Year in review: A roller-coaster ride for wireless

The wireless industry had its share of ups and downs in 2008.

The year started off with a bang as the Federal Communications Commission held its most successful wireless spectrum auction ever, raising a record-breaking $19.6 billion for licenses in the 700MHz band of spectrum. The auction, which began January 24, reallocated wireless spectrum that will be freed up when TV broadcasters stop transmitting analog TV signals over the airwaves in February 2009.

Verizon Communications came out the big winner in the auction, snagging nationwide coverage in the C-Block of the 700MHz spectrum auction. But it was pressure from Google's bidding in the C-Block auction that helped push the price of the licenses above the $4.6 billion threshold to ensure that the open-access rule Google had lobbied for would take effect.

After the 700MHz auction, Google joined other tech companies like Microsoft, in lobbying to free broadcast TV spectrum called "white space" for unlicensed use. In May, Google co-founder Larry Page went to Washington, D.C., to drum up support for "white space" spectrum. But TV broadcasters complained that allowing devices to use this spectrum would cause interference. Despite opposition, the FCC unanimously voted in November to approve rules that would open up the spectrum for unlicensed use.

Credit: Sarah Tew/CNET Networks

In September, T-Mobile and HTC launched the
G1, the first cell phone to use Google's
Android operating system.

It was also a big year for smartphones, which are now considered the fastest-growing product category in the mobile handset market. In mid-July, Apple introduced the highly anticipated 3G version of the iPhone. With a faster network connection and subsidized $199 price tag for the 8GB model, iPhone 3Gs have been selling like hotcakes. On the heels of the iPhone launch, T-Mobile and HTC launched the world's first Google phone in September. The new G1 is the first cell phone to use Google's Android operating system.

In November, Research In Motion introduced the BlackBerry Storm, a touch-screen phone that uses technology called sure-press that requires users to press down on the screen as if they're pushing a button. The Storm is exclusively sold on Verizon Wireless' network, finally giving the nation's No. 2 wireless carrier a phone to compete against the iPhone sold by AT&T.

Fourth-generation wireless also took its first baby steps in 2008. About six months after Sprint Nextel announced it was combining WiMax assets with Clearwire to build a nationwide 4G wireless network, Sprint launched its first 4G wireless market in Baltimore in October. Other markets, like Philadelphia and Chicago, are soon to follow. The Sprint/Clearwire deal--which has financial backing from Comcast, Time Warner, Google, and Intel, finally closed in November--creating the new company called Clearwire.

Also in 2008, Verizon announced its $28.1 billion bid to buy regional operator Alltel, which when complete will make Verizon Wireless the largest wireless operator in the country, unseating current title holder AT&T.

Cell phone subscribers made some headway in their legal battles with wireless operators over early termination fees. In July, Verizon Wireless agreed to pay $21 million to settle a lawsuit filed by customers who claimed the company's early termination fees are excessive and unfair. Later that month, a judge in Alameda County, Calif., ruled that the fees Sprint charges customers for ditching service early were illegal. Sprint is appealing the decision. But the company has joined the three other major wireless operators in the U.S. that already prorate early termination fees.

While 2008 was filled with several high notes, there were also some low notes. Early in the year, EarthLink, which had championed the citywide Wi-Fi cause, announced it was selling the business.

Citywide Wi-Fi wasn't the only piece of the wireless industry to take a hit in 2008. The weakening U.S. and global economies affected the wireless industry in the third quarter. By November and December, handset manufacturers, including Nokia and RIM, were reporting a slowdown in sales. In early December, AT&T was the first phone company to announce major layoffs. The company said it will shed 4 percent of its workforce, or 12,000 jobs.

Economic troubles are likely to follow the wireless industry into the new year. But there are also likely to be some bright spots, including some cool phones. Word has it that Sony Ericsson is working on a Google Android phone for summer 2009, and HTC, the maker of the G1, will introduce an entire portfolio of Android devices. And there's always a possibility that Apple will come out with a new version of the iPhone midyear to set everyone in a frenzy.