Living Through Cell Phones

April 7, 2008
In case you haven’t noticed, we live in a cell phone-centric world. Steve Largent, president and CEO of the CTIA said at one of the keynotes during the recent conference, “We are living through our cell phones”. At first I was skeptical of such a statemen

In case you haven’t noticed, we live in a cell phone-centric world. Steve Largent, president and CEO of the CTIA said at one of the keynotes during the recent conference, “We are living through our cell phones”. At first I was skeptical of such a statement, but thinking about it, he’s right. The cell phone may just be our one single most important accessory or appliance—however you want to classify it. It has become the one thing we cannot put down or give up. And the CTIA conference last week just pointed up just how involved we are.

The CTIA conference is the U.S.’s largest cell phone show of the year. CTIA, of course, is the premier Wireless Association for this industry. This year is the 25th anniversary of the organization. The show is a big one with, over 40,000 in attendance and 1200 exhibitors. There’s lots of sessions on all aspects of the cell phone business and I’s hard to see it all or even a fraction of it. Here is a summary of what I saw and heard.

Keynotes
The keynotes at CTIA are really the highlights of the show. It is here where major industry leaders, players and celebrities bring news of trends, significant efforts and new products. I managed to see and hear them all. First up was Lowell McAdam, president and CEO or Verizon Wireless. He reminded everyone that there are over 260 million cellular subscribers in the U.S .now, more than wireline customers. And during 2007 the industry spent over $24 billion dollars in new infrastructure. A sure sign of a healthy and growing industry. He said that the business has become more difficult and competitive, and to win this game a carrier has the “make it happen” for its customers. The cellular business is clearly a customer driven business. His main point was to warn of the clear and present danger of the potential for increased regulation. McAdam said that this industry is way too dynamic to regulate and too important to our lives to tax us the way the wireline business became.

Steve Largent, the president and CEO of CTIA spoke briefly quoting some stats from a recent survey. With 84% of the U.S. population now with cell phones, subscribers burned over 2 trillion minutes last year. Furthermore there was a huge increase in data usage last year. Data revenue was $23 billion and over 1.6 billion text messages a day were sent. Data revenue is expected to continue to rise making, network management a major issue with all the carriers.

Kevin Martin, chairman of the FCC spoke next and summarized the recent spectrum auction results. Over one thousand licenses were bought by both large and small regional carriers in the soon to be available 700-MHz spectrum. Auction revenue was almost double that expected at $19.5 billion. The usage is expected is broadband wireless and increased cellular coverage. Some of that spectrum is allocated to open platforms and public service usage. Martin praised the industry for its competition and growth. He also said that the FCC would not immediately adopt any new regulations related to open networks. He said that the major carriers had all just recently agreed to an open policy that would allow new devices and applications beyond what they offer. He promised to recommend to his commissioners that there be little future regulation regarding this issue. We shall see.

Robert Bach , president of Microsoft’s Entertainment & Devices division spoke next. He introduced the latest version of Windows Mobile operating system. Version 6.1 has a new browser and is a better platform for entertainment applications. It also has a new search capability. The demo of 6.1 was on the new Sony Ericsson Xperia touch phone. Bach mentioned that all five major U.S. carriers are expected to offer phones with 6.1 later in the year.

Dan Hesse, Sprint Nextel’s new CEO was next. He called the cell phone our instant gratification device as we have become a society of impatient folks that want what they want when and where they want it. They want the “whole package”. He used the Sprint Nextel push to talk feature that has been available for years as an example. Hesse also pointed out the increased data usage on the networks. Over 50% of subscribers now use data and that is expected to rise to 75% in the coming years. Video will be the biggest factor and music will continue to be a major feature. The cell-phone-content industry is growing at a spectacular rate and is expected to exceed Hollywood and sports revenue. Hesse also mentioned Sprint’s new “Simply Everything” plan for $99/month. No fancy or complex charges. You just pay the monthly fee and automatically get unlimited everything. Hesse demoed the new Samsung Instinct touch phone that operates on their EV-DO Rev.A network. Finally, Hesse said that Sprint would continue to build out its XOHM WiMAX network in the years to come.

