July 27, 1999
Rush Is On in Europe for Wireless Data Services
By EDMUND L. ANDREWS
ELSINKI, Finland -- After 24 years as lead singer for the
Leningrad Cowboys, Finland's most popular home-grown rock band,
Mato Valtonen figured it was time for something new.
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Soile Kallio/Lehtikuva, for The New York Times
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Mato Valtonen saw his fellow Finns' penchant for sending messages on cell phones and founded a business sending jokes and horoscopes. Now he is planning to start a kind of Web site, for a new class of phones.
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Noticing that Finnish teenagers were perpetually tapping out
messages on their cellular phones, Valtonen set up a business last
year that transmits jokes and horoscopes for about 30 cents apiece.
He was soon drawing thousands of requests a day so he added a
half-dozen other quirky services, including a dictionary that
translates words into 10 different languages and wireless chat
rooms that attracted about 7,000 visitors on a recent Friday night.
In the next few months, he plans to start what amounts to a
wireless Internet site, using a new class of phones that have
highly simplified Web browsers. Based on a slimmed-down, text-only
Web format, the site will offer bus schedules, restaurant listings,
stores and games. If all goes as he hopes, people will eventually
make restaurant reservations and hair appointments -- and pay his
company, Wapit Ltd., a few pennies every time they do it.
"We just think up ideas and see whether they catch on,"
Valtonen said. "But I'm convinced that companies will see this as
an important opportunity."
Improbable as it may seem, Valtonen is part of a very serious
rush across Europe into wireless data services that is keeping the
Continent, along with Japan, well ahead of the slower-moving United
States. Teenagers in Italy already use their cell phones to tap out
millions of short messages every day. Germany's top-selling
tabloid, Bild, offers scores of news and sports bulletins through
short messages. Here in Finland, it is possible to tap out an order
for a taxi or a take-out pizza.
And now, with the impending start of wireless Web transmission,
European cellular carriers are gearing up for a huge increase in
the speed and ease of transmitting wireless data. As a result, the
gap could widen further.
Indeed, history may be repeating itself. In the early 1990s,
European wireless companies jumped ahead of their American
counterparts by adopting a single technical standard for digital
cellular. As a result, digital phones with built-in paging and
message functions arrived years earlier in Europe than in the
United States. They also worked anywhere in Europe, long before
American phones worked throughout the United States.
"Europe has always been about one or two years ahead of the
United States in wireless technology, and they still are," said
Herschel Shostek, an industry analyst in Wheaton, Md.
Beginning this fall, cellular phone carriers from Scandinavia
through Germany and down to Italy plan to start the text-only
wireless Web sites for mobile phones. And next year, most European
carriers plan to offer a technology called general packet radio
service, or GPRS, which will allow people with newly equipped
wireless phones to transmit data fast enough to browse the Internet
in full color.
Beyond offering speed, the new service is designed to let
customers stay connected all day long. Many companies plan to
charge only for the data customers send or receive instead of for
each minute they are connected.
European governments are also setting the stage for even faster,
"third generation" wireless networks. Most plan to hand out or
auction off new radio licenses for so-called wideband networks that
will be able to carry videoconferences.
Finland, where wireless phones now outnumber traditional ones,
has already issued its new licenses; Germany, Britain and other
European countries plan to do so next year.
No one, however, is quite sure what kinds of features customers
will actually want.
And the third-generation systems will not be ready in Europe for
at least two years, slightly behind Japan's timetable.
U.S. carriers are pushing wireless data as well. But Americans,
who first got digital phones only a few years ago, have barely
begun to use them for two-way data transfer and messaging.
Just as the absence of a common standard delayed the ability of
Americans to use their phones anywhere in the country, it is
slowing down the rollout of more-advanced services. AT&T and other
wireless carriers are pushing a third-generation technology called
EDGE. Other big players, including Sprint and Bell Atlantic, are
pushing a rival approach called wideband CDMA, or code division
multiple access.
The conflicting standards "have slowed things down
considerably," said Mark Lowenstein, an analyst at the Yankee
Group, a research firm in Boston.
"A lot of the technology is coming out of Silicon Valley, but
in terms of actually using it, the early adopters are in Europe,"
Lowenstein said. "They have a much bigger base of digital users,
they have one harmonious technology and particular countries are
doing more to market new services."
