MP3s are wireless phone companies’ next goal

In the fast-moving wireless phone industry, the next killer application may have more to do with music than with conversation. The big wireless equipment makers all are rushing to create cell phones that can play MP3 music files, hoping to have them ready for the U.S. market by the end of this year. Most are building their prototypes now.

Motorola, for example, showed its entry into the nascent market to analysts this week. For their part, the phone carriers see the Net music phenomenon as a valuable new way to sink use of their phones and networks even more deeply into customers’ everyday lives. “It goes after a lifestyle,” said Jane Zweig, executive vice president of Herschel Shosteck Associates, a wireless consulting firm. “It’s evolving. This is the way the industry is headed.”

Analysts say wireless companies around the world have learned from the experience of companies in Japan and Scandinavia, where wireless customers are far ahead of the rest of the world in using their phones for such activities as downloading games, snippets of music or photographs, or for sending text messages. These services, often offered relatively cheaply by U.S. mobile standards, have in turn helped to drive use of the phones for ordinary voice calls.

The companies now are looking at the meteoric successes of the Sony Walkman and other subsequent personal music devices, hoping to add fuel to the fire already raging through the mobile phone market. But even if the phones do come to market soon, it will be some time before a generation of head-bobbing cell phone customers hit the streets, analysts say.
The first wave of MP3-ready phones will simply see the players bolted to phones, providing storage for an hour or so of music. Those players will hit the market this year but are not likely to be used much for downloading or listening to songs directly over the wireless connection, analysts say. The problem is, mobile phone connections still run around 14.4 kilobits per second—or about a quarter of the speed of the most common dial-up modems.

That’s not fast enough to do anything but painfully slow downloads or choppy, poor-quality streaming files. That means most people using the cell phone/MP3 player crossovers will likely use them the same way they use a RioPort or other ordinary MP3 device, downloading songs on a personal computer with a fast connection and transferring them to the phone, analysts say. But a new generation of mobile phone infrastructure should help lift those speed limits.

Dubbed third generation technology, these new networks will allow download speeds more than twice as fast as dial-up modems, or even seedier. That’s enough to allow access to MP3 files stored online and streamed to cell phones—and that’s where many in the industry see the real value. “We’re getting more and more dependent on this link to the network,” said International Data Corp. analyst Iain Gillot.

Because small sizes and low weight are critical for phones, models that can reduce the need to store data on the phone will be more successful, he said. MP3 Web firms already are gearing up to offer their services to cell phone customers. Myplay.com, a company that offers huge online storage lockers for customers’ music files, providing access to the files from any Web connection, already has a prototype for a next version of its service that allows wireless phone access.

Like others in the industry, Myplay is looking for the market to take off in Japan and Europe before it reaches the mainstream in the United States. Skeptics who point to the very real problem of maintaining adequate wireless quality for even a basic phone conversation in the United States should look to those areas as a guide, company executives say. “What people have to realize is that it’s much better in other parts of the world,” said Myplay chief executive Doug Camplejohn. “You’re really going to have the cell phone in those (areas) be a replacement for the Discman or the Walkman.”

But the wireless network problems in the United States, which result in frequent dropped calls, patchy service coverage, and poor call quality, do raise serious questions about when any kind of reliable streaming services can be offered. The upgrade plans for U.S. companies range from a year or so for intermediate technologies to several years for third-generation upgrades, analysts say.

Even then, the companies will have to make sure they plan for the surge in usage produced by popular services such as MP3 music. Already, Japanese carrier NTT DoCoMo’s experience, which has seen the overwhelming use of its popular iMode Net service cause some network failures, shows the danger of overselling a service. “It will take a different network than what is there today,” Zweig said. “They’ll have to make sure the marketing and engineering departments talk. And that hardly ever happens today.”