Like the stubborn ache of a mild whiplash, new wireless application service providers (WASPs) and wireless Internet service providers (WISPs) are chipping away at the territories of established carriers, according to a study released by Friedman, Billings and Ramsey & Co. Inc., a consulting and market research group.
The 136-page study, which expresses confidence in the future of the wireless industry, says, “Although the major carriers currently control the relationship with end users, the emergence of new WASPs and WISPs should challenge their position in the market.”
Riyad Said, managing director of FBR’s communications services, identified some of the new WASPs as Aether Systems and Canada-based 724 Solutions and the WISPs as OmniSky, GoAmerica and Research In Motion.
“These providers came into the market with an angle of providing and optimizing the development and delivery of wireless application data,” he said, adding that this enables them to access different networks and mobile devices.
Data advantage
He said the established carriers are primarily based on voice applications, which leaves great room for new entrants to position themselves for the future, where data is expected to reign.
“The WASPs and WISPs have the ability to package a broad range of content, services (including traditional voice) and applications for end customers.
The second reason, according to the study, is that both groups of providers tend to be network and device agnostic, which provides them with “greater flexibility in utilizing the optimal network and device for specific applications.”
Said noted enterprise customers are looking less at loyalty but for price, features and capabilities in end-to-end solutions.
He said customers are interested in providers that can “provide ubiquitous coverage over a variety of devices like smart phones and PDAs.”
He said traditional carriers have underlying infrastructure with strong brands and relationships with end users. The report observed that apart from enjoying network footprints and customer bases because of a recent phase of consolidations, the established carriers also have upgraded their high-speed and bandwidth-intensive applications.
The advantages for the traditional carriers, said the report, are longer-term cost-savings, substantial balance sheets, established brands and customer bases.
Said, however, noted that a pendulum swing of market dynamics could alter their stranglehold on the customer. The dynamics include further commoditization of traditional communications services, the proliferation of new wireless devices and applications, and the ubiquitous delivery of a broad array of content and information services to subscribers.
He said the traditional carriers are going to look for ways to bundle services and make their offerings more attractive.
The report emphasizes the importance of data. “Market research indicates that one in six people today uses their wireless phone for wireless data access, with 55 percent of these users relying regularly on the service,” said the report.
It referred to a Yankee Group study that estimates that more than 28 million Americans will use wireless phones for data communications by 2002, with 75 percent using them for e-mail messaging and 25 percent for Web browsing and wireless applications.
Alluding to the strengths of the individual new service providers and their vertical markets, he said Aether Systems concentrates on financial brokerage firms, financial services, health care and mobile government. 724 Solutions concentrates on banking applications. OmniSky optimizes Internet access services for Palm pilots and other handheld devices. RIM, which also manufactures products, also provides services.
“These companies look to reduce cycle times, enhance information flow and reduce costs,” he said.
