NEW ORLEANS – Despite a recession dogging the telecommunications sector, the cellular-phone industry has grown into a $76.5 billion business – a 17 percent increase from last year, Cellular Telecommunications & Internet Association CEO Tom Wheeler told an audience here at the CTIA show.
The industry is developing at such a rapid rate that applications once considered futuristic – such as cell phones powered by body heat and home appliances operated remotely by cell phone – "are not too far off."
"This industry is far from the doldrums," said Wheeler, who warned that the biggest threat to the industry's health could come not from business forces but from government regulation.
As executives from Motorola, Nokia and LG Electronics noted in their question-and-answer sessions on stage with Wheeler, cell phones already do much more than make phone calls. They are sleek, converged devices that let users check e-mail, maintain personal calendars, work on Excel spreadsheets and PowerPoint presentations, take pictures, download directions and surf the Web.
Soon, cell phones will come with multiple radios that make it possible to use a handset anywhere in the world. The phones will also come with Bluetooth and Wi-Fi radio chips that let users retrieve information wirelessly from a PC, printer or any other device that uses the radios.
Bluetooth lets devices within 30 feet of each other communicate wirelessly. Wi-Fi, a wider-range radio that is already installed in places such as coffee shops and home offices, lets users within 100 feet of an access point surf the Web wirelessly.
Tom Engibous, president and CEO of semiconductor-maker Texas Instruments presented a prototype for a PDA that is powered by a cellular high-speed general packet radio service (GPRS), Wi-Fi and Bluetooth. Engibous said the chip's bulky size, as well as its cost and power consumption will come down to the point that by the end of next year, "we will see a single-chip cell phone."
"The power challenge is the most significant," Engibous said.
But, he added, so much progress has been made on extending cell-phone battery life that wireless devices being worn that "will get energy from the heat of your body" are not too far off.
"We are in the initial stages" of developing such a device, he said.
LG Electronics, a manufacturer of consumer electronic products in South Korea, has already launched its "home network" line of products: refrigerators, washing machines, dryers, microwave ovens and flat-panel PC monitors that can be remotely controlled by either a PC or a mobile phone. To show off its wares, LG ran a video that features a mother who starts her laundry and begins cooking remotely by inputting information on her cell phone. She then leaves a video message on the computer monitor of the refrigerator welcoming her children home from school and letting them know what's cooking.
John Koo, chairman and CEO of LG Electronics, said he expects such connected appliances to arrive in U.S. households shortly, although he didn't give an exact date.
"They are already being sold all over the world," Koo said.
Wheeler emphasized that this is an example of a cell phone being used in a way that "is clearly beyond voice" communication. He estimates that revenue from such non-voice services is poised to break a billion dollars this year.
The trend of using the cell phone as a device for delivering data will largely be driven by an increase in short text messaging (SMS) over phones, Wheeler said.
SMS already makes up 15 percent of revenue for carriers abroad and has made inroads here in the United States. In June 2001, only 30 million SMS messages were sent in the United States. In December, that number exploded to more than 1 billion messages, Wheeler said. All of the carriers are airing commercials with people sending SMS messages to one another. AT&T Wireless is promoting it heavily on the prime-time show American Idol by having viewers choose their favorite singer by typing into their phones.
"That is not the definition of a telecom funk," Wheeler said.
However, the industry's efforts could be hampered if the U.S. government regulates the wireless industry as it has wired-line telecommunications, Wheeler said. State public utilities commissions, for example, are already treating the wireless industry like traditional telephone companies by passing levying taxes for switches that cell-phone users aren't using. Wheeler also feared that the federal government was moving too slowly to distribute airwaves to the industry so that it could build out its networks and accommodate more customers.
Federal Communications Commission chairman Michael Powell and Rep. Billy Tauzin (R-La.) both appeared to agree with Wheeler that the markets, and not the government, should dictate what wireless services consumers receive.
"Unfortunately, most state regulatory bodies are anxious to get back into the business of regulatory telecommunications," Tauzin said. "If it has to pre-approve every innovation, imagine how slowly it will take for every innovation" to come to market.
Powell said he has already created a spectrum task force to look into what airwaves could be dispersed to the industry.
"Spectrum is not scarce," he said. "The (available) spectrum was not being used efficiently."
But Tauzin did offer Wheeler some advice in order to avoid more regulation: Have the industry clean up its act. If it doesn't want to be hit by legislation, it should improve cell-phone coverage, roll out enhanced 911 service in a timely fashion so that anyone who dials 911 on a cell phone can get help immediately, and build a mechanism to protect content from piracy over wireless devices, he said.
Wheeler responded, "I think you laid an agenda for us in the next three years."
