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2004: Mergers, convergence, and Wi-Fi as a public utility

Posted: 23 Dec 2004 ?? ?Print Version ?Bookmark and Share

Keywords:wireless? broadband? network? pda?

In 2004, cities started treating wireless broadband like sewage and water, converged devices started flying off the shelves and the U.S. wireless industry got smaller.

What does wireless broadband have in common with water and solid waste management? Like the first two items, wireless broadband is becoming a municipal utility as dozens of cities have started the process of creating public wireless networks.

The city of Cerritos, Calif., started the trend early in the year and, by year-end, dozens of U.S. cities had jumped on the bandwagon. Their reasons varied widely. Cerritos, for example, had no DSL or cable coverage from private vendors. Other cities, such as Philadelphia, placed more emphasis on using wireless to project a progressive and business-friendly image.

Not surprisingly, this trend has drawn the wrath of private-sector broadband providers who claim government has no business getting into the wireless business. Verizon Communications successfully supported state legislation to give private broadband providers veto power over municipal network plans in Pennsylvania. That legislation was approved, however, only after Verizon agreed to give Philadelphia's municipal network the green light.

Perhaps the most important part of this trend, and the most subtle, is the growing recognition that fast access from virtually anywhere is becoming something close to a right in the U.S. That can only bode well for the future of information technology.

The chin scratchers and crystal ball gazers have long predicted the ascendance of converged devices and, in 2004, it finally started becoming true.

While sales of traditional PDAs flattened, sales of smartphones, which combine PDA and phone functionality, started soaring. In the U.S., the palmOne Treo was the best-selling smartphone according to market studies while, worldwide, smartphones based on the Symbian platform prevailed. Microsoft made some progress as a smartphone platform vendor but still hasn't become a major player. One potential major player, though, is Linux. PalmSource said it would port the Palm OS to that platform.

And more convergence is on the way. The first smartphones combined cellular voice, wireless data and personal information, but smartphones with built-in Wi-Fi started appearing toward the end of the year. Many observers expect these devices to be used for voice-over-IP as well as for cellular access. And several telecoms have banded together to develop technology that would enable both wireline and cellular access in a single phone.

Consolidation swept through the U.S. wireless industry in 2004. At the start of the year, there were six nationwide wireless operators in the U.S. At the end of the year, there were four, two of which had agreed to merge.

The first bit of consolidation, between AT&T Wireless and Cingular, initially played out more like a soap opera than a business deal with various suitors wooing the staggering AT&T Wireless. In the end, Cingular tendered the winning proposal over England's Vodafone. That merger closed in the fall.

Then, just last week, Nextel and Sprint agreed to merge, a deal that could take as long as a year to complete. Unlike AT&T and Cingular, which both used the same voice and data technology, Nextel and Sprint use different technologies, leading some to wonder how much synergy there will be in their union.

There still are rumblings that, once Sprint and Nextel tie the knot, Verizon will take a run at the newly-named Sprint Nextel. Such a move would face far higher regulatory hurdles than the previous two mergers, however.

At year end, only one national wireless player T-Mobile and a handful of smaller and regional carriers didn't participate in consolidation. Given the market power of the newer, big players, though, don't be surprised to see some of those smaller players gobbled up in the next year.

- David Haskin, Mobile Pipeline

TechWeb.com





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