Glut of wireless data threatens viability of a new industry

CHICAGO?Life is full of trade-offs. As users of mobile devices become more dependent on access to remote resources, the growing demand for bandwidth could threaten the economic viability of the emerging wireless data industry, one of the industry's founders warned.

"As an industry, we have to decide to encourage network efficiency," said Mike Lazaridis, president and co-CEO of Research in Motion Ltd., in his keynote speech at the GlobalComm tradeshow.

The industry relies on carriers whose technology and business models have been developed for a voice-delivery environment. Those models are fast becoming outmoded as new data, graphic and video applications are riding on those systems. Current trends point to a future in which bandwidth and performance will be constrained or services will be priced out of the reach of many users.

"Bandwidth is not free," Lazaridis said. "Bandwidth is a cost to the carrier. We need to create economic incentives and disincentives so we can have the efficiencies to ensure a profitable industry."

RIM helped to create the wireless data industry with its BlackBerry remote e-mail devices. Today, the addictive nature of the handheld devices has become legendary, and Lazaridis opened his speech with a mock commercial poking fun at customers who spend their lives glued to their BlackBerrys. It featured a BlackBerry helmet, so you can "protect your skull while you destroy your thumbs."

Success did not come quickly. It took a decade for the concept of wireless data access to catch on. But in the last five years, growth for RIM and the rest of the industry has been exponential. Initially this has not been a problem for carriers who sell the service, Lazaridis said.

"The BlackBerry was born in a two-way paging environment" and optimized for small pipes, he said.

The need to maximize performance without depleting battery life also put a premium on efficiency, he said. As more features and applications were added, they were designed to avoid exponential growth in bandwidth requirements. E-mail and attachments are not downloaded all at once, but in 2K increments. "If you keep reading it, as you go on we pull down more of the content."

But new applications continue to appear and more products enter the marketplace, and Lazaridis said that RIM's efficiencies could be penalized as competitors offer applications and services that consume more carrier bandwidth. Motorola Corp. last week announced its new Moto Q cell phone and e-mail device in the U.S. market, and the Palm Treo comes with some unlimited service options, as opposed to the flat rate pricing offered for BlackBerry apps.

The problem is not just availability of bandwidth and radio spectrum, but the pricing of it. If carriers cannot make profits at rates that are affordable to users, industry growth will be stifled by inefficiency, Lazaridis warned. A representative from a carrier company said its new customers expect from their BlackBerrys and other mobile handheld devices not just e-mail and messaging, but full remote desktop access.

"If we allow unlimited access to desktops, we are going to put a lot of load on [an] environment" not designed with that in mind, Lazaridis said.

William Jackson is a staff writer for Washington Technology's sister publication, Government Computer News.