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Something in the Air

Wireless technology is suddenly as ubiquitous as radio waves -- and nearly as invisible to most executives.

1Jun

April may have been the cruelest month for Nasdaq, but in the very week that investors learned that Internet stocks are not immune to reality, a telecom megamerger fueled what may be the newest new thing: wireless communication. Bell Atlantic Corp. completed its joint-venture agreement with Vodaphone AirTouch Plc, creating Verizon Wireless. The new company will get a further boost this quarter, when parent Bell Atlantic's acquisition of GTE Corp. is expected to be completed, making Verizon the country's largest provider of wireless services.


Even as the ink was drying on that deal, Sprint Corp. and MCI WorldCom Inc. were pushing forward with their merger, expected to be completed by fall; SBC Communications and BellSouth were ironing out the details on a joint agreement that would give them almost one-fifth of the market; and AT&T was spinning out its Wireless Services Group via a tracking stock, raising more than $10.6 billion in history's largest initial public offering.


This reverse Balkanization of the major telecom carriers is just one piece of evidence to support the argument that wireless technology will soon be a critical aspect of corporate life. The increasingly mobile nature of the American workforce, the momentum behind new communications standards, and plunging prices on a wide range of wireless equipment and services are reshaping the way America does business. At least that's what those who sell these products and services claim. The corporate audience is less sure. No one really knows what form wireless technology will take, how much it will cost, or who the key providers will be.


One could hardly blame a company for waiting to see how things develop--yet that could be a mistake. "We'd rather not comment on wireless communications," says a spokeswoman for a major office-supply retailer. "If our competitors find out what we've got planned, they'll accelerate their own efforts."


If? In all likelihood, it's more a question of when. Mobile commerce, or "M-commerce" (conducting Internet transactions from a cell phone or handheld device), will be a $200 billion market by 2004, according to Strategy Analytics Inc., a market research firm in Wellesley, Massachusetts.


"Wireless should be on the radar screen of every CFO," declares Bob Egan, an analyst at Gartner Group Inc., an information technology consultancy in Stamford, Connecticut. "It's a vital part of customer service, it's the growth hormone behind E-commerce, and companies should figure out how to manage it."


Some companies, including Amazon.com and Yahoo Inc., are already rushing to make their Web sites available to users of handheld devices. Other companies are less concerned about serving phone-wielding customers than about making sure their own employees can access messages and critical company data from wherever they happen to be. This may be the more pressing area for businesses to concentrate on, given that there are 50 million mobile workers today. When Cahners In- Stat Group, a research firm in Newton, Massachusetts, asked 500 businesspeople how often they'd access job-related data with a wireless device if they could, 49 percent said they'd do so several times a day.



Voice First...

Wireless access to data may be where the greatest payoff lies, but it's also the aspect of wireless most plagued by confusion and uncertainty over competing standards, technological incompatibility, slow transmission speeds, and other handicaps. In the short term, many companies want to iron out the kinks in wireless voice services first.


Early licensing decisions by the Federal Communications Commission may have been good for consumers; by granting licenses to a large number of regional companies, the FCC gave competition a boost--in some metropolitan areas consumers can choose from among half a dozen companies. But that competition has actually stymied business customers by making it more difficult to obtain broad coverage. The spate of recent mergers should help, since most have been motivated by the desire to achieve a national "footprint," or coverage area, providing seamless service coast-to- coast.


The initial, consumer focus of wireless is an anomaly. Most IT trends have begun in the corporation and migrated to the home, the PC being the most conspicuous example. Vendors cut their teeth serving corporate clients. Not so with wireless, where usage discounts, service-level agreements, and other niceties of the corporate sale were slow to appear.


That's changing fast. As wireless carriers expand their coverage areas and begin to offer data services, they are also creating or expanding national account teams that cater to businesses. "The carriers have been stumbling for a while," says Roberta Wiggins, an analyst at Boston-based Yankee Group. "Selling to a consumer takes just a few minutes, while landing a business client takes much longer. But carriers are growing up, and businesses can now negotiate much better prices and services."


With 2,500 employees approved for cell phones, Air Products & Chemicals, in Allentown, Pennsylvania, has been able to "negotiate some significant discounts due to our volumes," says Virgil Palmer, director of global telecommunications and network services. The $5 billion supplier of industrial gases (and related equipment) and selected chemicals does business in almost every state and has operations in more than 30 countries. "Our strategy is 'scale, simplicity, and sameness,'" Palmer says, "so the fewer suppliers, the better."


