Monthly Research Update

Experton Group Weekly IT News

Wireless Service CEOs Slow to Embrace Open Development

By: Jerald Murphy

Executives of major wireless service providers have publicly announced their reluctance to rapidly embrace open mobile development standards. In other news, officials from Sprint Nextel Corp. and Clearwire Corp. announced that their WiMAX deal was just about complete, while other industry experts predicted the deployment of Long-Term Evolution (LTE) wireless networks would take much longer than initially predicted.

Focal Points:

• Officials from Verizon Wireless, Inc. recently spoke at a major wireless conference, stating that new open wireless networks would most likely lead to higher handset prices. In addition, other major wireless carriers also expressed their concern about moving too rapidly to adopt open wireless development standards. When executives asked audience members if they wanted to use any device with any software on any network, there was an overwhelming positive response to this question. Executives then suggested that open devices will not carry the same subsidies current devices have with carriers, which inevitably will result in higher device prices. Sprint Nextel and T-Mobile executives said they will start open development, but quality and reliability may suffer, in addition to higher prices.
• Clearwire executives recently gave the public an update on the pending merger of its WiMAX business with Sprint Nextel. Clearwire officials said that everything appeared to be on track for the deal to close in the fourth quarter. In addition, officials said that the infrastructure build out for the first four WiMAX markets is actually ahead of schedule. In a separate announcement, Clearwire venture partner Comcast Corp. also predicted a fourth quarter close. Officials said there are currently around 1,200 sites in development for the initial four markets, which include Atlanta, Georgia, Las Vegas, Nevada, Portland, Oregon, and Grand Rapids, Michigan.
• An analyst panel at a recent CTIA Wireless IT and Entertainment Conference predicted that the adoption and deployment of fourth generation (4G) LTE technology is not likely to be implemented in any significant way by any wireless carriers before 2015. Panel members suspect there may be some limited to hotspots. The main reason for the delay is that carriers still see voice as the major component making up service provider revenues. Data use is not at the level where they are willing to bet on development of higher bandwidth capability in anticipation for new data services. While carriers agree that LTE is more efficient than Evolution-Data Optimized (EV-DO), most question that the gains are worth the billions it would likely cost to upgrade networks to LTE.

Experton Group believes mobile wireless platforms will develop in a more open fashion, with end users willing to pay more for handsets in exchange for more flexibility in their use. Increased competition will likely drive prices down more than operators predict, with the demand for mobile applications occurring faster than carriers will predict. IT executives should plan for future applications to be accessed by these new, open platform devices.