Lessons in Wireless Data

With less than 3 million subscribers today, wireless data never has taken off like the industry predicted it would. Current numbers point to a dud, but data does have potential.

According to Killen & Associates, wireless Internet applications have the potential of reaching $37.5 billion in revenues by the year 2002. According to the Yankee Group, the wireless data market can reach 21.3 million users by 2002.

So what is the problem? You can blame it on standards and misunderstanding among consumers, but carriers and analysts say it is all about marketing. In fact, carriers admit they are not doing an adequate job of promoting data.

DATA'S NOT DYING According to Brad Stevens, AT&T Wireless Data division spokesperson, more than 1 million people are using wireless data applications today. However, they are not always ideal solutions. People who are using laptops or portable devices for remote access are working from a corporate database. Doing that wirelessly is expensive and complex, and companies have been reluctant to make a substantial investment in it.

Bill Lenahan, BellSouth Wireless Data president & CEO, said one of the reasons people assume data is not growing is that a lot of cellular carriers have stopped deploying CDPD and have taken back some of their data resources because they don't have the experience or the expertise to provide these solutions.

"It's basic economics," he said. "BellSouth has a huge cellular business, but they have not deployed wireless data or CDPD in their 9-state area because they don't want to dedicate any voice channels to data that they can sell voice traffic on."

But many carriers now are realizing that instead of giving up on data, they need to give it more attention. For example, Lenahan said BellSouth is investing significantly in its network, including a total software update, and doubling its base stations to provide full 2-way communications for data users at the same level as 1-way data coverage. The carrier is rolling out 515 new base stations this year and plans to add more within the next three years.

"That's a very exciting move for us -- we will have the broadest geographic and in-building penetration of any carrier out there for wireless data," Lenahan said.

BellSouth also has increased the sensitivity of its base stations to 6dB so its in-building penetration and geographic coverage have improved dramatically, making it easier to get a signal and stay connected to the network. The carrier's data network is totally digital, backward-compatible and software-based.

"(Carriers) realize it is strategic for them to offer data services as a differentiator, with competition increasing to as many as six carriers in some markets," said Roberta Wiggins, the Yankee Group director of wireless mobile communications. "Data offers the opportunity to extend the relationship with the customer and reduce customer churn."

Stevens said the data market is growing, but its progress has been slow.

"Like any nascent market, we're still taking baby steps, and at some point it's going to explode," he said. "The Internet has helped. Three or four years ago when we started the wireless data business, it was the realm of academicians and the government."

CDPD efforts also have encouraged the growth of wireless data. AT&T Wireless is part of a nationwide interconnection of CDPD carriers serving 100 markets, and those markets together serve almost 50 million people.

"CDPD is one component of wireless data that will encompass a variety of wireless options," Stevens said. "There are a lot of different approaches to wireless data that a company can choose from, and CDPD definitely has some benefits."

STANDARD STATIC & PROTOCOL PITFALLS Konny Zsigo, Zsigo Wireless Data Consultants president, said lack of industry standards is the biggest reason the wireless data market has remained virtually untapped. He said the lack of standards means no one technology has become dominant, and that perpetuates a "wait and see" attitude among customers as well as software developers.

"Developers are scared to commit their resources to an unproven market, and customers are scared to commit their dollars to an unproven technology," he added. "It's a circle, with no immediate end in sight. The digital cellular airlink wars (GSM vs. TDMA vs. CDMA) do very little to bring about a market consensus."

And that is too bad, Zsigo said, because the potential for the wireless data market could double the revenues of the existing cellular/PCS industry across the board, and do so at a 70% annual growth rate.

According to Zsigo, only one standard is needed -- Internet protocol (IP). He said every wireless data network should support IP connectivity, and carriers should stop fighting over proprietary interfaces and middleware requirements.

"The sooner we stop talking about new standards and new protocols, the sooner the computer industry will take us seriously," Zsigo said.

Bill Davidson, Bell Atlantic Mobile vice president of wireless data marketing and sales, agreed the industry has spent too much time debating standards rather than worrying about what the customer wants.

"Wireless IP is definitely becoming the predominant protocol on which to send wireless data," he said. "Whether that is over CDMA or CDPD, I don't think it matters, and if I don't think it does, the customer couldn't care less."

Is the end to the standards war in sight? Although there is movement toward standardization, Wiggins said there will continue to be multiple networks and protocols to fit different application requirements and user needs.

MARKETING DATA Regardless of standards and protocol problems, the explosion of the Internet and the convergence of the computing and communications industries have created new opportunities for marketing-savvy carriers.

According to Zsigo, carriers are rethinking their strategies.

"The term 'wireless data' is dying with all those unfulfilled promises, missed expectations and companies out of business," he said. "Rename it, and everyone wins. When carriers stop using the term 'wireless data,' the industry will have its first chance to succeed."