But simplicity is a long way off. "Voice is relatively easy," Palmer says, "but we're going to hold off on data. Companies are putting so many things out in the market every day that it's hard to know what to pick. You might make an investment and be left high and dry in six months."


Air Products is looking at WAP phones, Bluetooth, and PDAs (for explanations of these and other terms, see "A Wireless Glossary"), but in the short term Palmer says, "I'd be happy just to find a cell phone that could work anywhere in the world. Right now you need two phones [to accommodate U.S. and international standards], and even that doesn't guarantee that you can make and receive calls from every place." But Palmer does advise companies to bring some order to bear on the rapid spread of cell phone usage. Air Products, for example, lets business-unit managers approve an employee's request for a cell phone, then rolls all charges up to a central billing system. That not only ensures maximum discounts, but also helps the company track usage. "We also know who has what kind of phone," Palmer says, "which helps us make an orderly transition from analog to digital service."


Helping companies manage their ever-growing investment in wireless access has become a priority for the major phone companies. Sprint PCS, for example, sends a CD-ROM to its corporate clients each month, capturing a record of call volumes and pointing out usage trends. And a spokeswoman for Verizon promises: "We'll have new products, services, and pricing options aimed at enterprise customers right away. We want to make the wireless phone the centerpiece of a company's information technology strategy."



... Data Next

Voice service may be approaching the status of a commodity, but just as companies are beginning to get their arms around that, along comes wireless data to galvanize--or paralyze-- the market. Pundits like to chirp that "the killer app for voice is voice," meaning that cell phones are first and foremost about talking to people. But others aren't so sure. "Most employees get six E-mails for every voice mail," says Yankee Group's Wiggins. "Companies can no longer tolerate having mobile employees be out of E-mail reach."


Wireless data services and applications will be essential to make mobile employees as productive as possible. Cahners In-Stat says the number of workers using wireless devices to access data will soar from 1.6 million in 1999 to 18 million by 2003. This rosy projection is based in large part on the belief that transmission speeds will be improved from today's 14.4 Kbps rate to, eventually, so-called third-generation (3G) speeds of up to 2 Mbps, with stops along the way for 2G and 2.5G.


The ascent to 3G speeds should bring with it an end to, or at least a diminishment of, the compatibility problems that have plagued those trying to use a U.S. phone in Europe, or vice versa. A consortium including, among others, AT&T, British Telecom, Lucent, and Nokia, is at work on a "3G.IP" standard that should help devices from different companies access voice, data, video, and other types of data from anywhere in the world by adhering to the Internet Protocol standard. Companies are also developing newer phones with larger display screens and better voice recognition, and are adding voice capabilities to such devices as PDAs and two-way pagers.


All those developments will take time; by some estimates, the full promise of 3G won't arrive in the United States for several years. But some companies insist that wireless data access can provide a competitive edge today. IBM Corp., for instance, is using its own employees to test a variety of wireless capabilities that it hopes to bring to market soon. "This is the year for wireless in the enterprise," says Ric Telford, the company's director of E-business technologies. He says that IBM is currently seeking optimal combinations of data and devices for varying user needs. "We try to be agnostic," he says. "Some people prefer to use voice as much as they can. Others may want a laptop with a wireless modem so they can see lots of data, and others fall in between."


IBM's "Unwired Blue Pages" provides contact information on all 300,000 employees via the Web, which can be accessed with a WAP-enabled phone or certain PDAs. "It's a tremendous productivity boost," Telford claims. "When you're out of the office and need to find and communicate with a certain person, having contact information at your disposal anywhere saves a lot of time." IBM will use its own experiences to enhance its "pervasive computing" products and services. Meanwhile, IBM's Lotus Development Corp. subsidiary is touting its Mobile Services for Domino (MSD), which lets users send and receive Lotus Notes E-mail and access their calendars from a variety of handheld devices. It's part of a broader effort, often dubbed "unified communications," that lets users send or access any type of message (voice, E-mail, pager) from almost any kind of device.


IBM is also working on a project designed to put sales data into the hands of account reps so they can bone up on a client's current situation as they wait in the lobby or ride the shuttle from the airport. In fact, many of the earliest efforts in wireless data are aimed at the sales side of the house. "We have one client that says wireless data allows its sales guys to make two extra calls a day," says Jay Highley, vice president of Sprint's PCS business customer unit. "Another pegs the productivity boost at two hours a day per salesperson."


