Remember when bluetooth was going to change your life? Named after Harald Blåtand, a Viking King who united Norway and Denmark in the 10th century, Bluetooth (English for Blåtand) is a wire-free way to unite electronic devices and it promised to eliminate cabling for good. Originally dreamed up by Ericsson and released as an international standard in 1998, Bluetooth has been the subject of the wildest predictions; one report issued last year said that by 2006, Bluetooth-enabled devices would generate an astounding $333 billion in revenue.
So far, Bluetooth has failed to live up to its hype. Analysts and industry experts have repeatedly rolled back projections, blaming the global economic slowdown, high costs, and glitches in actually making the thing work. Yet industry insiders say there is another, quieter reason that Bluetooth is not yet a household word: the mobile-phone industry is resisting Bluetooth because the technology inadvertently could end up saving consumers a lot of money and cutting into mobile network profits. How? Software called cordless telephony profile (ctp) allows business users and consumers to use Bluetooth-equipped cell phones to connect directly to the fixed-line network when they are in a Bluetooth-enabled zone. By so doing, they bypass the costlier mobile network and save big on their phone bills. Cost reductions are already being offered by Norwood Systems, a company in Richmond-upon Thames, England, which makes a wireless communications platform that allows wandering office workers to make telephone calls over the fixed network via Bluetooth headsets, for up to 60% less than calls made from a mobile phone inside the office. This can save $100-$125 a month per user on corporate mobile-phone bills. Once CTP is available, the company says users will be able to reap similar savings, and be able to use the same device their regular mobile phone inside and outside the office.
The demand for such cost-efficiency is huge. The Gartner Group, a technology consultancy, estimates that 30% to 40% of all missed business calls occur when people step away from their desks to go to another part of the building. Hence, businesses are seeing a dramatic increase in the use of mobile phones inside offices and an equally dramatic ballooning of phone bills. Getting those costs under control is a priority for business, and CTP seems a good way to help.
But so far most handset manufacturers aren't including CTP in their products. While fixed-line carriers, such as the U.K.'s BT, say they are potentially interested in exploiting the technology, handset manufacturers' biggest customers mobile operators aren't requesting it. "No one is going to own up to this, but there is a desire and real pressure on the part of mobile operators to limit its development," says Andy Brown, a U.K.-based research manager for the technology research firm IDC.
Saving customers money may not be the first priority for operators struggling with billions of dollars of debt. But the standoff is frustrating companies working on ways to allow cost-efficient roaming across different phone platforms such as Norwood Systems, and a competitor, Red-M, in Wooburn Green, England. Red-M has developed software that enables roaming between phone networks, Bluetooth and 802.11, a standard which allows broadband wireless Internet access. Both Norwood Systems and Red-M say their technology can't reach critical mass until handset manufacturers start putting CTP in mobile phones.
Nokia says it sees no business case in the short term for CTP, claiming that there are easier ways to reduce mobile-phone bills. Sony Ericsson says it has no immediate plans to include CTP in its handsets. For its part, Motorola says it is evaluating CTP at the request of fixed-line operators who are interested in using the technology but is not sure when, or if, it will offer it.
At some point, customers are presumably going to demand CTP, if analysts' predictions turn out to be true. Market-analysis firms estimate that between 490 to 600 million Bluetooth devices worth $158.6 billion will be shipped in 2006, up from the estimated 30 million Bluetooth devices worth $9.6 billion expected to ship this year.
The majority of Bluetooth devices are likely to be mobile phones. Ironically, the mobile providers are resisting CTP at a time when they are trying to figure out ways to hang on to their customer base. Paul Østergaard, co-founder and CEO of Norwood Systems, argues that the best way for telecoms operators to reduce customer churn is to offer additional services. "The most successful carriers will be those that provide customers with the Bluetooth services they are demanding," he says. But customers can't demand CTP until they know it exists and mobile operators don't seem overly keen to tell them