With more than a billion mobile phones expected to be in use worldwide within four to six years, it is not surprising that analysts are anticipating explosive growth in the hand-held device and phone markets.
The GartnerGroup, a leading research firm on technology issues, sees wireless phones becoming the most common client device by 2005.
The US has been slow to catch on to mobile phones, primarily because the cost of local calls here is much cheaper than in Europe. The wireless industry has also struggled to resolve the differences among standards like GSM (Global System for Mobile Communications), TDMA (Time Division Multiple Access) and CDMA (Code Division Multiple Access).
But now, this country's 300 wireless telecommunications companies are eager for phone users to catch on to the latest craze since the Internet.
Wireless carriers such as AT&T Wireless, Sprint PCS and Bell Atlantic are encouraging new users to join up for wireless service by offering flat monthly rates for up to 1,500 minutes of mobile phone time. There are about 77 million mobile phone users in the US with about 37,500 people signing up for wireless phone service each day. Major metropolitan centres such as New York, Los Angeles and Seattle have the highest mobile phone usage in the country.
However, the US has a long way to go compared, for instance, to Finland. More than 60 per cent of Finland's population of five million has mobile phones. This is said to be the highest mobile phone penetration in the world. In contrast, the equivalent figure in the US is 20 per cent.
Many US mobile phone users who have recently signed up in response to major advertising campaigns by the phone companies complain of network-busy signals or calls that have been dropped. Part of the problem is that there aren't enough cell sites to handle the increased traffic. A wireless phone works by transmitting and receiving radio signals to and from the nearest cell site. As a user travels from one cell to the next, the system hands on the signal so there should be uninterrupted service.
The main carriers are spending billions of dollars to increase the number of cell sites to improve service. The Cellular Telecommunications Industry Association estimates that as of December 1998, there were more than 65,000 cell sites in the US, a 28 per cent increase over the previous year. It estimates that 7075 per cent of the land area of the US has wireless coverage and that there is greater coverage for analog systems than for digital.
The new generation of digital phones now allows for limited Web access, e-mail, built-in address books and calendars. Companies such as Motorola, Nextel and Qualcomm are coming out with a steady stream of Internet-ready phones.
Since last October, Fidelity Investments has been offering Instant Broker to let customers get investment information by pager, e-mail or personal digital assistants. W-Trade Technologies offers Internet trading to about 12 securities firms over mobile phones.
While the US securities industry is well out in front, it seems that banks are not too far behind.
Bank of America, Citigroup and Bank of Montreal have all bought into a Toronto company's vision that sales of wireless communications devices will explode in the next three years.
Bank of America announced in July that it would begin testing software allowing users to conduct personalised banking, brokerage and electronic commerce over wireless devices such as mobile phones, pagers and palm computers.
Nothing is more likely to inspire customer loyalty than letting customers look at stock quotes from wherever they want, said Mr Greg Wolfond, founder and chief executive officer of 724 Solutions. He said 724 Solutions wants to reach 200 million customers through financial institutions. It is also developing an electronic wallet so consumers can buy goods and services from their mobile phones.
Mr Wolfond was bullish about wireless because when 20 per cent of the population in European markets and Asia-Pacific began to use the phones, wireless communication escalated. He sees the same happening in the US.
The financial services sector is taking such an optimistic view of wireless means of communication that last month, Citigroup's advanced technology unit, e-Citi and the Helsinki telecommunications company, Sonera, took a 40 per cent stake in 724 Solutions.
The companies declined to say how the holding was divided. Sonera invested $25 million (€24.05 million), a Sonera senior vice-president, Mr Harri Vatanen, confirmed. But e-Citi was less forthcoming. Mr Alan Young, a vice-president of access devices and distribution technologies, said only that it had injected "enough money to roll this out on an accelerated basis and to cut down the cost of delivery on a global scale".
724 Solutions said it would use a security program from Sonera to deliver Citigroup's services worldwide over such devices as mobile phones, smart phones, PDAs, palm computers and digital televisions. Citigroup's customers could then gain access to their bank accounts, pay bills, transfer funds and trade securities. Mr Vatanen sees great potential in the US in the next five years because of its high Internet penetration.
