- The Washington Times - Monday, February 14, 2000

Europeans show power of cellular in daily life

Americans are behind.

Despite our reliance on technology, embrace of the Internet and growing use of tools like e-mail, the technology to bring the Internet to wireless phones remains far behind other tech-savvy nations.

Most wireless phones here can only be used to place a call.

Europeans are buying soda from machines with their wireless phones and having the purchase subtracted from debit accounts, while in the United States, thirsty purchasers dig into pockets for lint-covered change.

U.S. consumers won't remain on hold much longer because tools making the Web portable and providing another link to the Internet are emerging.

"It's very basic now, but a lot of companies are hopping into this market because they saw what happened with the Internet and how they got left behind," said Patrick McQuown, president of District-based Proteus Inc., a 4-year-old company with software to translate Internet content so it can be read on Web-enabled phones.

Wireless phone manufacturers are including the technology in wireless phones sold here that connects the devices to the Internet. By 2003, nearly all phones available in North America will have the software to let wireless subscribers log onto the Web, analysts say.

As production of Web-enabled phones picks up, carriers including AT&T; Wireless Services, Bell Atlantic Mobile, Reston-based Nextel Communications, GTE and Sprint PCS are among the companies pushing Web phone service.

Sprint has made the biggest splash and has the most aggressive marketing effort. It introduced a Web phone last August that can be used across its nationwide network. Analysts say an estimated 100,000 of Sprint's 5.7 million subscribers have signed up for the company's Web phone service.

"We've seen two great trends: the Internet and wireless communication," said John Yuzdepski, vice president of product management and development at Kansas City, Mo.-based Sprint. "The intersection of these is an incredibly compelling proposition."

Analysts say Web phone service must improve before consumers are willing to make it part of their lives.

"The reality is, right now services are relatively limited," said Mark Desautels, managing director of the District-based Wireless Data Forum, a trade association of about 100 companies that represents the wireless phone industry.

That isn't stopping phone companies from quickly jumping into the burgeoning industry.

"In the next six months, I think you will see every major and many minor carrier pushing the service," Mr. Desautels said.

A new standard

The most important development moving wireless Web phones to consumers is called WAP wireless application protocol. Developed by Redwood City, Calif.-based Phone.com Inc., WAP has become the de facto standard for displaying Web content on wireless phones. WAP is important because Internet content can't appear on phone screens in the language that makes it readable on personal computers.

Most information on the Internet is written in HTML, or hyper text markup language. That accommodates publication of text and graphics. WAP software contains another language, wireless markup language, that eliminates graphics.

As important as WAP's development is its ability to work on all wireless phones. That's no small feat in the U.S., where wireless carriers aren't using one technology and never agreed on a single standard for carrying voice. Carriers here rely on any one of three competing technologies. In Europe, wireless phones all rely on the same technology.

Phone industry experts say Europe's agreement on a single standard for wireless calls let consumers there get Web-enabled phones before U.S. consumers.

Carriers, phone makers and companies developing Web phone applications are optimistic the phones will become a hot commodity here because they see a natural audience. Nearly 70 percent of people who use wireless phones also use the Internet, said Elliott Hamilton, vice president of global wireless research at The Strategis Group, a District-based telecommunications researcher.

Wireless phones already exceed the number of personal computers in U.S. homes. There are an estimated 50 million PCs in homes, and there are 85 million wireless subscribers.

A matter of convenience

John Harris, chief executive of Reston-based Ztango.com Inc., can only do so much with his Web phone when he's home. In addition to using the phone to place calls, Mr. Harris uses it to send e-mail and instant messages to colleagues at Ztango.com, a software company developing applications for Web phones.

But on a trip to Helsinki, Finland, Mr. Harris could take fuller advantage of the strength of the Web phone.

Mr. Harris used his phone in Helsinki to buy a can of Coca Cola and to check schedules for buses from Helsinki to that city's suburbs. The phone sends a signal to a soda machine that commands it to spew out a can of soda, then deduct money for the purchase from a debit account. Others can have the purchase added to a phone bill.

Use of the phones in Europe offers a preview of how U.S. consumers will one day use the devices, Mr. Harris said.

"The phones have become a natural extension of the Internet. It's a convenience that becomes part of your everyday life," Mr. Harris said.

The phones also have given rise to a flurry of instant messaging, a task accomplished here on PCs. In Europe, 2 billion instant messages are sent over Web phones each month, according to the GSM Association of Europe.

