This is not one of the many articles about the emergence of the “sleeping giant” India or China. Instead, this article will focus on the emergence and continued strength of another long sleeping giant, the North American wireless data market. By “wireless data market,” I am referring to the wireless messaging, browsing and download services available on all major wireless carriers in the U.S. and Canada.

The false dawn
The wireless data market in North America appeared to come to life during the over hyped Wireless Application Protocol (WAP) boom in 1999-2000. The wireless industry spent enormous amounts of money in predicting imminent, ubiquitous availability of high-speed third generation (3G) wireless networks with fast and slick browsing user experience.

Unfortunately, reality did not match expectations. The basic problem was that the networks were too slow and the browsing experience on small monochrome screens was cumbersome. I will note that neither of the two problems above were an inherent limitation of WAP—they were limitations of the environment WAP was running on. The crash was severe, affecting companies from telecom equipment makers to WAP development houses.

In 2001, as we started m-Qube at the time, we saw several encouraging signs that the wireless industry may have learnt some lessons from the crash, primarily by a judicious combination of picking what worked in Europe and Asia plus making evolutionary rather than revolutionary change.

Interoperability always leads the way
It is incredible to think now that as few as three years ago I could not simply send a text message from my Cingular phone to my colleague’s Verizon Wireless phone. Each of the wireless carriers ran their messaging service as a completely closed network, with no ability for subscribers to text each other across networks—it was as though AOL users could not send email to Yahoo! users and vice versa.

Europe has shown time and again, with U.K. and Italy as excellent examples, what happens when the carriers lifted this restriction and allowed interoperability. The inevitable network effect of having more people connected and capable of communicating kicked in, resulting in the carriers gaining high-margin revenue from text messaging.

The North American carriers opened up in the spring and summer of 2002 and after a slow but steady start, text messaging appears to be generating the same results in the U.S. and Canada as in Europe, particularly amongst the youth market.

Show them the money
NTT DoCoMo introduced the i-mode service in Japan in 1999, in response to their perception that the traditional voice services market was reaching saturation in Japan and that consumers were in need of new data-driven services.
NTT was daring and farsighted in the technology and business model they adopted in introducing the i-mode service—they made it easy for developers to create and promote new applications and sites but even more crucial was the decision to let the developers keep a majority of the revenue derived from consumers using the applications and sites.

As the i-mode service generated good revenues for NTT and third party developers alike, NTT showed that it was indeed possible to maintain a closed, proprietary wireless data network while at the same time nurturing a thriving and profitable third party application market.

North American technology providers like Qualcomm and carriers like AT&T Wireless, Verizon Wireless and Sprint PCS were paying attention, and they introduced one or another form of application or content download service where chosen/approved third party developers could participate in the revenue share whenever consumers downloaded games, ring tones or wallpapers. This is what I mean by an evolutionary step—the carriers did not open the door to all comers, rather they built a sometimes cumbersome but always thorough qualification and testing procedure to bring the chosen few third parties on board.

As a result Verizon Wireless’s GetItNow service—based on Qualcomm BREW, ATT Wireless’s mMode service—now branded as Cingular Media Net, SprintPCS Vision and other like services from North American carriers are providing excellent returns on carrier investment.

Further opening the doors
Since early 2004, the messaging market has moved rapidly from consumers being able to send messages to one another to consumers being able to interact with applications and service providers using text messaging as the communication medium. The text voting for American Idol is a good example of a messaging driven application. We at m-Qube currently have over 100 messaging content providers driving a variety of premium messaging applications through our gateway, all generating revenue with a variety of applications ranging from premium chat to baseball score alerts.

Where is it all going?
We are at the confluence of three hot markets: the “classic” cellular wireless market, the IP telephony (VoIP) market and the portable consumer entertainment device market. Not a day passes by without a story about yet another cool portable game or music device or yet another VoIP initiative or the further growth and penetration of the wireless carriers. I think we’re racing towards a convergence of the technologies and the business models of these three areas.

It’s a phone, no it’s a PDA, no it’s a Walkman, no it’s an iPOD!
This should not be a surprise to anybody watching the new releases from device manufacturers like Nokia and Sony Ericsson—we’re being treated to a wide variety array of devices that bring together a variety of consumer entertainment and personal productivity features.

Meet the new carriers:
Yahoo!, Comcast and Vonage?
Imagine a wireless device that has Wi-fi connectivity, cellular wireless radio connectivity, VoIP capability and the ability to handoff between carrier networks (Wi-fi to cellular) as you move around. I have seen the demo, and I believe it’s just a matter of time before large portals, ISPs and VoIP providers emerge as a new breed of wireless carrier.

There will always be a ringtone market
A query I often get, once people can play full MP3’s on their phone, won’t ringtones market die? I don’t think so, not as long as consumers want to personalize their wireless device—my ring tone is an attempt on my part to let others know who I am, what I listen to and where I fit in the consumer culture.

Finally, the brand is king
I would not be surprised in 2007, if the list of wireless carriers includes not only Verizon Wireless, Cingular and Nextel but also many smaller brand-driven players such as Virgin Mobile, BOOST Mobile, Amp’d Mobile, Yahoo!-meets-Skype, Vonage, ESPN Mobile, Disney Mobile and more. The latter names are what we in the wireless industry call Mobile Virtual Network Operators. We started m-Qube with the goal of providing a platform for these MVNOs—the wheel is gratifyingly coming to a full circle.