Technology Play
Wireless World: Are We There Yet?
October
15, 2000
By Charles
W. Thurston
Though
technical limitations are delaying mass adoption, pressure is building
for energy firms to offer mobile applications.
There's
a rising buzz in the electric industry airspace, and it's not
from high-voltage power lines-it's from the growing swarm of customer
voices carried over wireless phones. As the technology for web-enabled
wireless devices continues to evolve, utilities are being forced to consider
strategies for the deployment of wireless applications, and roll them
out where they can cut costs or drive new service revenues.
Current technical limitations
in wireless devices may mean that it will take a few years for applications
to be attractive enough for broad customer adoption. Still, the widely
predicted boom in usage among customers will help define the surviving
technology standards that businesses can bet on.
"Globally, the market for small,
wireless Internet-capable devices, including handheld computers, basic
micro-browser phones, smart phones, and next-generation multimedia phones,
is set to grow from $10 billion in 2000 to $73 billion in 2005," reckons
Nitesh Patel, an analyst at Strategy Analytics, Wellesley, Mass.
Parallel to the growth in the
demand for web phones will be growth in the demand for web phone-delivered
services that utilities are particularly poised to capture.
"I have seen market numbers
all over the place, but we possibly will see a $5 billion to $10 billion
per year market in a matter of years," says Charles Maglioni, utilities
industry director at Proxicom, the Reston, Va.-based wireless e-solutions
provider.
"We have had more inquiries
from utilities in the past two or three months than we had in the prior
year. Chief executive officers are saying, 'Why should we do it?' or are
saying, 'Why should we be doing it now?'"
U.S. Utilities
To Follow Europe's Lead
The wireless services market
is growing faster in Europe than in the United States, and growth also
is strong in regions without high landline penetration, like Asia and
Latin America. The number of mobile phone subscribers in Europe alone
is expected to rise from a current 200 million subscribers to over 300
million by 2004, according to International Data Corp., the Framingham,
Mass., market analysts. In the United States, where the subscriber base
is smaller but growing rapidly, the potential is still sufficient to command
utilities' attention.
"The number of wireless data
users [in the United States] is expected to grow to 18 million by 2002,
creating a $3 billion market for B2C [business-to-consumer] network related
services. The B2B [business-to-business] potential may even be larger,"
predicts Paul Hughes, the director of billing and payment applications
strategies at Yankee Group, the Boston telecommunications analysts.
One company that is finding
success in Europe is Coactive Networks, which offers a web-based site
for both utilities and their customers to use as a nexus in wireless applications.
"Deregulation has proceeded
more quickly in Europe, where we are doing a mass deployment for a 400,000-home
residential gateway in Sweden," says Adam Marsh, vice president of marketing
and the co-founder of the Sausalito, Calif.-based company. "With deregulation,
competitors are moving into one another's countries, so in the North,
where competition is fierce, utilities are moving with these applications
because it is a necessity of the moment rather than a result of forward
thinking, like it is in the United States. But that necessity is beginning
to show up here in the United States now," he says.
"Our gateway provides a lot
of application benefits, from automatic meter reading, to Internet billing,
to turning on lights from a cell phone," he explains.
One reason the electric utility
industry is expected to be an early adopter of wireless phone services
is its history of using telemetry for such functions as remote meter reading
and energy management. Landline telephone service providers, like cable
television service providers, are not as used to operating with radio
and wireless devices, one analyst says. Further, utilities can adopt a
wireless web operations capability as a cost-saving measure-for activities
like meter reading and energy management-and then add new ancillary services
for customers to expand the revenue base.
Wireless device manufacturers
see the utility segment as particularly promising among industrial groups.
"We see the utility wireless
business growing at 15 percent per year on a base of $1 billion a year,"
says Karen Caldwell, director of the utility solutions business for Motorola
Inc., in Phoenix. Her company sees growth in wireless phone usage readily
outstripping landline usage growth. "That's why we are involved," she
says. "We see a three- to five-year timeframe for wireless applications
to be common. We see applications for distribution and for transmission."
Tiny
Keyboards, Tiny Screens
Technology fixes are coming, but how soon?