Building a market for wireless data has eluded most carriers. The key starts with using the correct terms. For example, GTE Wireless markets its data services as a "business solution" rather than as "wireless data" to emphasize that data is a total solution for business, not an ancillary service.

Another mistake some carriers have made is dropping prices to open up the market. In fact, carriers dropped service prices by 50% last year, according to the Yankee Group, but did not see a corresponding increase in subscribers.

"I don't think price is the issue right now," Davidson said. "You could drop the price, and I don't know how much difference you're going to see in a run rate. Our strategy has been, rather than just roll out a rate plan and cut the cost on that plan, to come up with specific products and services."

According to Davidson, instead of dropping prices, carriers need to focus on marketing data. They need to create awareness that these products and services exist and are much easier to use than five or six years ago. Education will open markets and let people know how, where and when they can use data and how much it costs.

"We (the industry) seem to be caught in a catch-22 ... people aren't aware of our products and services," Davidson said. "We're not putting the marketing horsepower behind it that we did when we built the voice business because people aren't running to this technology in millions of units right now."

Davidson said carriers should use voice as a model for data. Carriers should look at how voice was funded and marketed, and consider the expectations they had for when the business would generate a return.

Wireless data isn't voice mail or an enhanced service. It's a whole business with its own network overlay to cellular. Carriers need to be willing to wait for returns and make the same investment they did with voice, he said.

"I think we all need to get a good customer focus and agree on where we're going to focus our efforts and where we can be successful in the short term, " Davidson said.

Efforts are improving, Davidson said.

"(Marketing) has always been critical," he said, "but we're finally figuring out how to crack the code on it, and that is to focus and get good at a few things, market them the way we did in the voice business and partner with people who can help us bring products and services to the marketplace," he added.

AT&T's Stevens said carriers are in a good position to help steer the data market.

"Now we are a combination cheerleader, vendor and network supplier," he said. "We continue to look for ways to bring together all the different pieces so our customers can easily implement wireless data solutions."

For example, with PocketNet, AT&T brought together the software developer, handset manufacturer, Internet service provider and Internet content provider, and combined all of that into a service equation it could offer customers.

Sterens said carriers need to look at what is going on in the marketplace, who is doing a good job of integrating solutions and who is providing value-added services in certain applications.

BellSouth's Lenahan said carriers should market data services in several ways.

"We have to make (data) so simple and so seamless to the customer that they're not even thinking about buying wireless data; they're buying a solution to a business problem," he said.

According to Lenahan, users are now figuring out how to implement wireless data solutions and when to do it, and they're budgeting for those solutions.

Data is a fast-growing segment and will get faster as new devices are introduced at the right price and as carriers provide the right coverage -- pervasive coverage, both geographically and in-building -- that will make it easier to implement solutions, he said.

SELLING DATA Until recently, wireless data was essentially a niche market largely confined to vertical applications within large companies. For example, Federal Express, IBM and UPS built private wireless data networks to allow their field service personnel to operate more efficiently.

Davidson said Bell Atlantic Mobile, as well as the rest of the industry, has focused mainly on specific vertical applications, such as public safety, field service, transportation, insurance and especially utilities.

"Being able to download service calls and dispatch jobs in real time cuts an extreme amount of cost out of their [utility] business," Davidson added, "and with that industry headed toward deregulation, the smart ones are preparing for it by driving as much cost as possible out of their business."

Although the biggest applications for wireless data have been vertical, Lenahan said BellSouth Wireless Data is targeting emerging segments by beefing up its applications, such as interactive paging/1-way paging, mobile devices/wireless connection to information databases, and the remote access of information.

In the short term, the potential market still lies in vertical niches, but those verticals are allowing for more selling opportunities, Davidson said. Point-of-sale is an easy-to-sell example where a merchant can take a credit card payment over a wireless device.

"We're not so much selling the mobility today," he said, "but the fact that the wireless account enables a credit-card transaction to take place four to five times faster than a dial-up line, it is more secure, and it has more flexibility."

According to Davidson, when it first began, the data industry tried to take every potential situation and solve them all, rather than concentrating on two or three things that it could do well.

"The potential market is huge if you pick the right products and you concentrate on just a few," he added.

Some carriers are growing sales teams and shifting focus from data salespeople to dedicated sales divisions. At GTE, for example, 600 salespeople nationwide now sell data solutions, which were previously sold on a limited basis by a 40-person sales team. Davidson said Bell Atlantic Mobile's data sales teams cover six regions. Regional teams include reps, a data director, salespeople and systems engineers. Two data divisions cover field service applications and retail sales, respectively. There is a team that focuses on vertical customers who require significant pre- and post-sales support from systems engineers and the network department. The second sales group is the wireless retail solutions group focused on moving point-of-sale into the marketplace.

