Voice Remains Wireless Focus

Wireless and wireline carriers are eyeing data as the wave to catch and ride into 3G. But wireless carriers still cling to what brought them to the beach in the first place -- voice. Despite the hype surrounding the hypothetical future of data applications, wireless voice applications are still what subscribers in the here and now are clamoring for.

"Wireless is becoming such a part of the American culture -- for businesses and consumers -- that build-out will have to continue in order to keep up with demand," said Ken Hyers, Cahners In-Stat industry analyst. "Already, carriers are engaged in a mad scramble to increase their build-out, increase their coverage -- their customers are demanding it."

Hyers predicted that wireline-like coverage with wireless is something to look for in the next 2 to 3 years.

"We're already seeing some cannibalization of wireline by wireless happening, but it doesn't mean that it's the demise of wireline by any stretch of the imagination," said Perry LaForge, CDMA Development Group executive director. "What we will continue to see is so much new opportunity for wireless that the rates of change will probably be rather dramatic."

Ken Woo, AT&T Wireless spokesperson, points to an increase in quality and a decrease in price that accounts for the continued interest in wireless voice service.

"We're down to 8 cents to 11 cents per minute -- that's very, very competitive with wireline prices," Woo said.

In some cases, wireless service actually costs less than wireline service.

In March, Merrill Lynch analysts compared telephony providers in a local market, with AT&T Wireless as the wireless carrier and GTE as the wireline carrier surveyed in the study.

"AT&T was the least expensive when all the features wireline carriers charge customers for were factored in -- for example conference calling, call forwarding and caller ID," Woo said. "Those same charges are bundled in with wireless pricing."

The Merrill Lynch analysts concluded that capacity does exist for wireline-to-wireless substitution, estimating that wireless capacity would equal approximately 48% of total wireless minutes of use by the year 2000.

The report also concluded that the industry is closer than it's ever been to incremental substitution of landline voice minutes.

"That doesn't mean that people will get rid of their landline phones -- at least, not yet," Woo said. "It just means that they'll start using their wireless phones more."