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Wireless applications
for utilities will be limited largely by the ease of web access
and use that the customer's handheld device offers. These limitations
suggest the market is a year or two away from a real boom.
Addressing the Size
Problem. Size is a formidable limitation, given the reliance
on typing for most data entry systems. Indeed, with some current
models, to type a letter means typing the corresponding numbers
on the keypad-a tedious process at best.
Many cell phones are
being redesigned to sport marginally larger screens, and more wireless
devices with substantially larger screens are incorporating telephone
capabilities. Personal information managers and pagers, for example,
have screens that are several times larger than cell phones. And
though they are less common thus far, wireless tablets have taken
the screen size up to a familiar eight-and-a-half inches by eleven
inches format. On-board computer screens in cars, expected to be
offered widely in the next few years, also will help increase application
access for mobile users.
A pairing of separate,
interchangeable screens, keyboards, and wireless phones is another
likely trend in the market, as customers choose the accessory that
will permit them the level of access and application functionality
they desire.
Some wireless personal
information managers permit handwriting recognition, but learning
the required scroll of a letter may be as hard for some users as
learning to write script was in second grade. New software, however,
permits entire words to be recognized rather than individual letters.
Still, the speed and accuracy of these devices leaves much to be
desired.
Speech-to-text functionality
in mobile devices is a next-stage leap in technology that could
revolutionize usage. However, with the first generation of software
still attracting few users, improvements could take another five
years to evolve enough for widespread use, some analysts predict.
WAP Will Spur New
Apps. The standard for wireless application development-the
wireless application protocol, or WAP-provides a strong base for
global development of more sophisticated applications, however.
WAP guarantees that programs can be compatible, and permits the
international usage of the programs. Though WAP phones are a common
sight in Europe, the standard only now is becoming widely known
in the United States.
"What might spur on some
of this application development is WAP, although it is relatively
new in the United States. In Colorado, for example, AT&T and Verizon
just rolled out WAP about a month-and-a-half ago," says Jeff Bilbrey,
product manager for Solant Inc., the Longmont, Colo.-based electronic
bill presentment and payment solutions provider. Solant adopted
WAP into its EBPP software for wireless devices in June.
"WAP is currently in
a nascent stage of development, so people are just starting to discover
it," says Bilbrey. "For example, I have a Motorola web phone, which
I use for business demonstrations. It only has three or four lines
of display, so it can say, 'Welcome Jeff, your bill is x'; then
I can scroll down and can pay it. So using it for more complex demos
is difficult."
Function buttons for
activities like payment also may become standard on web phones in
the near future. "Special buttons on the touch pad for navigation
are one of the little things that will increase the usability of
wireless devices," says Bilbrey. -C.W.T.
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Motorola is a strategic partner
with Salt River Project in a number of initiatives, including the SRP
Spatia web-based business venture, which involves wireless web-based information
collection and management.
"This alliance will speed the
delivery of exciting new utility services and products for our customers
and the larger market beyond SRP's service area," says SRP general manager
Richard Silverman, in Phoenix. SRP executives hope to use the Spatia platform
to serve customers not only across the United States, but also outside
of the country.
From a utility perspective,
cost has been a limiting factor until recently. "People have been dilly-dallying
for over a decade with wireless services, since they have not been cost
effective. The pilot projects told the utilities that people were not
willing to pay $200 per month for wireless service. But now the level
of home-based technology and the Internet can bring the cost down to a
return on investment in less than 24 months," says Marsh.
"Today the range of prices
that customers are being offered is between $5 and $15 per month, while
the one-time cost of setting up an Internet gateway is about $200, so
it won't take long to recover costs."
One reason that offering wireless
web-delivered services will be attractive to utilities is that once a
customer has purchased the first service, the cost of adding additional
services may be marginal.
"Software for additional services
can be downloaded in modules from the web, so a utility shouldn't have
to mess with the customer setup again, physically. If a customer wants
a new service, you can send a device for them to plug into the wall and
you distribute software to their gateway, so they don't even know it has
been updated," says Marsh.
The overall trend for moving
customer billing services to the web also argues for providing customers
with web phone access to ancillary service applications.
