
“All it takes to make social networking a big hit on cell phones is the right kind of wireless network”
So says Dick Lynch, chief technology officer of Verizon (NYSE:VZ) Wireless, the US’s second-biggest mobile phone company.
Verizon just happens to be laying the ground work to launch a next-generation wireless broadband service in about 2010. That fourth-generation, or 4G, broadband network will be geared to social networkers, among others.
“What we see is the typical person today at Facebook or YouTube, or any social networking site, being the major wireless user of the future,” Lynch said.
Social networking Web sites like MySpace and Facebook have quickly gaining in popularity by letting users create online profiles, contact people and share video clips, music and photos.
Many analysts expect Verizon Wireless, jointly owned by Verizon Communications VZ and U.K. based Vodafone, to bid for a substantial amount of radio spectrum in January’s government auction of airwaves. With the spectrum it gets then and other airwaves it has stockpiled, Verizon Wireless plans to roll out a 4G broadband network.
The 4G network will have much improved two-way data speeds, with plenty of bandwidth for video services, interactive gaming and other applications. The social networking generation will help drive already booming wireless data revenue even higher.
4G isn’t going to be about more voice services or more text messaging, it’s going to be about interactive applications and about customers that are far more comfortable with and demanding of interactive applications - people who believe interactivity is a right.
Verizon Wireless saw revenue from wireless data services jump 63% to $2 billion last quarter.
Just like other wireless firms, Verizon still garners most data revenue from text messaging and ring tones. Music and video downloads, photo messaging and Web-based information services has started to grow at a faster rate, though.
Market research firm Ipsos says that young social network users are much more likely than older wireless subscribers to download music or video to mobile phones.
Verizon isn’t the first wireless firm to eye social networkers. In fact, it might be late to the game, despite its ambitious 4G plans.
In 2006, No. 1 social networking site MySpace struck deals with the nation’s No. 1 wireless service provider AT&T /Cingular and with Helio. AT&T has deals with Facebook and a few other social networks as well. And AT&T is in the early stages of rolling out a mobile video-sharing service over its 3G network, so its users can share video with other AT&T wireless users. Helio offers phones preloaded with MySpace features that make it easy for subscribers to view profiles or post comments and photos, and Helio also offers a one-click video-posting service to YouTube.
In September, T-Mobile USA introduced new MySpace features for its popular Sidekick phone.
T-Mobile has yet to build a 3G network like Verizon or AT&T, but it has said it plans to target social networks and user-generated content when it rolls out 3G services over the next year or two.
Rather than develop their own social networking products, market research firm Ovum says most wireless firms have decided that it is best to work with popular sites like Facebook and MySpace.
John Fletcher, analyst at market research firm SNL Kagan, says social networking will give wireless service providers a data revenue a boost.
“Today data is hovering at about 20% of total service revenue,” he said. “But a big chunk of that is from business users on BlackBerry devices and laptop computers. Consumer data revenue is much lower.”
Lynch says Verizon’s 4G network will bring about big changes in portable consumer devices. He says consumer devices such as cameras will now come with built-in wireless chips, the same as laptop PCs.