Are Wireless Firms Playing Smart?

One promising solution to the lousy mobile phone service in the United States might be the implementation of smart antennas. Then why aren't the big companies putting them up? By Aparna Kumar.

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If the message that wireless service is getting worse isn't reaching carriers, maybe that's because the calls from disgruntled customers complaining about it get dropped or never go through in the first place.

Or maybe carriers are aware of the problems with wireless service but are simply choosing not to do anything about it.

But as the number of wireless subscribers grows, the industry will have to find ways to expand networks to accommodate greater volumes of voice and data traffic.

Already 30 percent of Americans use mobile phones, and that number is expected to approach 50 percent by the end of this year and reach 86 percent by 2006, according to a study released Tuesday by the research firm Strategy Analytics.

Analysts agree that the long-term solution to the wireless industry's capacity crunch is not simply building more cell towers or increasing wireless spectrum, but investing in so-called smart antenna technology.

Experts say the widespread deployment of smart antennas already on the market would reduce signal interference, resulting in better spectral efficiency, fewer dropped calls, lowered infrastructure costs and better wireless service quality across the board.

But a quick survey of the industry shows that the major carriers have been slow to adopt smart antenna technology, in spite of the fact that networks are already overburdened and are sure to get worse once third-generation (3G) data services, such as streaming video for mobile phones, are introduced.

Metawave and Arraycomm are the industry leaders in smart antenna technologies. They claim the technology can boost network capacity anywhere from 75 percent, when it's added to an existing network, to up to 10 times its current level, when it's embedded in an entirely new infrastructure.

"There's been a perception in the industry that smart antennas are very expensive, especially the embedded variety," said Jeff Schwartz, a spokesman for Arraycomm.

"It turns out the opposite is true. A few years ago, you couldn't have bought the processing power necessary to do what we do for any amount of money. Now that chip speeds have evolved smart antennas are a bargain."

So why aren't carriers snapping them up?

"It might be one of those chicken-and-egg things," said Frank Viquez, an analyst with Allied Business Intelligence. "On one hand, carriers are waiting for WAP (wireless application protocol) content to get more sophisticated before investing in next-generation wireless technology like smart antennas. On the other, the content providers are waiting for the technology to become more advanced."

Indeed, while carriers abroad have been quick to adopt smart antenna technology, carriers in the United States seem reluctant to hop on the bandwagon.

"Our technology is a new technology," Arraycomm CEO Marty Cooper said. "It takes a long time for the industry to adopt technology like ours. Frankly, people didn't believe us. So we had to go all the way to Japan to find a visionary company."
Arraycomm's embedded technology is currently deployed in about 65,000 base stations across Asia.

Metawave, which offers CDMA (code division multiple access) and GSM (global standard for mobile communication) compatible "add-on" technology, has sold its smart antenna software to a number of carriers in Asia, Latin America and Europe. But currently the company has only two customers in the United States -— Verizon, the nation's largest CDMA carrier, and Alltel.

"Three-G means that carriers will have to basically rip out their existing base stations and start over," Metawave general manager Marty Feuerstein said. "Their goal is to minimize investment in the current infrastructure."

Both companies agree that the future of smart antennas lies in embedded technology -— base stations with smart antennas already built in —- which is the more expensive but also a more powerful and longer-term solution to the capacity crunch.

To that end, Metawave recently announced a partnership with Samsung, a wireless infrastructure company, to develop commercial base stations equipped with its smart antenna technology. Arraycomm announced a similar partnership with Marconi, another base-station manufacturer.

As smart-antenna technology gains ground, carriers will need fewer base stations to achieve greater capacity and coverage. That's a reality that has base-station manufacturers scrambling to come up with smart antenna technology of their own.

Indeed, as carriers become convinced of the need for smart antennas, Metawave and Arraycomm will have to face increasing competition from the Lucents, Nortels, and Motorolas of the wireless world.

Earlier this year, Ericsson became the first major wireless infrastructure company to announce the development of its own smart-antenna-equipped base stations, which have already been deployed in Germany.

For now, deployment of smart-antenna technology remains up to the carriers, who will chose when and with whom they will partner. Although they insist that improving network capacity is one of their top priorities, some major carriers aren't ready to make a commitment.

"We've trialed some of these technologies and decided not to employ them," said Keith Radousky, an executive director of engineering at Cingular Wireless. "We don't find that the value equation is quite there yet, when you compare the costs versus benefits."

There are hidden costs behind the smart antenna technology currently on the market that make them less-than-worthwhile investments, according to Radousky. For instance, smart antennas are larger than conventional antennas, which makes them more expensive to maintain. "The larger the antenna, the more wind it catches, and as operators increase the wind load on towers, it costs more to support (them)," Radousky said.

But also, carriers' seeming reluctance to implement smart-antenna technology may have more to do with keeping the competition in the dark than with uncertainty about the quality or cost-efficiency of what's available.

"This whole industry is about partnerships, and many are carefully guarded trade secrets," Viquez said. "I think that's why we don't see announcements in the U.S. about the adoption of smart antennas. They don't want the competition to know before they're ready to deploy them."

Cingular's Radousky seemed to confirm that assumption.

"There's a number of technologies we're considering to use that will continue to increase capacity and quality, but can't be disclosed at this time," he said.

In the meantime, mobile phone users in the United States will have to hang up and try their call again.