Big 4 Wake Up

Have U.S. wireless carriers finally found a clue about where their future lies?

In the wake of the big news of last week -- Sprint Nextel Corp. (NYSE: S) spending $3 billion over the next few years to build a WiMax network for high-speed voice and data applications -- wireless analyst and consultant Chetan Sharma has assembled figures that demonstrate that such a network will likely be highly profitable. (See Sprint Goes WiMax.)

Wireless data revenue for the Big Four American carriers (Cingular Wireless , Verizon Wireless , Sprint, and T-Mobile USA ) rose almost 75 percent in the first six months of 2006 over the same period last year, to $6.3 billion. The total for this year should reach $15 billion, Sharma says, up from $8.6 billion in 2005. (Even with this jump, none of the U.S. carriers rank in the top 3 worldwide for wireless data revenue.)

I've written before in this space that the U.S. carriers are fixated on consumer voice and novelty applications like mobile gaming, at the expense of the high-margin, high-growth (but less sexy) market for enterprise wireless data. A finer-grained examination of Sharma's figures shows this emphasis to be increasingly out of whack. Average revenue per user (ARPU), the key service provider metric, continues to decline for voice users -- it's down 8 percent from last year -- while ARPU for data has risen by a whopping 48 percent.

Not all of this, of course, represents growth on the enterprise side of the market -- music- and video-mad consumers are using more data services, too -- but it's a clear indication that the business market still holds pent-up demand looking for attractive services at reasonable prices.

And the wireless carriers are putting serious money into the next-generation networks that will carry those services. What's interesting, moreover, is that each of the top three carriers has chosen a different technology to underlie their networks.

Sprint, of course, has gone with WiMax (a no-brainer since, along with Clearwire, Sprint owns a preponderant chunk of the 2.5GHz spectrum that will likely carry WiMax in this country).

Verizon, which just racked up $1 billion in quarterly data revenues for the first time, is spending heavily to upgrade its next-generation EV-DO network to "Revision A," which will offer more capacity to enable advanced services including voice-over-IP, video, and video telephony.

Cingular, the No. 1 wireless carrier in the U.S. market, is turbo-charging its third-generation Universal Mobile Telecommunications System cellular network with a technology called High-Speed Downlink Packet Access.

For IT professionals who have heard for years now about the coming world of ubiquitous high-speed wireless networking, these are all welcome signs. Now, the market gets to decide which networking technology will win out -- or whether all three will thrive. Let the races begin.

— Richard Martin, Senior Editor, Unstrung