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Tech Industry

Where's my all-in-one device?

If handset makers and wireless carriers dally much longer over turning their plans into real products, CNET News.com's Melissa Francis says, that's bad news for the embattled telecom sector.

Check out this super-cool gadget: It's got always-on e-mail and PIM functionality that syncs wirelessly with your office network, even while you're on the road. And it makes calls, too.

There's only one catch: You can't use it in most of the United States.

This is the situation wireless handset manufacturers face today. Names like Nokia and Motorola remain hamstrung by carriers who are building their next-generation wireless networks at a snail's pace. Even as Research In Motion unveiled its new BlackBerry 5810 pager with a built-in cell phone at Spring Comdex, AT&T Wireless representatives quietly admitted that they still weren't ready to support the all-in-one device.

Meanwhile, the situation of handset makers grows more desperate all the time.

Global mobile phone sales dipped below 400 million units in 2001, the first decline in the history of the industry. Device makers think their best bet to turn this trend around is to offer compelling new products that will convince everyone who's already got a cell phone that they can't live without an upgrade.

So what's holding up the carriers?

First, network operators have to decide which standard to adopt.

Who can forget the "old days" of cell phones, when talk time was so expensive, only high-rolling Wall Street traders and Beverly Hills plastic surgeons dialed away without fear of getting blindsided by a huge bill.
Sprint PCS and Verizon Wireless have chosen to follow a migration path to CDMA2000, while AT&T Wireless has opted for W-CDMA, and Cingular Wireless is moving to a standard known as EDGE. For subscribers, the difference shouldn't matter. Experts say the change in experience for callers will be transparent as they roam across various networks, though how prices will differ remains unclear.

As if choosing a standard weren't enough, telecom companies also have to secure precious radio spectrum to make room for more activity on their networks.

The government has promised to hunt down bands of spectrum that could be turned over for commercial use. Industry analysts are betting that many of those targeted, including the Department of Defense, will resist giving up their goods without compensation. And when the FCC identifies blocks of spectrum for 3G service, there's no promise that the auctions for the rights to use them will begin anytime soon.

It all comes down to cash
Of course, both the adoption of a superior network technology and the acquisition of new bandwidth licenses will cost big bucks. Since the tech downturn, the cost and availability of capital have become prohibitive. Financial backers have watched the spectrum wars surpass the $100 billion mark in Europe, and no doubt they're not eager to see such a battle reach our shores. But industry insiders say much of the answer for both the cash-strapped carriers and the stalled handset makers lies in 2.5G, rather than 3G.

"Even with the intermittent step to 2.5G, users will be hooked," says Mike Farese, CEO of WJ Communications. His company manufactures and sells semiconductor products that power wireless networks, giving him a bird's-eye view into what carriers are really doing with their cash.

Farese argues that the amount the carrier collects per average user will go up during the 2.5G phase, especially as customers gobble up more minutes of airtime to take advantage of the new features. That windfall of revenue could finance the building of the 3G networks, not to mention create some relief for handset makers, as consumers buy newfangled gadgets to use the latest services.

I'm the first to pounce when new gadgets hit the market. But until someone can deliver an all-in-one device that works as well and costs as little as my cheapo Verizon phone, I'll resist spending my own money to sign up.
Some believe there's even more hidden market share for carriers to steal. Research firm Forrester Research predicts that wireless carriers could grab almost $9 billion per year in service revenue from their fixed-line competitors by 2006, as people already frustrated with Internet access problems at home turn increasingly toward a mobile solution.

But the key to this scenario will be finding the right price and the right way to package the plans.

Who can forget the "old days" of cell phones, when talk time was so expensive only high-rolling Wall Street traders and Beverly Hills plastic surgeons dialed away without fear of getting blindsided by a huge bill. It wasn't until providers started offering free long-distance and blocks of cheap minutes that wireless handsets started popping up in every briefcase, purse and backpack.

The BlackBerry pager is popular because most of the people you see hammering away at that tiny keyboard aren't paying for the device or the monthly fee. Their companies are footing the bill. Perhaps their consumption would not be so gluttonous if they actually had to cover the cost themselves.

My mother-in-law called me last month to ask where she could buy a phone that would be small and easy to use, let her get her e-mail all the time, and come with a service plan of cheap, bundled airtime. I had to tell her that for now, it doesn't exist. That is precisely the challenge both handset makers and carriers must take on if they have any hope of getting the embattled telecom sector back on its feet.

I'm the first to pounce when new gadgets hit the market. But until someone can deliver an all-in-one device that works as well and costs as little as my cheapo Verizon phone, I'll resist spending my own money to sign up.

And so will the rest of America.