Wireless as a Utility

It has begun. In 1999 I speculated that the wireless industry was going to migrate to a utility by or around 2010. So what are the components of the wireless utility? What does it look like? Most wireless carriers' offering flat rate voice access to nationwide no long distance charges, with a possible charge on tiered data usage. The actual carriers will not actually carry phones. They will offer the service for a nominal contract and better coverage than available in the 90s and even today. Handsets will be sold either directly from the manufacture or, most likely, via retail outlets; similar to how TV's, car stereos and cameras. Therefore carriers would not need to subsidize the handsets and not need to recover that expense with longer term contacts.

So what does that look like to the customer. The average customer will go to a Wal-Mark, Best Buy or specialty retailer to purchase the handset. The handsets will cost about $100 to $200 more for an equivalent phone today. If the phone broke or needed repair, it would be handheld similarly to how the service, repair or warrantee works on a TV you buy from BestBuy or another big box retailer. The consumer will then take the phone into the carrier to have it activated. Most likely, in the long run, this will be on line or over the phone. The need for a retail location would be only as necessary as the retail locations for you home phone, or home gas service.

The effects of this is tiered. For the handset manufacturer, such as Nokia, Motorola, Sanyo etc. the value is put back into the handset. Currently these manufacturers feel that their handsets are not perceived at their accurate worth, because a phone that should have a MSRP of $200 is often sold for free to the customer. So when the phone breaks the customer doesn't feel they should pay the $200 to have it replace it. This cost the manufacturer money. So when the carriers are no longer selling the phones the prices will more accurately reflect the worth of the handset, presenting a more honest view of the phone. The carriers should be able to focus on the network and the billing providing a better business plan for the carrier and better experience for the customer. Carriers should also be able to offer more advanced services with better coverage. Most likely they will give voice away unlimited and charge for the data services. The customer will get more selection on phones and better services and better service prices, but will pay for the better phones and service with higher handset costs.

The utility migration has begun.

Handsets: Steve Jobs power to make the industry sign exclusives on his much demanded iPhone swayed power back toward the handset manufacturer. Google's android and bid on 700 mHz, Verizon and AT&T commitment toward allowing unlocked phones all goes towards taking the phones out the carrier and into the retail and customers hands.

Plans: Just this week, Verizon and AT&T have announced flat rate unlimited nationwide voice plans starting $99.99; along with T-mobiles existing plans and the rumors that SprintNextel will launch a $60 national unlimited plan, moves us closer to the voice part of the utility. Carriers may be realizing that voice is just the commodity and data is the revenue.

So it has begun. Within the next 5 years. We may be using wireless like they do in Europe. For a good view on the future of wireless, look at Finland, Germany, Korea, Saudi Arabia, South Africa. Then you will see the future of the US Wireless Market.