"With billing, settlement,
and other finance applications moving to a browser-based front end, the
plan is to have a utility's entire suite of software become browser-based
in the very near future; so clearly there are some synergies from a wireless
standpoint," says Dean Vassiliou, director of product management at Lodestar
Corp., in Peabody, Mass. Lodestar provides interval data for energy management
to customers on a web portal, which permits them to manipulate the management
through the web.
Wireless applications also
can help ensure that a utility's most valuable customers receive the best
attention.
"From a billing standpoint,
potentially there could be 10 percent of a utility's customers that make
up 45 percent of revenue in a critical billing cycle, so they might want
to make sure that the bills go out with no problem. Thus they might want
to use wireless technology to send the information to customer analysts-business
or information technology analysts-that might not be in the office," says
Vassiliou. "I've heard this discussed by a number of utilities."
Beyond the allure of additional
revenues, deregulation is making utilities and their affiliates more sensitive
to extra services that can help hold customers. "Customer retention is
a bigger driver for adoption than cost reduction or additional services
revenue," Caldwell says.
But Where Are
The Killer Apps?
The manufacturers of cell phones
have seen the explosion of web-capable phone use in markets like Europe,
and today, most cell phones manufactured around the world include the
technology necessary to permit web access-whether it is used or not.
"Some 80 percent of all mobile
phone sets now have the capability to access the web, and carriers have
capability to provide the access," says Marsh. "But the problem with the
growth of the market isn't access; it's having a compelling application
to use."
There is not yet an application
popular enough with consumers to drive the overall market, although promising
applications-including bill payment-are expected to emerge over the next
year or two.
"There have been some attempts
at taking websites and trying to shrink them to a few lines of text, but
wading through that becomes frustrating quickly on the small screen of
a cell phone," he says. (See sidebar, "Tiny Keyboards, Tiny Screens.")
Some business customers using
cell phones to take advantage of electric utilities' energy management
services, for example, are using the devices more for remote control than
for high levels of web interface, says Marsh.
"What we've found is that when
it comes to some types of services like those DTE Energy Technologies
is offering, they are used more like remote control. Their commercial
or industrial customers can analyze energy usage and get alarms if the
usage goes up. And their residential consumers can get an alert if the
temperature in their house gets too low or an appliance is accidentally
left on. In either case, the customers can go in and proactively change
the management settings."
The project being rolled out
by Coactive for DTE, an affiliate of Detroit Edison, involves two business
customer-oriented web-based bundles. The first is Energy!Now, which provides
energy monitoring and data services; the second, Safety!Now, involves
temperature monitoring and other services for companies in the food service
industry. DTE, which initially has targeted small businesses in the Michigan
area, for which spikes in energy bills can be critical to financial operations,
has found its offerings so well-received by customers that it is doubling
the size of the pilot project, notes Marsh.
Such remote control usage is
not administered purely from a customer's web phone, however.
"Customers at home can click
on the Coactive home page, and can set preferences and values on the web;
then they use their cell phone for remote control. The two Internet interfaces
go hand in hand," he explains. Thus the limitations of screen size and
keyboard access do not necessarily prevent wireless customers from taking
advantage of sophisticated wireless services.
Other types of services that
are expected to increase usage of the utilities' web-based portals are
security and medical monitoring. For home security, an alarm can send
a signal to the customer, who in turn can determine whether to alert police
or other security providers. Once cell phones are able to receive video
signals, a short video clip of the home or business may be able to help
customers determine the appropriate level of response. For medical monitoring,
"customers can have full flexibility in setting up complex schedule preferences,
as in medication for an elderly relative, so if a nurse doesn't show up
and give the medicine, the customer gets an alert," says Marsh.
Wireless applications also
can permit utilities to link their customers with third-party service
providers, further establishing the utility-selected Internet portal as
a customer's primary web nexus.
"Wireless alerts can provide
analysis of the functionality of certain home appliances so that users
know whether a refrigerator or a dryer is not working properly; failure
then can trigger a user call to a manufacturer to dispatch a repair person,"
observes Maglioni.
With the rise of Internet banking,
utilities also may choose to begin offering financial institutions access
to their websites, so customers might seek out additional services that
can subsidize the utility's web portal operating expenses.
Charles W. Thurston, who
writes on global finance and information technology, is based in Willow,
N.Y.
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