The most entertaining speaker of the day was the self proclaimed “old hippie” Sir Richard Branson of Virgin Records fame. He talked about building his Virgin brand by moving from a music business to an airline business and today the Virgin Mobile cell phone business. He said that he did not follow the traditional business or marketing models and instead focused on making customers happy. He also said that the climate change and global warming was driving his business decisions. Branson talked about his plans for a trip to Mars in the future. He asked for volunteers for this most likely one way trip and over 30 from the audience joined Branson on stage . . . probably just to meet him.

Arun Sarin, CEO of the Vodaphone Group started off the day 2 keynotes by recommending that carriers join together and put all their support behind long-Term evolution (LTE), the favored 4G technology. That so far has been the general feeling in the industry. LTE has won the battle, but WiMAX is still out there and actually ahead of LTE in deployment. Sarin also recommended that WiMAX be included as part of the LTE standard under the TDD segment. The likelihood of that happening is probably no more than 50/50 but it is an interesting view. WiMAX is already deployed worldwide and is slowly continuing to roll out. And with Sprint Nextel getting ready to build out nationwide, probably with Clearwire’s help, why wait longer for LTE?

Next up was Yahoo Mobile’s Marco Boerries who announced a new version of Yahoo’s oneSearch product. This gives mobile users a better search capability than exits now, if it exists. oneSearch 2.0 is an open mobile ecosystem that lets you get answers, find people and store your favorite content. It features a “semantic Web” approach that should give more relevant answers. Voice input is a part of 2.0 and should be available with several partners this coming summer. Mobile Internet use is going to be much greater than laptop and even PC Internet use because of the sheer number of subscribers. This will make mobile advertising a target for increased revenue extraction. Get ready.

The remainder of the keynote was a panel discussion chaired by Lowell McAdam, president and CEO of Verizon wireless and made up of Patricia Russo CEO of Alcatel Lucent, Carl-Henric Svanberg CEO of Ericsson, and Mike Zafirovski CEO of Nortel. The topic was the Path to 4G. This is an infrastructure panel and their opinions seem to be just a bit different from the carriers they sell to.

Just as a reminder, 4G is the cell-phone industry’s next big technology advancement that uses OFDMA to offer the potential for mobile data rates up to 100 Mb/s in bandwidths of 50 to 100 MHz. It is an all IP wireless broadband service that includes voice. The goal is a better user experience and far more data services and applications such as video and gaming. LTE was not expected to show up until about 2012 but almost everyone in industry is pushing hard to develop this standard and get it deployed. We can expect to see some early deployments probably in 2010. The consensus of the panel seems to be that about 85% of the world wide carriers will adopt LTE including even Verizon that up until now has supported the cdma2000 EV-DO path. LTE is definitely the winner here but this group did not seem to have an opinion on how the carriers will differentiate themselves if they all use the same standard. It will no doubt be the carrier who can link together all the various products and services that are expected to be deployed.

When asked about the status and future of 3G, the panel indicated that 3G was still rolling out and it would continue to be a good investment for years to come. Eventually carriers will switch over to 4G well into the future. However, most agreed that the move from 3G to 4G will come much quicker than the 2G to 3G switchover that has taken a decade or so and is still going on.

  • Will there be a seamless handoff between the various 4G technologies? Answer: maybe.
  • Network management will be more important. Those wanting/needing the higher speeds will have to pay extra for it.
  • Data usage has increased 700% in the past 12 months. More capacity is definitely needed.
  • A key change is the move from PC/laptop centric usage to a handset centric usage.
  • Femto cells definitely solve some current access problems and will be part of the future infrastructure.
  • Regulators should enable a healthy industry so as to maximize its potential.

Steve Largent kicked off day three of the keynotes with some interesting new stats based on a recent CTIA survey. The general conclusion is that people are “living through their handsets”. How true! Ninety-one percent are satisfied with their current service. Most subscribers want no more regulation. Already state cell phone taxes are adding from 16% to 22 % tax to cell phone service. For those hoping to avoid more regulation, you can join the MyWireless (www.mywireless.org) movement, a non-profit that fights for less regulation.

