News

Businesses Increasingly Unplugging Phone Lines

Jon Van
1 January 2005
Chicago Tribune
Chicago Final, 1

Cutting the cord is popular, especially among the young, but it really makes an impact when people like Larry Schutz do it.

Schutz is engineering vice president for a St. Louis firm that's phasing out nearly 1,200 phone lines and replacing them with wireless service.

A shift from wired communications to wireless has cost traditional phone companies such as SBC Communications Inc. dearly in lost business and revenue, and analysts suggest the trend is accelerating.

A report this week from market-research firm In-Stat/MDR projects that wired-service expenditures, which topped $188 billion in 2003, will shrink to about $160 billion by the end of 2008.

"Generally, when you go with a wireless network, you get more control and flexibility," said Daryl Schoolar, a senior analyst for In-Stat/MDR.

"Wireless is just starting to creep into a lot of applications that have always been wired, and there are a lot more you can think of. All those security cameras you see everywhere. They're almost all wired now, but they could go wireless."

The shift from wired to wireless mostly involves voice service, but data lines increasingly are cutting the cord, which is the case with Schutz's AAT Communications Corp.

"By eliminating phone lines, we cut maintenance significantly," said Schutz, whose firm owns towers used by cell phone networks.

Until recently, AAT had traditional phone lines running to each of its 1,174 towers to monitor the flashing lights that warn low-flying aircraft. But the towers and the lines combined make an excellent lightning rod, and when lightning struck, it often sent electric surges through the lines and damaged the electronics controlling the warning lights, Schutz said.

Going with a wireless network has lowered costs and boosted reliability, Schutz said. It also will improve flexibility, as AAT's technicians soon will get personal digital assistants to monitor the warning-light system.

For an enterprise like AAT to move from wired infrastructure to wireless is far more complicated than for a consumer to decide to cancel his wired home service and take all calls on his cell phone.

There are several kinds of wireless technologies available, and the technologies keep changing as carriers upgrade their networks.

A Chicago firm, nPhase LLC, which specializes in enhancing communications between machines, launched a new service a few months ago to help companies go wireless. It handled AAT's switchover to wireless, working with Cingular and Sprint PCS as well as various equipment vendors.

There are immediate cost benefits to most firms that go wireless, said Steve Pazol, nPhase chief executive.

A company that leases a phone line for an application such as checking that the level of liquid in a remote storage tank is adequate may pay $50 or $60 a month for that line, Pazol said. A wireless connection typically costs well under $20 a month, he said.

"There's also the administrative headache of having lots of phone lines," Pazol said. "If you're running 1,000 phone lines to 1,000 different locations, that means you're getting 1,000 bills coming in every month.

"If you lose track of one or two bills a month and don't get them paid, then you may lose service."

Analysts expect that the next few years will see an explosion of wireless networking for devices now tied together by wires, such as bank cash machines, said Eric Miller, senior manager of indirect sales and strategy for Sprint.

"Someone who has an ATM machine in a hotel lobby who wants to move it six feet might find it attractive to not worry about rewiring his phone service to do that," Miller said.

As traditional wired networks become wireless, the logic of networking new devices will spread, predicts Glen Allmendinger, president of Harbor Research Inc.

"We'll see these wireless seeds that are planted spread to new uses," said Allmendinger. "This technology is getting cheap enough that it makes sense to network all kinds of things that have nothing to do with information technology."

Wireless-network operators are doing all they can to encourage the trend, Allmendinger said, because they soon will reach saturation in consumer demand for wireless products. But wireless communications for machines is a potentially huge and mostly untapped market.

There is almost no end to the devices that might benefit from being networked, Allmendinger said.

Indeed, while it hasn't happened yet, some people in the banking world have inquired about connecting money bags into wireless networks, said Sprint's Miller.

"We do have people using this to keep track of large items now--rental items like backhoes--and it's only a matter of time until they'll use it for smaller items," he said.

As a firm with wired and wireless networks, Sprint has few qualms about the shift from one to another.

"The customer defines what he's looking for," Miller said. "We just want to keep that customer, one way or another."