The convenience of tools like instant messaging will help drive the U.S. wireless Web market, analysts say, but tools like on-line banking, electronic commerce and the ability to trade stocks will have a greater influence on the technology's growth.

"News, weather and sports ain't going to cut it," said Ken Dulaney, vice president of mobile computing at Connecticut technology research firm Gartner Group.

But in many respects, services for wireless Web phones still are being defined.

Location-based services could also help move Web phones from novelty to necessity. That includes the ability to enter your location and get a list of restaurants, banks, bars, theaters or other businesses you may want.

Like the services, the phones themselves continue to be refined. The phones now have serious limitations, skeptics say.

Small screens mean users can view only a few lines of text at a time. The largest screens are on NeoPoint phones, used by Sprint, that display 11 lines of text. Most other phones have enough room to display only five to six lines of text.

"Larger screens are part of the solution," said Cliff Raskind, senior analyst at Boston-based market research firm Strategy Analytics.

People accustomed to a PC could be disappointed by the text-only displays, but the phones won't display graphics any time soon.

Data moves at a mere 14,400 bits per second on the phones currently, and adding graphics would slow that to a crawl. In the emerging era of broad-band, consumers are becoming used to data transmission speeds on PCs of up to 500,000 bits per second.

But Web phones are not viewed as replacing PCs, phone carriers say.

They see it more as a "mobile mouse" that will be valuable to an increasingly mobile world of business travelers who work outside the office and to consumers already in the habit of carrying phones.

"Sure, you don't get a 19-inch screen, but you can go anywhere," Mr. Yuzdepski said.

Money to be made

The industry is young, but companies are rushing toward it. The WAP Forum, a global industry group based in Atlanta that promotes the Wireless Application Protocol and the wireless Web market, started in 1997 and has more than 200 members.

"There is not a major Internet company out there that isn't talking about wireless Web," Sprint's Mr. Yuzdepski said.

Internet companies aren't the only ones anxious to roll out the service.

Sprint already has 10 wireless phones on the market that can access the Web.

Nextel won't even begin offering Web phone service until later this year, but it already has three Web phones available.

GTE Wireless in Atlanta will announce a new Web phone service today to expand on the limited service it began last November.

Phone.com, formerly Unwired Planet, seemingly came out of nowhere and now it has the dominant browser in the wireless phone industry. The company claims to have a 95 percent share of the browser market. Browsers, like Internet Explorer and Microsoft Outlook, are gateways to the Web.

"A few years ago, Phone.com was not a player. Now they are a major company," Mr. Yuzdepski said.

Other browsers that could threaten Phone.com are in development. Microsoft has said it will create one, and its version could appear on Ericsson phones next year. Motorola, which uses the Phone.com browser now, is expected to develop its own.

Traditional portals, Internet supersites, to the wired Internet also are trying to carve out space to provide access to content on a wireless Web.

"We think all the carriers will align themselves with a portal," The Strategis Group's Mr. Hamilton said.

Yahoo Inc. provides content for Sprint users.

Microsoft Network will serve as Nextel's portal.

Even more activity is taking place among companies developing applications for Web phones and delivering content to phones.

Among the most successful is Aether Systems Inc., the wildly popular Owings Mills, Md., company that provides Palm Pilot and Web phone users with financial information. Aether Systems went public last Oct. 21, offering 6 million shares of stock at $16 per share. By Feb. 5, the stock's value had vaulted to $182.75 per share. By Thursday, after Aether Systems bought another company, the stock's value had vaulted to $220 per share.

Aether Systems bought Vienna-based Riverbed Technologies Inc., which makes software for wireless devices, for $802.5 million.

Companies like District-based Proteus that translate Internet content to be read on Web phones also are popping up. That's because of the estimated 1 billion pages on the Internet, content from only about 1,000 sites can be accessed by Web phones now, WAP Forum chief executive Scott Goldman said.

"There's a tremendous amount of content being prepared right now," Mr. Goldman said.

Once companies refine their products and services, it's expected the Web phone market will balloon and provide them with enormous revenue.

Strategy Analytics estimates phone carriers like Sprint will earn revenue of $1.9 billion in 2001 from increased data traffic along their networks as a result of Web phone use.

It's that moneymaking potential that ensures U.S. consumers using wireless phones to connect to the Web won't remain behind the rest of the world much longer.

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