The remainder of the keynote was a treat with both ex-presidential contenders John Edwards and Fred Thompson talking. John Edwards started by asking the audience if they really understood the issues: the economy, immigration, overseas entanglements (war), health care, etc. and how the various candidates stand on each. By the pathetic number of hands raised, it is evident that few people really know the issues in any depth. And almost none actually indicated that they clearly understand the differences between the stands by each candidate. What a sorry state. Edwards went on to say that the media was running things and turning the campaign into a popularity contest where the issues really take a back seat. The media is more interested in who is ahead and especially in creating and promoting any improprieties and fights. There is too much focus on the celebrity and the superficial. Edwards says that the country deserves better.

Edwards also said that we needed to come together to confront the tough challenges produced by the massively increasing population and the acceleration of consumption. He said we really need to deal with the global warming problem. The U.S. is vying with China for first place polluter. Edwards is big on the global view of the world where nation states should not operate in their own self interest. We are all connected today and we cannot live or address problems in isolation. Not all agree with this, though.

Fred Thompson pretty much stood with Edwards on the problems that the media causes. More glitz and controversy and less education of the public on the issues and positions—a huge waste of the media that could improve matters nationwide. Instead, the media fosters discontent and controversy. They would rather show the cat fight between candidates than report on the real problems, solutions and issues. The press concentrates on the process of the campaign and less on the substance. He also said that just trying to be yourself in the campaign is bad advice. And it definitely helps to be very rich when running for president. He quoted someone who in the past said that anyone willing to go through this process should automatically be disqualified. Candidates are promising things they cannot deliver and we are bankrupting the future generation with things like social security and health care.

Thompson further said that no one politician will really address the problems. While credible candidates are out there to do this, he said that most are not willing to subject themselves to the process the media puts everyone through. What a waste. Finally he said that he believed that the media is trying its best to talk us into a recession and that they seem to be succeeding. Then again, he said he hoped that Congress would not continue to increase regulation on wireless or other businesses. The free market is still best.

In the Q & A session that followed, both ex-candidates were asked who influenced them most as a politician. Edwards named Bobby Kennedy and Governor Terry Sanford of North Carolina. Thompson named Howard Baker, Senator and leader of the Watergate investigation. Both agreed what we need is a candidate that is civil and honest, tries to be bipartisan but maintain convictions, and exhibits leadership. It is the extremes of the bases on the left and right that really push the candidates into disagreeable attitudes and positions.

The Q &A also centered on the media and its 24/7 cycle that needs massive amounts of material to fill its air space. The media thrives on controversy and does not do a good job of educating the public. The extreme positions that the mainstream media often puts forth come from the far left and right wing bloggers they have come to rely upon. Not good.

The session had much good humor. Thompson certainly supported McCain but Edwards would not commit to supporting either Hillary or Obama. Both said they would not accept a bid for Vice President.

Key Trends
In looking at the big picture for engineers, the big trends in the cell phone space are the rapid push to 4G technology, primarily LTE. With data applications increasing rapidly, a faster more reliable broadband wireless solution is needed. WiMAX continues to be a hot topic at this show. It is not strictly a cellular technology, but with voice over mobile WiMAX it can be and not doubt will be. Femto cells also continue to be a hot topic as most carriers will no doubt deploy them in some way to solve the problem of poor at-home cell phone service. Search and advertising will also be coming to cell phones. Most want the former but not the latter, but we will get it any way. Mobile broadcast TV is one other thing just now showing up. More will come as carriers build out their broadcast stations and find attractive content to offer subscribers. And the Apple iPhone remains the handset to beat. New touch phone competition is beginning to show up like the new Xperia from Sony Ericsson, the Samsung Instinct, LG’s VU and the HTC XV6900. But Apple is hard at work on its next generation iPhone that will feature 3G speeds, an open architecture and no doubt neat features that will keep it in the lead. And it is anyone’s guess what RIM has in mind for its BlackBerry series. For more content from CTIA, click here.

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