There's a lot of talk these days about the "virtual office"--employees who work out of a car, home, or job site, staying in touch with the actual office via cellular phones, pagers, and portable computers. But there are still a lot more real offices than virtual ones, perhaps because of a vital missing link: Cellular networks can get calls to you wherever you roam, but it's a lot harder to reliably send and receive critical data.
Somebody could get rich bridging that gap. Which is why two well-heeled groups are racing to perfect ways to transmit wireless data and voice over a single system. Cellular phone companies, with McCaw Cellular Communications Inc. and its determined chairman, Craig O. McCaw, leading the charge, are betting on a technology developed with IBM called cellular digital packet data (CDPD). On the other side is enhanced specialized mobile radio (SMR), developed by Motorola Inc. and backed by Nextel Communications Inc. and its equally focused founder, Morgan E. O'Brien.
HARD BIRTH. This is more than a battle of esoteric acronyms. Both companies have deep-pocketed partners: McCaw can call on AT&T, its owner-to-be, while Motorola and MCI Communications each have 17% stakes in Nextel. Their bet is that an increasingly mobile workforce, equipped with notebook PCs, personal digital assistants, credit-card-size modems, and digital cellular phones, will create huge demand for anytime-anywhere communications--phone calls, electronic mail, and access to information services. True, less than 1 million people used two-way wireless data networks last year, according to consultant Yankee Group Inc., and they were divided primarily between two networks that cannot carry voice, Ardis Co. and RAM Mobile Data Inc. But the advent of easy-to-use voice-and-data networks should attract some 10 million subscribers by the end of the decade, generating annual revenues of some $3.8 billion.
So far, the race is a toss-up: Neither system has been rolled out nationally. CDPD may have a slight edge because the technology will be added to existing analog or digital cellular systems, while Nextel's network must be created from scratch. CDPD was designed to eliminate the "noise" that messes up data sent over standard cellular links. Data are enfolded into electronic packets, which are sent at high speed through little-used radio channels or during minuscule gaps in cellular conversations.
But CDPD is having a difficult birth. McCaw has twice pushed back deployment, blaming delays on equipment suppliers. The service is now available in only three cities. Full service in McCaw's 105 U.S. markets will be available by yearend, six months behind the original schedule, the company says. Bell Atlantic Corp. and GTE Corp. are also promising CDPD but on a slower timetable.
SEAMLESS ROAMING. McCaw has a few other problems. It must hammer out agreements on roaming access with other cellular providers, and CDPD standards are still not uniform throughout the cellular world. And, even though it's the largest U.S. cellular operator, with about 2 million subscribers, McCaw's licenses cover no more than 70 million potential customers. Nextel, however, has snapped up SMR licenses in 21 states, covering 180 million potential subscribers, and says it will offer seamless nationwide roaming once its network is up.
Ah, there's that future tense again. For all its big-name backers and bold plans, Nextel's service exists so far only in Los Angeles. The company says it will take $2.5 billion and two years to set up a national network. That's still a lot less than what it would take to create a national cellular network because signals over Nextel's vehicle-dispatch frequencies range 25 times farther than those of cellular. As a result, Nextel says, SMR services will cost 10% to 15% less than cellular. On the other hand, existing wireless equipment won't work with SMR, and the handsets that do are bulkier and more expensive.
In the end, consumers will decide who wins the technology battle, says Karen O. Nielsen, senior analyst with Northern Business Information: "Ultimate success will most likely be determined by whoever does the best job of figuring out customer needs." So there's not much doubt that wireless e-mail will arrive--it's just a question of how.
THE WIRELESS VOICE-AND-DATA RACE: TWO APPROACHES
-- Cellular digital packet data (CDPD): places data in electronic envelopes that are sent at high speed during pauses in cellular-phone conversations.
-- Can be laid over existing analog cellular networks but is eight times faster at transmitting data. Makes possible delivery of voice and data on a single device.
-- Deployment delayed twice, with service in only three cities so far. Standards battles must still be settled.
NEXTEL COMMUNICATIONS TECHNOLOGY
-- Specialized mobile radio (SMR): two-way-radio dispatching service now used by taxis and trucks that Nextel is converting to digital with the help of Motorola.
-- Like CDPD can deliver voice and data to a single device. Nextel holds licenses across U.S., so it could
build a seamless national network.
-- National network doesn't exist yet and is expected to cost $2.5 billion to build. Existing wireless phones and pagers won't work with SMR.