Cingular Wireless launched high-speed data service in Chicago and several other markets Tuesday, putting new competitive pressure on DSL and cable modem products.
Cingular, the largest mobile phone service provider, joins two other large wireless operators–Verizon Wireless and Sprint–in rolling out third-generation technology that carries data at speeds comparable to landline DSL.
Cingular’s initial products are aimed at business customers and limited to inserted radio cards that enable laptop computers to go online. The carrier said it will have consumer-oriented 3G phones available early next year.
The new service costs about $60 a month for unlimited service with monthly rates as low as $20 for limited service. That is comparable to rates offered by other wireless operators.
Given the product’s speed and mobility, “consumers will look at us as an alternative to other broadband services,” said Terry Stenzel, Cingular vice president for Illinois and Wisconsin.
Wired phone companies have been losing their core voice business to wireless for years, and the new generation of wireless technology will put added pressure on high-speed services offered by wired phone companies, said Dominic Endicott, a vice president with Boston consultancy Adventis.
“Today wireless voice is cheaper than its wireline equivalent,” said Endicott. “The wired network’s fixed line-cost structure doesn’t come down much, while wireless gets cheaper and cheaper with new technology.”
Adventis research suggests many businesses are interested in buying wireless data services for $60 a month, Endicott said. Interest escalates appreciably as the price drops.
Wireless companies are counting on new data services to bolster revenues, even as they cut the rates they charge for basic voice services.
Market research firm TNS Telecom suggests this strategy is working. In the third quarter of this year, the average U.S. household paid nearly $79 a month for wireless service. That’s up from about $68 two years ago, TNS data found, and about $56 in 2001.
Increased use of non-voice service is fueling growing revenues. A study this year by market research firm Forrester found that in 2004, more than 11 percent of mobile phone subscribers used their carrier’s branded data service, compared to 9 percent in 2003.
Services have become comparable, said Mitch Mitchell, telecom vice president at A.T. Kearney, and it is more common to find similar applications available on both wired and wireless platforms.
“The wireline companies own a bunch of wireless, so it’s natural to see a move to integrate the services,” he said.
Cingular is a joint venture between AT&T Inc., formerly SBC Corp., and BellSouth Corp. While it was slower than competitors to launch a third-generation network, “Cingular has the ability to equal Verizon Wireless and Sprint,” Mitchell said.
While the new wireless data services will make inroads into the broadband market, the wired networks have a long-term advantage, said Robert Norcross, leader of the telecom, media and entertainment practice at consultant Capgemini.
“For high-profile applications–downloading movies or exchanging music–wireless isn’t viable,” Norcross said. “If you have three or four people making big downloads through the same cell site, it’ll clog up the network.
“Wireless is fine for e-mail, Web surfing and a lot of applications, but it won’t replace wired networks for heavy-duty users.”
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jvan@tribune.com
