Motorola and Sonera's Holiday Gift From Hell

I've always been a big fan of Ingmar Bergman. None of that feel-good slush from him. He peaked with Scenes from a Marriage -- a dissection of a Nordic marriage as an icy hell of destructive self-delusion, corrosive pride and impossibility of redemption.

Too bad he wasn't into documentaries about mobile telecommunication companies: He'd have a ball with the newly launched Sonera Group's (SNRA:Nasdaq - news - boards) General Packet Radio Service featuring the Motorola (MOT:NYSE - news - boards) Timeport handset, introduced in mid-December. It's a marriage made in hell in a very Bergmanesque sense.

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GPRS is one of the new mobile data technologies intended to boost the data transmission rates of current mobile networks and turn mobile Internet into a consumer-friendly, addictive feature of mobile handsets. Sonera and Motorola's commercial launch of GPRS in Finland is a case study of what happens when overly aggressive companies hook up to showcase their "first-mover advantage."

There's a valid reason why many of Sonera's peers have postponed their launch of GPRS into next spring -- they want to iron out the network bugs before pushing GPRS on consumers. What Motorola and Sonera are about to discover is that the first-mover advantage is only an advantage when it creates good will among consumers. If it means using paying customers as beta-testing droids, the results can get real ugly real fast.

Motorola and Sonera make an archetypal Bergman couple because at this point they are fundamentally motivated by desperation. Motorola needs to show that it still has what it takes in the mobile handset market. Similarly, Sonera needs to show that its recent share price collapse is unfair -- that it actually is the global leader in mobile content delivery that its press releases claimed it was in the halcyon days of late 1999.

These days, however, wishes can be hearses rather than horses. Motorola is able to launch GPRS months before Nokia (NOK:NYSE - news - boards), because the latter company has declined to bring immature GPRS models into the market. But for the besieged wireless industry, Sonera's and Motorola's haste may poison the well for many players, no matter how cautiously most of them proceed. The result might be some serious PR havoc around a new technology. This is not exactly what telecom investors want as a follow-up act for the year 2000.

Motorola and Sonera were adamant about being among the first companies in the world to launch GPRS handsets to noncorporate customers. They had to do it before Christmas 2000, because that was the self-inflicted target date, come hell or high water.

Two weeks later, the latter has arrived in the form of devastating early reviews in Finland. Reports about the atrocious quality of this GPRS service have been published in major newspapers such as Helsingin Sanomat and Kauppalehti. A vicious publicity backlash is in full swing; and only because of foolish corporate vanity.

Here's what several telecom engineers engaged in extensive testing of the new GPRS services are talking about:

• Net access speeds topping 20 seconds.

• A "dropped-call" rate of more than 50% of all GPRS calls made.

• The unstable Timeport operating system crashing regularly as a result of a attempted GPRS connections.

The irony thickens just about here -- the very point of GPRS was to turn the currently clunky Wireless Access Protocol, or WAP into a faster, smoother, more reliable product than it was in its current older, circuit-switched incarnation. The whole point was to avoid the publicity nightmare that resulted from early WAP models delivering less than stellar user experience.

At this point it's hard to pinpoint the source of the early problems. They could derive from the inability of Motorola phones to talk with the Nokia/Ericsson-built GPRS infrastructure of Sonera. They could derive from WAP gateways. They could derive from buggy phone software. There were serious incompatibility problems when GSM itself was launched, but most of these early problems were ironed out. But that was way back when -- at that time new mobile products did not face the full blast of media attention from day one.

In chasing after a quick credibility booster, both Motorola and Sonera are managing to erode their reputations even further. Instead of creating new faith in their ability to move toward next-generation 3G products, they are now managing to raise questions about the viability of even a far simpler 2.5 technology such as GPRS. That's a whole lot to pay for the "first-mover" bragging rights. I hope it was worth it -- for the sake of the rest of the industry.

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Tero Kuittinen is the vice president of wireless telecommunications at Halsey Advisory and Management, an investment firm based in New York. He is also the senior strategist of SpringToys, a mobile entertainment start-up company based in Helsinki. He is currently working on his Ph.D. in neurobiology research at the University of Helsinki. At time of publication, Halsey was long Nokia and long Nokia Put Options, and long Ericsson, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Kuittinen appreciates your feedback and invites you to send it to Tero Kuittinen .