There is little doubt that the future of telecom lies in wireless. Just ask Randall Stephenson, CEO of AT&T. “Wireless is the core of the business now,” Stephenson told USA Today in a recent article. This future reality does not mean the death of wireline telephony. Wireline circuits will simply migrate to IP enabled broadband pipes which deliver content of all types, voice included. But wireless connectivity will soon become the status quo. This ongoing migration to wireless ubiquity creates huge operational challenges and perhaps, glorious business opportunities. Those potential opportunities are not going unnoticed by non traditional wireless service providers, who are increasingly eyeing the ownership of wireless spectrum as a hedge for the future. We often forget that the cable industry is sitting on a wide swath of wireless spectrum (unrelated to their Pivot Wireless joint venture) gained from the last AWS spectrum auction. The upcoming 700 Mhz auction has the rumor mill ablaze, with Google making much noise about their interest. The latest potential competitor to the party now is Apple, who is rumored to be eyeing 700 Mhz spectrum. EBay/Skype are also rumored to be considering adding spectrum assets to their fold. The key word in all of this is rumor. We won’t know the reality of these interests until the scheduled January 2008 auction. But it’s intriguing to speculate on the potential of these technology innovators stirring up an already intense competitive environment.
For starters, companies like Apple, Google, and EBay have very loyal followings. Apple has already demonstrated its power with wireless by selling one million iPhones in record time (74 days to be exact). iPhone sales surpassed all smartphone competitors’ sales in the month of June, Blackberry included. The iPhone is now the fastest selling consumer electronic device in history, even ahead of the venerable DVD player. If given the opportunity, could Apple translate that loyal following into a wireless service offering, at the expense of traditional wireless service providers? The rumors about a pending launch of a Google phone, or gPhone, have reached a fevered pace. Certainly a company that has managed to transform their brand into a verb (“google” it) can also leverage it into a formidable wireless competitor, right? And lastly, EBay, who would love the chance to leverage their Skype subsidiary’s high eight figure subscriber base (not to mention their own passionate online auctioneers) into loyal wireless subscribers. Add to these intriguing scenarios, the never ending quest for substantial growth in order to meet Wall Street expectations, and the thought of these publicly traded companies eyeing wireless service as a growth engine begins to make more sense.
These scenarios are fun to talk about, but far from today’s reality. The idea of launching and maintaining a national wireless network is pretty sobering. The shear cost withstanding, does building and operating such a network really make sense for companies like Apple, Google, and/or EBay? The phrase “core competency” has never been more apropos. But stranger things have happened. Who would have guessed 10 years ago that Cox would have higher phone service customer satisfaction ratings than AT&T. Or that Virgin, a British based media company could become arguably the most successful wireless MVNO in the U.S., not to mention successfully operate an airline. History does suggest that on rare occasions, a smart, well financed company with superior brand recognition (of which all three of the companies in question qualify) can reach beyond its core competency and prosper. Will that occasion come true again, with either Google, Apple, or EBay becoming a feared competitor in the wireless arena? Stay tuned.