Highley says the most critical aspect of wireless data for business is the most prosaic: giving employees access to the same internal data they can reach easily from their desktops. "If you can reach behind the corporate firewall with a phone or a PDA," he says, "that's really what counts." Telford agrees. "I don't think of these wireless applications as applications at all," he says. "There is no app to it, it's just data. It's the information you need, and if wireless lets you get it faster, better, and easier, that's the key benefit."



Wireless Customers

Some companies see customer service as another and perhaps more important benefit, and are targeting wireless technology in that direction. Countrywide Home Loans Inc., in Calabasas, California, for example, is reaching out to both its business and consumer customers with a wireless-enabled Web site that provides information on branch locations, loan status, and mortgage rates, plus an affordability calculator. "Initially we expect the business-to-business aspect to dominate," says Brian Ruggiero, a first vice president in the company's E-business division. "But as consumers look to do more with their phones or PDAs, we think they'll add us to their favorite [wireless] site list."


Ruggiero says the rationale for offering wireless access was simple. "Customers will want it," he says. "People think of us as a technology leader. It's a factor in how we win business, and this is just part of that identity." With their minuscule screens and clunky navigation methods, cell phones would seem unlikely to become the Web-surfing tool of choice, but the sheer number of them--220 million sold worldwide in 1999 alone, almost rivaling the total number of people with Internet access, estimated at 250 million--is inspiring companies to make some facet of their business accessible to them, even if most phones in use today don't have the requisite technology to access the Web.


Most activity in this sphere is speculative. Old Kent Bank, in Grand Rapids, Michigan, considers wireless access as "a natural extension of what we do on the Web," says David Schneider, executive vice president of retail strategy and product development. "Customers probably won't apply for loans over a cell phone," he says, "but if they can transfer funds between accounts or take care of other core functions while stuck in traffic, we think they'll welcome that option."


Schneider admits that Old Kent hasn't had much actual demand for such services, but the bank has extended its Web site into the wireless realm anyway--believing that as consumers acquire next-generation phones and PDAs, they'll want to use them for banking and related functions. "The kind of people who adopt that technology earliest," Schneider says, "tend to be the most profitable customers, so we're confident our efforts will pay off."


There is evidence that consumers welcome wireless access to the Web. Mohan Vishwanath, vice president of Yahoo's wireless group, Yahoo Everywhere, says usage of the company's wireless portal (launched in the fall of 1999) is already six months ahead of projections. Wireless access will be a key part of the company's forthcoming corporate My Yahoo service, which will allow companies to create custom intranet pages based on the My Yahoo portal.


Phil Usher, senior vice president at Countrywide Home Loans's E-business division, and Old Kent's Schneider both say that retooling Web sites for the wireless world was fairly easy. "It's like going back in time to the earliest days of the Web," Usher says. "You lose all the pretty stuff, and just go with the basics." Schneider says it was "not a significant technical effort; it took only a few weeks." And both companies relied on long-established relationships with partners: Old Kent worked closely with Financial Fusion Inc., in Westport, Connecticut, an E-finance applications vendor, and Countrywide teamed with AT&T Wireless, becoming part of the telecom giant's trial program to offer a wide range of wireless voice and data services to businesses.



At the Chasm

The major telecom carriers all see wireless data as an important growth market, and they plan to package voice and data services into a one-stop-shop offering. But some admit they're still grappling with price. "We've conditioned the market to look at cost on a price-per- minute basis," explains Sprint's Highley. "But with data, this may not hold. We're developing some creative packaging that will emphasize simplicity."


AT&T's flat-rate price for data was a key selling point for Countrywide. "You don't want people to feel penalized for going all through your site," Usher says. "In this program you buy a phone, pick a voice plan, then pay a flat rate on top of that for unlimited data access."


Kendra Vandermeulen, senior vice president at AT&T Wireless, believes that bundled services will appeal to businesses, bringing the same volume discounts to data that have become commonplace to voice. Indeed, Strategis Group, a research and consulting firm in Washington, D.C., surveyed 500 businesses and found that two-thirds favored some sort of bundled service, with half that group hoping to see no fewer than six telecom services (local and long-distance service, wireless, Web access, paging, and enhanced data services such as frame-relay and asynchronous transfer mode, or ATM). "The desire is clearly to go with fewer and bigger companies," says Strategis Group analyst James Mendelson.


Given the uncertainties in the wireless world, there is comfort in knowing that it is, as Schneider observes, simply an extension of what already exists. That means that tried-and- true vendors, from the telecom carriers to the phone and PDA makers to the software companies, are likely to be the most important players. And over time, wireless functionality may become nothing more than an accepted extension of what they offer.


