CHUTES AND LADDERS

About two years ago I optimistically wrote that we were at the bottom of the telecommunications equity roller coaster, and invited everyone to hop back on for the next wild ride. I wasn't far off, but the last two years felt more like emerging from a chute into a deep, dry well than the beginning of an exciting upswing. While we were in the well, however, advances in wireless and IP technologies built the ladder for the way out.

According to FCC data, broadband IP connectivity serves 23.5 million homes in North America and is becoming a market requirement, not a luxury. Networks and devices based on session initiation protocol, or SIP, have begun to deliver on the promise of lower costs and valuable new services. In-Stat MDR's numbers say more than 75 million individuals walk around with IP addressable phones, and for the first time in four years, mobile infrastructure spending is going slowly up rather than quickly down. Wireless connectivity standards, such as Wi-Fi and WiMax, and liberal spectrum policy have driven capability up and costs down.

Wireless technology used to succeed because it was mobile and, at times, worth the required cost premium. Now, while mobility is still a big driver, wireless is succeeding because it is better, and sometimes less expensive, than fixed. Wireless access is bringing voice and broadband data not only to your local coffee shop, but to underserved markets all over the world. Mobile phones, with a push from Moore's Law, can store your contact list, keep your calendar, e-mail anyone, play music, entertain you with games, take and send pictures, and — oh, by the way — let you make a phone call. Try that at home with a phone attached to the wall.

Carriers, both fixed and mobile, are now faced with a battle of epic proportions for customer ownership and retention. The ability to hide behind regulatory shields has long been absent on the mobile front and has all but disappeared for wireline carriers. Now, liberal spectrum policy and wireless technology are removing the fences that used to keep fixed and mobile operators in their own backyards.

So who's going to win? The mobile operators that incorporate Wi-Fi/WiMax into their networks will have a big advantage. After all, mobile operators are always with their customers. However, those fixed operators that aggressively deploy SIP network elements to provide enhanced data services and embrace the new Wi-Fi and portable WiMax standards to follow their customers will be tough competitors.

It's not a roller coaster anymore — it's a long, steady climb. Wireless technology will make the winners, and both fixed and mobile look an awful lot alike.

DOSSIER TOM HUSEBY

Occupation: Managing Partner, SeaPoint Ventures

Location: Bellevue, Wash.

Current reading: The Aubrey/Maturin series by Patrick O'Brian; “Charlie Wilson's War” by George Crile, “Globalization and Its Discontents” by Joseph E. Stiglitz

Hobbies: Family, work and sailboat racing

Favorite Web site: SeaPoint portfolio companies and their competitors

Next project: Building ladders