Smartphone Firms Worry About SecurityBy Reuters | Posted 09-11-2008
U.S. mobile phone companies have begun to see substantial returns from delivering data and not just voice, fueled by greater openness on their networks, industry leaders said on Wednesday.
But top executives of three of the nation's four largest mobile carriers also said they are still worried by consumer demands for unfettered freedom to use untested devices or software applications to connect to their networks.
"You are seeing the bulk of our opportunities really coming out of non-voice activities," Robert Dobson, chairman and president of T-Mobile's USA unit, said during a panel at a wireless industry trade show in San Francisco.
"Unfettered access would be a pretty bad experiment," Dobson said. "There needs to be some stewardship or control."
Industry trade group Cellular Telecommunications Industry Association (CTIA), the organizers of the conference, released new statistics showing that $14.8 billion of U.S. wireless revenue came from non-voice services in the first half of 2008. That's 20 percent of total U.S. wireless service revenue and a 40 percent increase over the first half of 2007, CTIA said.
The rapid growth in data services has been fueled by the success of Apple's iPhone with AT&T and a race by rival carriers such as Verizon and Sprint to offer competing phones and data services with touchscreens and hot software.
Others expressed concern that if there was too much freedom interoperability would suffer.
At the same time, Dobson said networks would be "most productive with stewardship and control."
But consumers have a different opinion.
"Let's take a poll of the audience," said Lowell McAdam, the chief executive and president of Verizon Wireless. "Would any of you like to put any device and any application on any network?"
McAdam was caught off guard as the audience erupted into cheers, applause and a significant number raised their hands.
"I think we have to be careful to not all run to one side of the ship," he said, and then painted a picture of a "Wild West" frontier with unbridled open access.
Consumers have become accustomed to phones that are essentially very expensive computers for which they pay little, McAdam said. And he said customers count on the option for "when things go wrong, to walk into a T-Mobile store, a Sprint store, a Verizon Wireless store, an AT&T store."
But Verizon's chief executive said that the freedom to hook up devices willy-nilly would mean an end to that.
"In an open environment that's going to change. You're going to have to pay more for the devices, just like the PC world. When an application crashes on your Dell laptop you don't call your cable modem provider," McAdam explained.
The picture he painted describes the situation in some countries in western Europe, where customers go to stores and purchase phones that are never "locked" to one provider, but can easily transfer from network to another. Customers who need support call their wireless companies, which compete head-to-head through price and service for their business.
Josh Silverman, chief executive of Skype, the Web-based telephone calling unit that is the world's largest Internet phone carrier, said he was skeptical about how open conventional U.S. mobile phone operators can be.
"I'm not speaking (of) Verizon specifically, but we've certainly seen from carriers that they often say one thing and in practice do something else," he told Reuters in an interview on Tuesday.
The Skype executive argued that consumers should be able to pick whatever combination of networks or devices they like, along the lines of the computer and Internet industries.