The United States also faces a more difficult chore in getting
from here to there. The American carriers do not have a middle-term
technology comparable to GPRS in Europe, and the third-generation
services are not expected to reach the market for a few years.
Moreover, the Federal Communications Commission is insisting that
carriers use existing radio frequencies, which are likely to become
overloaded if customers transmit video and graphics on top of voice
conversations.
Paradoxically, much of the inspiration for new wireless data
services comes straight from the United States. Yahoo Inc. is
setting up wireless Internet gateways in Germany. Phone.com, a
small California company, developed the simplified browsers and
servers -- known as wireless access protocol, or WAP -- that European
wireless carriers are now embracing. Meanwhile, the Microsoft Corp.
is locked in a fierce competition with a European consortium called
Symbian over establishing a global standard for personal digital
assistants -- hand-held devices -- that would use these wireless
networks.
Most of the big cell phone manufacturers are rolling out
Web-ready phones designed for GSM, or global system for mobile
communication, the dominant second-generation wireless standard in
Europe. Nokia of Finland, which will probably be first to the
market, plans to start selling its version in August. The Nokia
phone is about the same size as an ordinary cell phone. It offers
no graphics or pictures, but it has a small screen to display text.
In Germany, Mannesmann AG, the country's largest mobile phone
operator, has signed contracts with the main television networks to
deliver news, sports and weather over a wireless network.
Handelsblatt, Germany's biggest financial newspaper, will provide
business news and stock-market information. Customers will also be
able to reserve airline tickets with Lufthansa and train seats with
Deutsche Bahn, the national railway.
"We are not interested in niche markets," said Dirk
Wierzbitzki, director of product marketing at Mannesmann's mobile
telephone unit in Dusseldorf. "We see this as a mass-market
business."
An exuberant talker who sprinkles his sentences with American
phrases like "killer app" and "Internet value chain,"
Wierzbitzki has reason to be bullish. Mannesmann customers already
tap out 100 million messages a month, and the volume is climbing 20
percent a month.
"Europe is definitely ahead" in the use of cell phones as an
interactive device, said Fabiola Arredondo, managing director for
Yahoo Europe, which recently teamed up with Mannesmann.
For Wierzbitzki, the next big shift will come with the start of
GPRS next year.
The service, which will require new handsets, has a theoretical
top speed of about 114,000 bits of data per second. Since the
airwaves will inevitably be bogged down by congestion, the real
speeds may be significantly slower. Even so, they would be far
higher than those of Europe's current cell phones, which have a top
speed of 9,600 bits per second -- the top speed of most American
cell phones, too.
But perhaps more important is the way it will work. The system
is designed to charge customers based on the amount of data
transmitted rather than by the minute. That can be a major change
from customers who can pay, say, $1 a minute during business hours.
"Always connected, always on line -- that's our vision,"
Wierzbitzki said. Though Mannesmann has not yet announced a pricing
plan, Wierzbitzki envisions deals along the lines of 10 megabytes
for about $10. For an ordinary consumer using the wireless Web
format, that would amount to almost unlimited browsing and e-mail
for a month.
But that is not the only point of these systems. The idea is
sell "mobility services" -- traffic and shopping information,
banking, full-time access to e-mail. "You need to forget about
traditional Web surfing," said Ilkka Raiskinen, vice president for
business development at Nokia Mobile Phones. "If you're walking
around Helsinki, you don't want to browse the Web. You want to know
where a restaurant is, where you can buy clothes and how do you get
there."
Mannesmann already has a separate subsidiary, Autocom, that
provides navigation aids through wireless networks. Executives are
now looking at services that would warn drivers about traffic jams
and recommend other routes, as well as automatic SOS buttons that
would call for help if an accident occurs.
"There is a huge pent-up demand for data over wireless phones,
but the barriers have always been reliability, speed and cost,"
said Anders Thulin, a consultant at McKinsey & Company in
Stockholm. "All those barriers are reduced now."
Even the most enthusiastic wireless bulls caution that the third
generation networks to deliver all this stuff fast and efficiently
are still several years away. Though carriers have agreed on the
design of the system, the advanced technology is by no means ready
for prime time.
Still, Raiskinen of Nokia predicted that at least 10 percent of
wireless phones will be Internet-ready by the end of next year. He
cautioned that speed itself will not usher in overnight change.
"The success will be based more on content," he said. "It's
not a revolution. This is very much about evolution."