Cell phone popularity is phenomenal, with nearly 230 million now operating in the United States -- far more than the 125 million households estimated to have wired lines.
In the coming year look for plenty of innovation in the hot wireless sector. As wired connections dwindle, even industry mainstays AT&T Inc. and Verizon Communications Inc. would be troubled without their profitable wireless operations.
But the wireless world is changing. Most people now have cell phones, so wireless carriers must pay more attention to keeping their current customers happy.
Thompson's Towerstream service exploits new wireless technologies to offer small and medium-size businesses a less expensive alternative to a wired broadband connection. Reliability and wireless need not be mutually exclusive, he believes.
"We provide a service-level agreement to our customer that's as good as any wired phone carrier's," said Thompson. "We're doing it through brute force."
In Chicago, Towerstream sends wireless signals from towers atop the Aon Center and the John Hancock Center so if one signal falters, the other one will deliver and the service continues without interruption.
It's one step that wireless firms are taking to bolster their image as purveying reliable service as well as the latest gee-whiz technology. Indeed, some analysts say that next year will mark a turning point for wireless communications that carriers will ignore at their peril.
The "land grab" era of wireless communications where carriers grew market share above all else is over, said Brian Corey, telecom practice leader at the Katzenbach Partners consultancy.
"The winners will be those companies who win customer loyalty by treating customers well," Corey said. "Real change is necessary from the customer perspective."
Up to now, Wall Street has rewarded cell companies that had the best growth, but as the U.S. market approaches saturation, that will change, Corey said.
"The market is going to focus more on customer loyalty and how a carrier manages customer loss rather than just reporting customer gain," he said.
Wireless carriers face disruptive new technologies such as Internet telephony and WiMax, a long-range high-speed data wireless technology that is just now beginning to get products to markets, Corey said.
"WiMax is a huge threat," he said. "I don't think 2007 is the year where this will take off, but certainly WiMax gaining traction in the future is inevitable."
Matt Tooley, chief technology officer at CableMatris Technologies Inc. of Des Plaines, Ill., looks for WiMax to begin gaining significant market share in 2008.
Tooley, whose firm develops software used by carriers to manage their networks, said WiMax equipment will likely follow the path set by Wi-Fi, a short-range wireless broadband technology, in that equipment prices will fall significantly as the gear becomes popular.
While WiMax will first be applied in rural and suburban areas that don't have access to wired broadband, Tooley expects the technology will make inroads into urban markets before long.
AT&T is already using WiMax technology to serve a small Nevada town located some 60 miles from Las Vegas, finding it more economical than wiring the community with digital subscriber line broadband service.
Worldwide, there are about 222,000 WiMax subscribers now, estimates Daryl Schoolar, a senior analyst with the market research firm In-Stat. By the end of 2010, he projects there will be nearly 20 million.
WiMax is the broadband technology chosen by Sprint-Nextel Corp., which is due to launch some service late next year. WiMax also has the financial backing of Motorola Inc. and Intel Corp.
"I don't think you'll see WiMax replicating the mobile cell phone networks," said Schoolar. "The real play will be for services we don't have now, like gaming where the players can hear each other as they compete."
While carriers try to cope with new disruptive technologies, they also face several regulatory ghosts from telecom's past that could have serious consequences for the industry -- both wireless and wired -- in the coming year, said Michael Weaver, a Chicago-based telecom analyst for Fitch Ratings.
Congress and the Federal Communications Commission will consider changes in the way carriers compensate each other for completing phone calls, how the universal service fund that subsidizes rural phone service is financed and whether to forbid Internet service providers from discriminating against content providers -- the so-called Net neutrality issue.
The recent election that gave Democrats control of Congress should have an impact on all these issues, Weaver said.
Weaver also expects the reduction of traditional phone lines replaced by wireless or Internet phone services will continue to accelerate in 2007.
And while telecom has traditionally been all about voice, look for video to command an ever greater role. At least that's Jeff Pulver's view.
Pulver is the telecom pioneer who founded the company that later became Vonage, the Internet telephony operation that now serves more than 2 million customers. Pulver is no longer associated with Vonage; he has started a new venture, Network2, which aggregates video for viewing on the Web.
Internet video created by independent filmmakers and commercial studios will greatly disrupt the broadcast and cable television industries, Pulver said.
"It's inevitable that people will shift their viewing," Pulver said. "They'll watch what they want when and where they want to."
His site features videos that generally run from 30 seconds to six or seven minutes, but some run as long as an hour.
"It's a glimpse of the future," Pulver said. "It's how we'll get our entertainment and information."
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(c) 2006, Chicago Tribune. Distributed by McClatchy-Tribune Information Services. Photo by Dave Winer Creative Commons License Attribution-ShareAlike 2.0
