Wireless Broadband Race Tightens

Everyone's playing to win the wireless data game, but the approaches are starting to differ.

Big telcos such as Cingular, Verizon Wireless and Sprint (FON Quote) are driving the high-speed push. Neck-and-neck in the early stages of this high-stakes race, they see wireless data as a big sales opportunity just as calling-service revenue is starting to plateau.

Selling office-speed Internet connections to on-the-go mobile customers could be worth billions to equipment companies like Lucent Technologies (LU Quote), Ericsson (ERICY Quote) and Nortel Networks (NT Quote) as well.

But there are a host of challenges that make so-called third generation, or 3G, wireless a risky bet.

The cost of upgrading a national network is steep, and there's no guarantee of payback. And as compelling as fast mobile Net access sounds, the actual demand for the service -- which carries a hefty $80 monthly price tag -- has only been guessed at. Then there's a phone upgrade required, and new high-speed-enabled handsets fetch a budget-busting price of $200 or more.

Meanwhile, outfits like the T-Mobile division of Deutsche Telekom (DT Quote) have gone the other route, installing Wi-Fi gear in coffee shops, airports and bookstores to create a system of hot spots where subscribers can log in with laptops for $30 a month.

While officially the phone companies say damn the skeptics and vow to charge full-steam ahead, at least one of the players is pacing itself.

Last month, Deutsche Bank analysts said Cingular would likely trim its target cities to less than the 15 to 20 originally planned. The company says that's not true. One person familiar with the network upgrade says Cingular will probably stick to its promise rather than take a demerit for coming up short.

However, that doesn't mean Cingular's plan to shift to faster universal mobile transmission system, or UMTS, upgrades are completely on track.