Years ago, most homes were equipped with one dial-tone phone and a television that actually required someone getting up off the couch to change a channel or turn up the volume.
Meanwhile, office phone systems required an operator, of the human sort, to take and direct individual calls for all company employees.
Today, thanks to frenetic technological advances in the telecommunications industry, smartphones enable people to text, chat, tweet, surf, yammer, network, navigate, blog, upload, download, print, shoot (photos), play games … the possibilities are, quite literally, endless. Presently, there are more than 300,000 smartphone applications (apps) available to users.
“The world has gone mobile,” said John Britton, director of corporate communications for AT&T West. “Today, networks are no longer attached to places but people. You simply take the network with you, wherever you go. All the capabilities travel right along with you.” It’s amazing, when you think it’s just been a little more than two years since Apple introduced the iPhone. “And now you find yourself using mobile apps like they’ve been a part of your life since you were a kid,” Britton added.
Take a trip to any neighborhood telecommunications store and you’ll find it hard to believe that Nevada’s suffering one of its worst economic downturns since the Great Depression. Consumers can’t gobble up smartphones, iPhones or iPads fast enough. “The consumer’s appetite for wireless products has only increased, even through the recession,” said Brian Danfield, president of Verizon Wireless’ Southwest Region.
It should come as no surprise that smartphone sales now constitute at least 75 percent of all mobile phone sales. And with the advent of 4G technology, it’s expected sales of smartphones, iPads and other mobile devices will continue to soar.
The lightning speed of 4G phones can deliver high-definition (HD) video streaming, multi-player gaming and video conferencing. Currently, Sprint and Verizon customers in Nevada have 4G capabilities. Verizon just launched its 4G broadband network in Nevada last month. Meanwhile, AT&T chose several East Coast cities to test market its 4G program. AT&T officials expect some 75 million AT&T users will be covered with 4G by 2011. It’s expected Northern Nevada users will be part of that group.
Keeping pace with explosive technological advances isn’t cheap. In the past few years, AT&T and Verizon spent a whopping $450 million and $550 million respectively to upgrade the companies’ Nevada networks alone. Nationally, those figures soar well into the billions of dollars. And those investments will continue, said Verizon’s Danfield. “It’s all about mobility. People want to take their entire office with them. They want the same desktop experience whether they’re at the office, on the Strip, at home or at a soccer game working.” Danfield said.
Using your smartphone instead of cash is just around the corner as well, Danfield noted. Already, in several overseas countries, people are able to use money on a cellphone account to buy goods and services. All they have to do is enter several codes into their phones. Almost instantly, a proprietor’s phone and the purchaser’s cell receive texts stating the transfer is complete.
As recently as 2009, an AT&T report showed mobile data traffic had increased 5,000 percent during a three-year period. And that astounding figure is expected to continue to soar into the stratosphere, thanks to 4G capabilities and other yet-to-be developed technological advances.
Nation’s First Wireless Backbone
Faster connections in the explosive mobile telecommunications industry have helped to boost the bottom line at companies like Nevada’s 1Velocity. Founded just four years ago, 1Velocity is responsible for building the nation’s first telecommunications backbone ring using (millimeter-wave) wireless fiber. A backbone system must be able to support many different user applications, from simple voice transmissions to high-speed data and multimedia networks.
While phone and cable companies build their backbone systems underground using fiber-optic cabling, 1Velocity is able to move its wireless fiber almost seamlessly from rooftop to rooftop at a fraction of the costs associated with building and/or expanding a landline operation. The company specializes in just two products: Ethernet transport and Internet access in Nevada. 1Velocity provides mega business data lines for private networks and Internet access to governments, casinos, healthcare companies and other telecom carriers.
Mike Ballard, chairman and president of 1Velocity, credits the company’s unique focus and business’ demands for better, more dependable and faster wireless technology as the major reasons 1Velocity has continued to grow even during the recession. “Business’ have contracted, yes. But their Internet needs have only gone up. Businesses want and need bigger, faster, more accessible connections,” he said.
The onslaught of more efficient, cost effective and lightning speed transmission systems has enabled telecom companies to offer customers some products at a fraction of their former costs. Take a 20-man office PBX system, for example. In the old days, business owners would have to purchase analog phones, digital phones, software programs, digital line cards, etc. Those expenses coupled with labor costs, for product installation, programming and employee training, could typically cost a business anywhere from $40,000 to $50,000.
“Today, you can offer products that require absolutely no capital investment,” said Joseph Brondon, vice president of sales and marketing at Excella, the former Nevada Telephone Co.
Indeed, in today’s current environment initial startup costs for a 20-man PBX system can run as low as $500. “All you have to do is install a router, interface with a network and install a switch,” Brondon said matter of factly.
There are no phones, cards or software to buy and telecom companies like Excella oversee the entire system for a monthly fee of $20 to $30 per phone. You can get into the network at will to upgrade and make any changes your business requires without incurring additional costs associated with replacing antiquated systems. “If you do a ‘hosted’ phone system your software will be updated continuously at no extra cost,” Brondon said.
Excella serves as the manager, or ‘host,’ of the entire system. In its role as “host,” Excella will automatically upgrade software programs or any other products on a seamless basis whenever the need arises. Business owners and employees just plug in the jack and leave the rest of the communication worries to Excella. “It’s much more cost effective. We can tweak systems, fine tune a network and infrastructure system and be more cost effective when doing it,” Brondon said.
New technology has also enabled firms like Excella to offer programs that allow businesses to do “cloud computing” in a more secure environment. Cloud computing is the new buzz phrase used by companies that offer computing services in their own data centers. Users can get access to software service on demand, usually over the Internet and through a web browser. The big pushers of cloud technology, which include Google, IBM and Microsoft, argue the concept offers more flexible and cost effective computing, which in turn can shorten the time companies get their products to market and consumers. “Basically, you just get the software program you need for your business over the Internet,” said 1Velocity’s Ballard.