"In the adoption of wireless, we're right at that point in the curve called 'the chasm,'" says Lotus's Jim Pouliopoulos, segment marketing manager for mobile and wireless-- "the spot between the leading adopters and the early majority." That's where vendors can charge extra for wireless functionality. "But over time," he admits, "it may come to be an expected part of almost any application you sell."


We aren't there yet. No one is saying wireless will be free, or easy. But it promises to be both ubiquitous and essential, like air.



A WIRELESS GLOSSARY

Discussions of wireless technology invariably run up against a host of buzzwords, acronyms, and questions about competing standards, disrupting the conversation as surely as a tunnel disrupts a cell phone call. Here is a brief guide to the most common terms.


AMPS: Advanced mobile phone service, the original cell phone standard, which transmits voice as an FM radio signal. This analog technology is giving way to competing forms of digital transmission. Both analog and digital operate at 800 MHz in the U.S.


Bluetooth: A standard for exchanging data between mobile PCs, mobile phones, and other portable devices using short-wave radio signals. Range is limited to several feet.


CDMA: Code division multiple access, a digital mode of transmission that converts voice and data into ones and zeros. Known as "spread spectrum," because it spreads the transmission across a wide spectrum and reassembles it at the other end based on a code assigned to each call. Distinct from TDMA (time division multiple access), which lets many callers use a single frequency by assigning unique time slots to each user.


Dual-mode phone: Can operate on a specific type of digital network (CDMA, TDMA, GSM) or on an analog network.


GSM: Global system for mobile communications. This is the digital standard in Europe. A form of TDMA with added encryption features, GSM operates at 900 MHz in Europe but 1,900 MHz in the U.S., meaning that a GSM phone sold in the U.S. won't work in Europe, and vice versa.


HDML: Handheld device markup language, one of several "microbrowser" standards for presenting Web pages on a mobile phone, personal digital assistant, or similar device. Others include WML (wireless markup language) and CHTML (compressed hypertext markup language). Differences between these are less critical than differences between digital phone standards, thanks to WAP.


PCS: Personal communications service. Despite Sprint's close identification with the term, PCS is a generic category of digital transmission that includes CDMA, TDMA, and GSM.


PDA: Personal digital assistant, an electronic organizer with LCD display and full keypad, epitomized by 3Com's Palm Pilot. Newer versions offer a wireless modem as an option.


Tri-mode phone: A device that operates at 1,900 MHz, 800 MHz digital, and 800 MHz analog.


WAP: Wireless access protocol, a standard now being built into phones and other devices that allows users to access and interact with Web sites. While WAP is built around WML (wireless markup language), a WAP-enabled phone or PDA can often access Web sites that use competing microbrowser standards such as HDML or CHTML if the operators of those sites incorporate special translation software.



Instant Network

One of the most appealing aspects of wireless technology is that it takes the structure out of infrastructure. When Rancho Los Amigos National Rehabilitation Center decided to bring new information technology to patients' bedsides, it encountered a problem: some of the older buildings on its Downey, California, campus used asbestos as insulation, promising to make the already expensive and time- consuming process of installing cables that much more cost-prohibitive. "Hospitals need approvals from several government agencies whenever they drill into walls," explains CIO Jerry Cernik. "Add to that the problems posed by asbestos, and we knew a different approach was needed."


The hospital launched a pilot project to test a wireless local-area network (LAN) from 3Com Corp. Laptop computers and other portable devices equipped with special PC cards can transmit data to and from a network of access points located throughout the hospital, which link the devices to one or more servers. "Doctors and nurses are highly mobile professionals," Cernik says. "This kind of technology can be a huge benefit."


Wireless LANs have been around for years, but until recently they found little favor. But new standards that boost transmission speeds to equal those of traditional hard-wired networks, combined with decreasing equipment costs, may galvanize the market. Frost & Sullivan Inc., an IT consulting and research firm in San Jose, California, predicts the market will grow from $400 million last year to $1.2 billion in 2003.


Cernik estimates that Rancho Los Amigos cut its costs by at least one-third by deploying a wireless LAN, and will be able to roll out the new applications that take advantage of it by the first quarter of next year. "If we had had to get clearance from [the California Office of State-wide Health Planning and Development], state building permits, and all the rest that goes along with a physical installation, that would have added many months to the project," he says.


Speed of installation isn't the only benefit; smaller companies, which tend to outgrow offices and change location often, can simply pack up their LANs and go. "It's an easy, instant network," says 3Com vice president Paul Fulton. He adds that while wireless LANs will extend but not replace the hard-wired networks at large companies, for smaller companies wireless networks may suffice.

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