Going mobile, in a big way
The mobile market was on fire in 2006 with big profits for operators as a slew of new products and services came to market.
Wireless revenue was a boon to phone companies AT&T, BellSouth and Verizon Communications, which own stakes in two of the biggest cellular providers. (AT&T and BellSouth own Cingular Wireless and Verizon owns part of Verizon Wireless.)
Even though most people aren't watching TV or surfing the Web on their cell phones yet, they are using SMS text messaging and downloading ring tones. Mobile operators also pushed forward with music services as Cingular introduced a music store to compete against those offered by Verizon Wireless and Sprint.
Mobile carriers are confident that people will soon be doing even more on their phones, including location-relevant searches and tracking friends and family, especially now that three of the nation's largest cell phone carriers--Cingular, Verizon Wireless and Sprint Nextel--have deployed third-generation, or 3G, technology across most of their networks.
Sprint isn't stopping with 3G technology. The company this summer announced plans to use a technology called WiMax to build its fourth-generation network.
T-Mobile, the fourth-largest national cell phone carrier in the U.S., has lagged behind the other major carriers when it comes to 3G. But that could soon change. The company came out a big winner in the Federal Communications Commission's spectrum auction this summer, and it plans to use the additional spectrum to deploy 3G services.
A big reason data services like mobile TV haven't taken off is that they're still too expensive for most users. As a result, operators are starting to consider new business models, such as the inclusion of advertising in mobile-TV offerings, to help defray costs. Mobile search services also got off the ground in 2006, as big names such as Google and Yahoo began offering services for the small screen.
A new crop of carriers called mobile virtual network operators, or MVNOs, made a splash in 2006. These operators lease capacity from other carriers and rebrand the service as their own to target a very specialized group of customers. Virgin Mobile was one of the first MVNOs, and has been very successful.
In 2006, three major brands launched their own MVNOs. Helio, backed by EarthLink and Korean telecom provider SK Telecom, is targeting young, tech-savvy hipsters. In February, Disney launched Mobile ESPN for die-hard sports fans, and in April it kicked off Disney Mobile, a phone service geared toward parents.
Early indications show that being a mobile operator is no easy task. Less than a year after its launch, Mobile ESPN pulled the plug on its service. Disney Mobile and Helio are still in the game, but neither company is publishing subscriber numbers.
And what would a hot industry be without its share of scandal? In January, reports surfaced about how easily cell phone records could be obtained by unauthorized third parties. Using a tactic called "pretexting," people attempt to gain access to customers' records by contacting phone companies and pretending to be those customers.
Several mobile operators sued companies that had used prextexting to obtain information. But the topic resurfaced in early September when it was discovered that private investigators working for Hewlett-Packard used the technique to access the phone records of several reporters, including three from CNET News.com.
The incident outraged lawmakers, and the executives from the big wireless phone companies were brought before Congress to answer some questions. Congress is now considering new legislation against pretexting.
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