Cell Service Providers Get A Wake-Up Call From Business Users - InformationWeek

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Cell Service Providers Get A Wake-Up Call From Business Users

Cell network operators, used to exercising strict control over phone features, are under pressure to change.

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Enterprise service contacts--on track to reach $52 billion by 2010, according to IDC--are helping businesses wield more influence with carriers. A typical enterprise service contract covers devices, service, and end user support. Companies are beginning to treat smartphones and cell phones more like laptops--indispensible business-productivity tools--which elevates the product and service evaluation process.

"The buyer is changing," says Bruce Friedman, CEO of Movero Technology, a provider of managed mobility services to businesses. "The point of sale has moved from a procurement officer in the company to the IT manager or CIO. And they're treating it not as a choice of carriers but as a platform choice, with all the usual IT concerns about manufacturing cycles, security, adoption of new technology, management, and so on."

Carriers accustomed to a take-it-or-leave-it sales approach face informed business customers with higher expectations. Carriers remain heavy handed, Friedman says, "but they're seeing IT managers looking at other trusted partners, to IT companies they've dealt with over longer periods of time, for these procurements." Case in point: Sun Microsystems last week showed prototype cell phones based on its Java Mobile FX software, putting Sun on track to compete with cell phone manufacturers.

With thousands of mobile phone users, the Veterans Affairs Department does business with all the major cellular carriers. Agency departments don't enter into contracts for specific phones but have ongoing agreements with one or more carriers that cover a designated number of units. Volume gives the VA and other large enterprises pricing leverage consumers can't match, says Charles De Sanno, the VA's executive director of enterprise infrastructure engineering.

Scenarios in which carriers don't offer certain features "happen all the time," he says. For instance, De Sanno wanted two phone lines on his BlackBerry, but Nextel wouldn't support it. "I had to switch to a different carrier," he says.

THEY'RE 'DOOMED'

Consumers, too, are starting to focus on "platform" rather than service provider, as the handset makers invest millions of dollars in marketing sleek new devices under their own powerful brands. Customers are intrigued by the iPhone, BlackBerry Pearl, Helio Ocean, and Samsung BlackJack more than the carriers that support them.

"The carriers are ultimately doomed because when anyone asks, 'What's your phone?' you don't say, 'Cingular.' You say 'Motorola' or 'Nokia,'" says Duncan Pilgrim, director of product marketing at Sequoia Communications, a startup maker of semiconductors for 3G phones. Carriers, he says, should concentrate on providing great service.

Earlier this year, Skype filed a petition with the FCC, asking that networks be opened so that consumers can use any mobile device and application on any wireless network. But any push for cellular "net neutrality" may lack political footing. Influenced by the U.S. Telecom Association, CTIA, and "consumer groups" backed by the Big Four carriers (AT&T, Sprint Nextel, T-Mobile, and Verizon Wireless), lawmakers and the FCC have shown little inclination to further regulate the wireless oligopoly.

But customers are pushing back. Last year, nearly 29,000 complaints were filed with the Better Business Bureau related to cell phone service, and disgruntled customers filed a class-action suit against the merged Cingular-AT&T.

Locked cell phones--the inability to take phones from one service provider to another--are partly a result of incompatible standards. But they're also a function of carrier practices. CDMA phones are carrier-specific down to the silicon: If the device serial number doesn't reside in the carrier's database, the phone won't work. CDMA is used predominantly by Verizon Wireless and Sprint Nextel. GSM, employed by T-Mobile and AT&T, is a more universal protocol: Slap the proper SIM card in a phone, and it'll run anywhere on any GSM network.

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