"The key is we're going to add -- and are in the process of doing so -- a significant amount of indirect distribution, which (does not add) sales heads, (but) definitely adds distribution capacity," Davidson said.

AT&T's 10,000-member sales force sells wireless voice and data services as well.

AT&T recently re-organized its data sales teams. Sales teams now report to different units, a sign that data is becoming a mainstream part of AT&T's business, Stevens said. According to Stevens, AT&T's wireless sales force has grown, and it has increased its commitment to wireless data over the past few years. Training tools are available, and the sales force has access to regional consultants who have been selling wireless data for several years.

Lenahan said BellSouth has a direct sales force specialized for large accounts and technical resources that are experts in implementing wireless data solutions. The carrier also has applications-provider partners and people who resell its services.

According to Stevens, there are obstacles to selling data. For example, it is expensive and complex, and its distribution channels are fairly new.

"Wireless data is an interesting market because there is no single entity that can conceive of, create, sell and support an entire solution," he said. "There are a variety of different companies involved in bringing a solution to a customer; that creates a degree of complexity that, as an industry, we still need to overcome in a way that uses minimum complexity and acceptable cost."

Wireless data will remain critical for carriers. Because data is important as carriers differentiate themselves, they must continue working through the complexities of data and building up their data sales teams.

"You can add a lot of value to a customer's investment in your wireless service by giving them access to data that's important to them," Stevens said. "It will be a crucial component of our overall service that we provide to a customer going forward."

The Yankee Group's 10 recommendations for marketing data successfully:

1. Make sure you are working with the right person who can understand how this technology can benefit him. The traditional contact in the wireless world is not the right contact for data. Articulating the benefits and focusing on the right customer contact will shorten the sales cycle.

2. Ask aggressive questions. Why do you want wireless data? What do you expect to get out of it? What is the key benefit? Who in your organization is sponsoring the technology adoption? Do you have the budget? Positive responses will indicate that the lead is worth pursuing.

3. Provide customer account references. The best person a prospective customer can talk to is an existing customer who has implemented a data solution successfully.

4. Promote team selling. Bringing together the right resources of technical expertise and good account-management skills is fundamental. An account manager should own the account; you don't want one representative selling voice, another data. But, you do need a data technical resource to gain credibility.

5. Align with the right partners. Carriers do not have the capability to install solutions themselves. They need partners who can supply pieces of the solutions and have the right customer contacts.

6. Partner with systems integrators. Wireline system integrators will begin selling wireless data as part of a total solution in 1998. Carriers need to work with them. Align with systems integrators that are working on an enterprise basis.

7. Value-added resellers present an opportunity for mobile data growth. Resellers can package airtime with software and end-user devices, provide ongoing support services, and determine billing. Wireless resellers can provide wireless data service on a subscription basis as an interim solution for large corporations or as a long-term, low-risk solution for smaller businesses.

8. Establish predictable pricing schemes. Most users do not understand kilobytes and assume they are expensive. Flat-rate pricing (with 6-month contract reviews) will enable them to predict the cost of wireless data. Voice and data usage should be bundled creatively with volume discounts.

9. Keep focused. New competitors, diverse market opportunities and emerging broader product portfolios are all sources of distraction. Build a track record by going after customers with similar needs and identified benefits from adopting wireless data.

10. Capture customer mind share. The history of wireless data has created many skeptics. To instill confidence, articulate the direction you are going with wireless, and get them to believe in it.

Bill Lenahan, BellSouth Wireless Data president & CEO, said internetworking -- two different wireless data networks on different frequencies that come together and provide one unified service -- has been beneficial. BellSouth Wireless Data began interconnecting the network seamlessly with satellite this year. It rolled out a 100% packet data solution to several customers. Customers will use the terrestrial network when they're in BellSouth's coverage area and switch automatically to satellite when they're not.

"We don't think that Mobitex (BellSouth's terrestrial network) solves everyone's problems," Lenahan said, "so we've now interconnected with circuit-switched cellular, with the paging networks, with the Internet and with satellite."

BellSouth also is installing algorithms to enable intelligent switching and least-cost routing, so customers don't need a service technician to decide whether to use the terrestrial network or a satellite.

According to Konny Zsigo, Zsigo Wireless Data Consultants president, wireless internetworking is a powerful new trend.

Roberta Wiggins, the Yankee Group director of wireless mobile communications, agreed that internetworking will become more common as carriers promise wireless data coverage anywhere and anytime.

"It would be cost prohibitive and technologically impossible for one network to meet this need," she said. "Therefore, with multiple networks offering commercial service, it makes more sense for them to interconnect than try to provide coverage on a single network to meet diverse user needs."