February 20, 2006

What To Do When Features Are Forced On You? [10:45 am]

I have colleagues who are desperate to find cellphones without cameras so they can take them to secure sites: It Rings, Sings, Downloads, Uploads. But Can You Stand It?

If the nation’s biggest cellular carriers are not impressing early adopters like Mr. Harper, it may be years before ordinary consumers start signing up in sizable numbers for the new services, which were introduced about a year ago.

American carriers combined have spent about $10 billion in the last three years to upgrade their networks. Verizon Wireless now offers 3G services in 181 markets, while Sprint expects to match Verizon’s coverage in the coming months. Cingular uses a different 3G technology that is available in 52 cities. (T-Mobile, the fourth-largest carrier, plans to introduce 3G services next year.)

With individual subscribers spending less on standard voice-only plans, the carriers are banking on consumers to move rapidly to more expensive 3G services and do more than talk on their handsets. But the experience of carriers that introduced 3G services in Japan, Korea and elsewhere is sobering. In those countries, it took years before phones and plans were cheap enough to entice consumers to use the new data features, and even longer before carriers saw any return on their investment.

American carriers have not released separate figures for 3G cell subscribers. But industry analysts say there may be fewer than five million 3G phones in use, or less than 3 percent of the market, and only two million of those are connected to a 3G data plan.

“The biggest impediment is not pricing or technology, but consumer behavior,” said Charles S. Golvin, an analyst at Forrester Research. “Most people still look at these things as phones.”

Later, related: Corporate Security: Too Many New Gadgets, Too Much Information at Risk

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