Thursday, April 21, 2005 | It’s Mikko Salminen’s job to tell you the world is discarding landlines in favor of wireless phones. It’s right there on his business card: director of fixed-to-mobile substitution for Finland’s Nokia Corp., which happens to be the largest maker of mobile phones on the planet.
Yet Salminen isn’t just preaching wireless for the sake of blatant corporate promotion. He’s got the charts, graphs, industry trends and outside research to support his once-ridiculed theory: about 50 percent of all voice traffic will be mobile by 2007. Maybe sooner.
“We’re in the midst of really big change,” Salminen said in a recent telephone interview, which incidentally required the use of both landline and wireless phones. “Two years ago, when we made this prediction, there were very few analysts who believed us.”
The proliferation of all things mobile, from iPods to cordless drills, has set consumers in an “irreversible” trajectory, he said.
“If it can go mobile, it will go mobile,” said Salminen.
How San Diego fits in
“It’s a center for wireless technology, so this natural development is good for San Diego,” he said.
San Diego certainly has its share of companies working on all aspects of mobile gadgetry, from chips to handsets. Telecommunications rank among the region’s top economic drivers and employers – a recent study commissioned by the San Diego Telecom Council estimated local telecom employment at nearly 37,000 people.
Nokia, although headquartered abroad, has a San Diego research and development center that uses Qualcomm Inc.’s flagship wireless technology, Code Division Multiple Access, or CDMA. Qualcomm is the largest locally-based telecom technology company, sharing San Diego’s sunshine with behemoths such as Kyocera Wireless, Siemens and Ericsson.
Mark Steele, chairman of the San Diego Telecom Council, notes that the San Diego telecom industry is comprised of companies working in wireless, landline, cable and satellite. The mix puts the local industry at an advantage, he said, rather than a complete dependency on mobile or fixed.
Steele doesn’t expect an immediate stampede toward wireless phones because fixed phones still offer features in aspects that wireless is still trying to compete: ergonomics, usability and even reception. Throw into the mix VoIP, the voice over Internet protocol technology that allows phone calls to be made with an Internet connection, and it’s anyone’s game.
“In the tug of war to get those customers, there’s no clear winner except the consumer,” said Steele, who is also vice president of worldwide OEM for Symbol Technologies Inc. He previously worked for companies such as Qualcomm, Gateway and IBM.
Steele expects the real marketplace in the near future will be in making wireless phones as dependable as landline phones, landline phones as attractive to young mobile users as wireless phones, and VoIP phones as portable as wireless phones.
San Diego companies have tried – with varying degrees of success – to invent at that usability level, from speakerphone accessories for wireless phones, to services that automatically transfer wireless calls to landline phones with the flip of a switch.
“It’s a fantastically fertile source of innovation here in San Diego,” he said. “There’s no better time to do a start-up.”
Consumer appeal
Oddly enough, it’s the Internet that’s creating some barrier to consumer adoption of the wireless-only lifestyle, said Salminen. Dial-up Internet access, which requires a phone line, is still the most popular means of getting online.
Enterprises represent an attractive market for wireless providers, though obstacles exist there, too. Nokia, for example, reduced its own desk phone count in Finland from 24,000 to 8,000, for an estimated annual savings of $720,000. Efforts to do the same in Nokia’s U.S. operations have been slowed by the recent implementation of a new landline system.
Ford was the first major U.S. company to make plans for a switch to exclusive mobile phone use, reporting in January that about 8,000 employees would be stripped of their desktop phones, Salminen said.
Some corporations are uneasy about a wireless-only existence for several reasons, including the potential for dropped calls, fewer mobile options for conference calling, and the perception that a work force equipped with just mobile phones would be more costly.
Salminen contended that enterprises actually save money by consolidating how they pay for wireless calls, rather than having employees expense calls from various carriers, and by eliminating desk phones that go unused while employees are out of the office.
“This resembles the development of PCs, when companies only had mainframes and people brought their own computers in,” Salminen said. “Company IT departments soon recognized this was difficult to maintain and control.”
Cost considerations
And it makes sense financially to maintain fewer phone lines, whether as a consumer or enterprise, he said.
“The U.S. lifestyle is more mobile. There is a hidden need,” Salminen said. “You spend 1.5 hours commuting – that’s a good time to talk on your mobile.”
Traditional landline providers stand to suffer from the shift to wireless, but Salminen notes that many of those companies are quietly hedging their bets.
For instance, conventional carrier Verizon Communications partnered with Vodaphone Group to create Verizon Wireless. Regional Bell companies SBC and BellSouth joined forces to acquire AT&T Wireless, creating the nation’s top wireless carrier, Cingular Wireless.
“There are several carriers with fixed and mobile services, so it’s a balance,” said Salminen. “It will be interesting to see how this converges.”
Jennifer McEntee is a San Diego-based freelance writer.