Originally created 12/23/01

Cell-phone service providers gamble big money



Marc Saulsbury considers himself an "early adapter" of next-generation wireless devices, but he's sitting on the technological fence when it comes to trading in his cell phone for one that can send and receive e-mail, photos and other data at high speeds.

Technophiles such as Saulsbury across the country are being tempted by phones that can, or soon will be able to, deliver e-mail and even full-fledged Web-browsing services.

But wireless providers are facing off with two technologies each side says will be the gold standard. As the companies race to roll out expensive upgrades to their national networks in the next few months, they're making billion-dollar bets that the next generation of cellular phone service will be based on either GSM (Global System for Communications) or CDMA (Code Division Multiple Access).

So far, Saulsbury, a 27-year-old student at the University of North Carolina's Kenan-Flagler Business School and co-founder of the RTP Wireless Initiative, a networking group for wireless businesses and enthusiasts, isn't willing to wager which one will rise to the top.

"I'm not convinced the technology is there yet - I want to give it a little more time," he said.

It's a common sentiment, despite the national cell phone craze and hype over new services for mobile gadgets. Nonetheless, providers on both sides of the GSM-CDMA divide are pushing ahead with plans to complete third-generation, or 3G, wireless data networks, which supporters promise will move data more than 10 times as fast as current devices.

Wireless innovation has been delayed for years in the United States as different service providers used a myriad of competing technologies.

Even with the choices narrowed to two standards, the technologies remain confusing for the average consumer still waiting for the ability to do things already available in Korea and Japan, such as sharing digital photos on the screen of a mobile phone.

That adds to fears that the high-octane device a consumer buys today will become obsolete tomorrow, the wireless equivalent of a Betamax videotape player.

At this point, it's hard to say which technology, if either, faces extinction. Even those who sell cell phones for a living admit it's a gamble to make a decision too soon.

"You do not want to buy a phone today with the anticipation of" being able to send and receive high-speed data files, said Don Scuotto, who owns Carolina Telecom in Cary, N.C. "We really steer our customers away from two-year contracts, because the technology and services are changing so rapidly."

Consumers won't see much difference today between the service of a GSM network, which is widely used around the globe, and CDMA, a technology that has grown up in the United States. The differences are mostly technical - the way a phone call or e-mail message is sent and received by a phone or handheld wireless device.

But as the large wireless providers roll out advanced services using CDMA and GSM during the next few years, each standard will offer distinct advantages and drawbacks. Big companies backing one technology or the other claim theirs will offer the fastest and cheapest service - usually while bashing the rival standard.

Cingular, AT&T Wireless and VoiceStream are using GSM, a technology that divides voice and data traffic into time segments to accommodate a large number of users. GSM is used all over the world - the phones can operate in Europe and parts of Asia, as well as domestically. The wide usage of GSM technology could mean cheaper phones when the next generation of the technology rolls out.

Sprint, Verizon and most other large providers in this country are betting on CDMA, which divides traffic into segments of code, instead of time. That technology will offer better high-speed data services than GSM, analysts say. One ultimate goal for mobile technology is real-time video service on handheld devices, which requires high-speed connections.

"It's going to be interesting to see what happens with high-data users over the next year - are they going to stick with (advanced GSM) because it's a global standard, or switch to (advanced CDMA) because it's better technology?" said Christine Loredo, an analyst with the Strategis Group, a consulting firm in Washington.

Current cell phones will continue to work for the next two or three years, but users will have to buy new ones to use the next generation of data services. Despite all the pie-in-the-sky claims of the big companies, some things won't get any easier for consumers. If you want to switch providers, for example, you'll still have to buy a new handset.

For now, there is limited availability for the next-generation phones. One model that will become available in January - the Kyocera 2235 - will work on Verizon and other networks. Cingular's advanced digital services require a Motorola T193 phone, which now sells for $149 on the Motorola Web site.

It's not clear yet what services people will really want to use - and to pay for. Though wireless providers are hoping to get customers to pay more for their wireless devices with additional services, the top concerns for most consumers are price and coverage area.