Wireless upside?

Reports about the FCC’s ruling on unbundled network element re-regulation last week mostly focused on the blistering political defeat dealt to FCC Chairman Michael Powell and the Bell companies’ assertion that the ruling does little to stimulate increased network investment. But the Bells’ disappointment could be good news for network technology and applications developers in the wireless sector.

Despite the unbundling relief the FCC ruling granted to incumbent carriers on the construction of new fiber facilities, the Bell companies are still expressing reluctance to further invest in their existing networks if it means they have to unbundle them and share them with competitors. All the Bells, however, have significant wireless holdings, either on their own or in partnership with other carriers. If they won’t invest more in their existing copper networks, and they’re still mum about investment in new fiber facilities, will they at least start to step up their spending on the wireless side?

It’s too early to say, although Verizon Communications CEO Ivan Seidenberg did tell attendees of a Merrill Lynch Global Communications Conference this week that the wireless side of Verizon’s business will concentrate on putting more data applications on its network--including multimedia messaging in the form of wireless imaging, which will catch Verizon Wireless up to many of its mobile competitors. The fact that the CEO of Verizon directly addressed wireless issues--even as he called the UNE ruling legally and strategically flawed--could be a sign that at least one Bell company’s attention could start to shift to a more wireless direction as a result of last week’s FCC action.

Whether that’s the beginning of a trend remains to be seen, but we’ll be watching the Bells carefully for further signs--including the addition of data applications, more bundled wireline/wireless offerings, and further efforts to upgrade the speed and capabilities of their wireless networks--in the coming months.

Contact me at jmeyers@primediabusiness.com.