Excella just rolled out a program called Sunuvola, the name of which translates into “your cloud.” In addition to managing telephone applications, Excella’s new product enables the company to oversee a firm’s data applications as well. “It’s a virtual server environment,” Brondon said. “We can take all critical data and put it in a secure environment. And a firm can use the same carrier to access the Internet and get to all of its (software) applications.”
Telecoms Take on Cable
With all the mind-boggling smartphone capabilities, it should come as no surprise that cable providers aren’t resting on their TV laurels when it comes to wireless. Indeed, Cox Communications Inc., one of the country’s leading cable providers, recently rolled out wireless service in several markets including Southern California, Virginia, and Nebraska.
And Nevada’s expected to join that list soon, said Marilyn Burrows, Cox senior vice president and general manager, Las Vegas.
Since the majority of mobile customers sign up for plans at stores operated by providers, Cox chose to introduce its mobile products via its own retail outlets. To date, the company has several stores in Southern Nevada and more are scheduled to open this year. “It’s a direction that a lot of communication service providers are heading,” Burrows said.
It’s not the first time the cable industry has tried to break into the wireless market. A little more than five years ago, the industry attempted to sell wireless through a joint venture with Sprint called Pivot. It failed to take off, and by 2008 Pivot was pretty much dead in the water. But with the advent of smartphones and fierce competition from providers, cable companies are expecting much greater success in the re-launch of wireless services. Telephone giants like AT&T and Verizon already offer bundle packages for TV, high-speed Internet, landline phones and wireless voice and data.
While cable providers like Cox are looking to wireless for more business opportunities, phone companies like CenturyLink, which serves Southern Nevada, are switching on the TV set to broaden their customer bases. CenturyLink’s new offerings include three different tiers of HD television coverage bundled with faster Internet and unlimited local and long-distance telephone service. Jeff Oberschelp, vice president and general manager of CenturyLink’s Nevada operations, said entering the hotly competitive TV market was inevitable, in light of the continually shrinking landline phone service.
“You can’t hang your hat on the traditional business, which is the telephone, when more and more people are moving away from landlines to wireless. We have to continue to figure out a way to keep our infrastructure useful. And TV is a natural progression.”
Called Prism, CenturyLink’s competitive TV package includes a variety of bells and whistles including a home digital video recorder (DVR) program that enables customers to watch, record, pause and play back up to 4 shows at once with a single DVR.
CenturyLink, which grew into one of the top baby bell companies with its recent purchase of Qwest, is a provider of broadband, entertainment and voice services to both residential and business customers in 33 states, including Nevada.
From Rabbit Ears to Multi-Channel Viewing
While the recession is slowing down in Nevada, it still is a very tough environment for TV providers, particularly cable giants like Cox and Charter Communications Inc. Charter provides cable service in Northern Nevada. The company recently emerged from Chapter 11 bankruptcy.
Charter’s bankruptcy was just another stinging reminder of just how long wretched economic conditions dragged on for TV providers. Not that any players needed reminding, particularly those in a state like Nevada. “Every one in ten homes is still vacant. That’s a very big deal when you’re a cable company,” said Cox’s Burrows.
And even in the homes that are occupied, many residents are still struggling financially. “We try our best to (connect) them with the amount of product that meets their needs at the lowest possible cost,“ Burrows said.
Some pay TV customers are simply canceling their cable altogether. According to published industry reports, cable and satellite companies had a net loss of some 330,000 customers from April to September of 2010. Some of those former pay TV customers are trying out free television by placing modern-day versions of rabbit-ear antennas on top of their sets. The quality, however, is affected by weather conditions and heavy movement in the viewing room.
While antenna reception is improving, with newer more advanced antennas, it’s unlikely the majority of Americans will be “rabbit-earring” to satisfy their insatiable TV appetites, particularly when it comes to sports. After all, it’s estimated that about 90 percent of American households still subscribe to cable or satellite television. That figure has been slowly and steadily rising throughout the past few years.
The increased TV competition from players like CenturyLink hasn’t gone unnoticed at cable firms like Cox. Despite the tough economic times, the cable giant has been continually upgrading and improving its product in an effort to continue growing its business and maintain its customer base. A small sampling of those efforts include: more HD programming, one-screen, multiple channel viewing capabilities and DVR programming via your telephone. Like other providers, Cox is bundling those new offerings along with lightning speed Internet and unlimited local and long-distance phone calls.
New TV players like CenturyLink are offering low 3-month trial rates to lure longtime cable customers. The question remains: Will all this lead to lower pricing in the long run? At this point, it doesn’t appear so since TV providers’ pricing flexibility is stymied by several factors including the stratospheric salaries sports figures are paid. “Those contracts are paid for by what happens on TV stations,” said Cox’s Burrows.
Providers are also being pinched by local broadcast stations, which charge cable and other TV providers a fee for retransmission of their programming. Previously, broadcasters were willing to do an advertising trade for cable airtime. “It used to be an advertising agreement, a tit for tat would cover it,” Burrows said. “But as broadcasters became more consolidated, that changed. Plus they’ve been squeezed during the recession, as well.”
Meanwhile, it’s clear business and consumer demands for faster more applicable mobile devices will continue to grow. CenturyLink’s Oberschelp believes the healthy competition will result in better products. “People are too smart and sophisticated to let any, one provider dictate (services). It will be (consumers) who will tell us what they want and where they want it provided. I’m a firm believer that competition makes us sharper and better,” he said.
