February 8, 2005
Who needs a "landline" anymore?
My brother-in-law has no wired phone. His mobile phone is his one and only. He figures he needs a cellular phone anyway, so why pay for two? He's not alone, and according to the CTIA (Cellular Telecommunications & Internet Association), by 2007, 30 percent of phone users is the US will be mobile-only. That's more than 60 million lines.
Even if you discount a bit the CTIA's number as self-serving, the trend towards people giving up their landlines, or just never getting one in the first place, is clearly on the rise. And really, who needs a landline phone? And why?
Aside from habit and the social custom of maintaining a phone number tied to a house or business, as opposed to an individual, there are other good reasons to maintain a landline. For one, indoor cellular coverage is rarely as good as outdoor coverage. For another, unless you carry your mobile phone around the house with you, you might find it inconvenient to retrieve it when it rings.
Spotwave Wireless, founded in 2000, is addressing the first problem: It makes cellular repeaters designed to bring the mobile signal indoors. Its product is a response to the obvious fact that people who have cell phones use them more and more as their primary phone, which means at their desk or other job location, or at home. The company started out selling to the carriers, which would set up repeaters at large job sites such as manufacturing plants in order to give their customers better coverage inside their buildings.
But over the years, Spotwave has gone steadily downmarket, expanding its customer base from giant enterprises (cellular carriers) to large and small businesses. Now it's planning an interesting push into the consumer market.
Or rather, the company is getting ahead of a trend. CEO Bill Carlin notes that some of Spotwave's carrier customers are opting to not install the Spotwave repeaters when customers need them, or at least not picking up all of the cost. They're trying to split the cost with their customers (businesses), or in some cases to shift the entire cost to the customer. If they lose the customer, they presumably think, so be it.
In the current climate, where carriers are fighting customer churn, I find this surprising, but I suppose the profit on a customer, even a big one, could be eroded by having to pay for and maintain extra infrastructure - perhaps to the extent that it might just be worth it to let them go.
Furthermore, Carlin claims that right now carriers are focusing more on upgrading their servers and data services instead of on their wireless infrastructure. It is this push into data services that Carlin thinks will make the market for small-scale cellular repeaters take off.
Carlin is betting on the continuing growth of the distributed workforce, in particular on the growing appetite for wireless data, as the driver for Spotwave's new residential product, the SpotCell 50. He points out that getting the data signals into a structure is the real challenge: While voice services may penetrate a building's walls, advanced data services, which tend to be lower-power, sometimes do not.
Carlin is hoping to get the price of the low-end Spotwave product down below $200 and to sell it through cellular storefronts (at the moment Spotwave's smallest product, the SpotCell 100, costs about $2,500 and is sold through carriers). Since the carriers do want to attract the high-dollar customers - those who will spend $80 or more per month on voice/data plans - they could in fact start subsidizing the residential SpotCell products - if they're inexpensive enough - in the same way that they subsidize cell phones.
Meanwhile, the public company Telular (Nasdaq: WRLS), headquartered in Chicago but with most of its revenue coming from Europe, is beginning its attempt to bring its "fixed wireless" products to the US market. Unlike Spotwave, which wants to make your cell phone usable in your building, Telular wants to put the phones you already have on the cellular network. It does this by replacing the junction box that currently hooks a home up to the wired phone system with one that connects to the cellular network. It can even simulate dial tones on existing phones, so there's no usability difference. Since the junction box is fixed and AC-powered, it can use a higher-power radio and give you a better signal than you'd otherwise have in your house, unless of course your place is Spotwave-equipped.
The Telular system is also used for "dial-around" systems in business: If a company telephone switchboard calculates that a cellular call might be less expensive than a landline call, it can route the call over the wireless network. With cellular pricing today, and especially with very low-cost or free cellular-to-cellular ("in-calling") pricing, this could be a substantial cost saver; it is already a popular application in Europe, where carriers charge a relatively large per-minute fee for land-line calls, Telular Senior VP Jeff Krevitt told me.
On the other hand, Telular doesn't do much for people who already have mobile phones - you still end up with two numbers. It does make an interesting competitor for wired telecom services, the same way VoIP technology does, but it doesn't really address the fundamental shift from associating a phone number with a location to associating it with a person. In the future, Krevitt said, Telular might offer some utilities that let consumers use their home phones as extensions to their mobiles, but I got the strong impression from Krevitt that there's no market demand for this handy feature (although some carriers, such as Cingular, do already offer an automatic forwarding service that does that).
Of these two different systems for getting cellular signals into the house, I'll give the nod to Spotwave. Telular's system is applicable to businesses, but the very notion of the land-line house phone is getting old. Furthermore, while Telular's system replaces the land line with cellular technology, the telephones it connects to still work exactly like today's home phones – they don't have the data, camera, and other features that users are becoming accustomed to.
Now that "mobile" phones are really becoming "personal" phones, and now that the cellular market is becoming saturated, the carriers may need a little help whittling away at the home land line business, and as they do so, even more help differentiating themselves from each other. Spotwave might be able to help.
