Wireless Industry Elbows Its Way Into the Top Five

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The New York Sun

How much the wireless telecommunications industry contributes to the economy is a question not answered by the thousands of statistics maintained by the federal government. To find an answer, CTIA, a trade association, commissioned a study that was released yesterday by the economics consulting firm Ovum.


Ovum estimates that the wireless industry contributed $92 billion to the economy in 2004 and that it is one of America’s five largest industries. While some may disagree with the details of Ovum’s findings, an inescapable conclusion is that the wireless industry, which barely existed 20 years ago, is large and growing.


The industry breaks down into several sectors. Firms such as Motorola, Intel, Lucent, and others manufacture handsets, microprocessors, and other devices. Similarly, businesses ranging from Microsoft to Qualcomm offer software necessary for wireless services. These companies are found mostly on the West Coast and in the Southwest and the suburbs of the metropolitan areas of the East Coast.


Wireless service providers such as Verizon Wireless, Cingular, Sprint-Nextel, T-Mobile, and Alltel offer services directly to residential and business customers. Last week, the Federal Communications Commission released a study on wireless competition, finding that 87% of the American population lives in counties where five or more wireless providers offer service. All but 3% of us have at least three choices among wireless providers. Although America appears weak in some international comparisons of wireless services, the FCC report highlights some of the strengths.


There were more than 184 million wireless phones in America in 2004, or more than 1.7 for each household. More than 90% of Americans between the ages of 20 and 49 have a cell phone. In 2004, for the first time, wireless phones exceeded the 176 million wired-access lines. Growth of wireless phones has consistently and substantially exceeded 10% a year. In contrast, wired-access lines are slowly shrinking. More than 5% of American households have only wireless phones, and the share is growing. Wireless companies are increasingly a source of broadband services as well.


Although most Americans still use a cell phone primarily for voice services, high-speed wireless data services are rapidly growing, both in capability and popularity.


The typical American household spends hundreds of dollars annually on wireless services. It is small wonder that wireless carriers spend billions of marketing dollars to reach and retain customers. Retail outlets specializing in at least one of the wireless carriers can be found in every mall in America. In addition, large retail outlets such as Wal-Mart, Best Buy, and Radio Shack offer a range of wireless products.


Wireless services have changed our lives. In the 1980s, a person walking in a public place speaking loudly to himself would have been thought slightly touched. Today, we simply assume the person is speaking on a cell phone. In the 1980s, parents thought it perfectly safe to send a child outside without a cell phone. Today, many parents do not. In the 1980s, restoring electricity and water were thought to be the highest priorities after a natural disaster. Today, wireless services often top the list.


Wireless services have affected many American businesses even more than households. FedEx personnel send information on the status of packages the moment they are delivered. Crews use wireless devices to communicate across large construction sites and with home offices to request new supplies. Hospitals use wireless devices to monitor a patient’s vital signs and to probe the depths of a patient with microscopic devices equipped with wireless transmitters.


Twenty years ago, American businesses were very different, and wireless technologies are a significant part of the change. Neither the FCC nor CTIA fully measures this change. The prospects in the wireless sector have been on a roller coaster over the past two decades, but the trend is unmistakably upward.


A former FCC commissioner, Mr. Furchtgott-Roth is president of Furchtgott-Roth Economic Enterprises. He can be reached athfr@furchtgott-roth.com.


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