Internet Companies To Lose Their Wires

LOS ANGELES -- Signaling that the next battlefield for the communications customer will be the mobile phone, several leading Internet firms have announced deals to provide services to wireless users over a new generation of portable devices.

Among others, America Online on Monday announced partnerships with Sprint PCS and telephone manufacturers Motorola and Nokia to bring its service to wireless subscribers; the Internet service provider Earthlink announced its own deal to provide Internet access to Sprint PCS subscribers; and Microsoft's MSN Internet Service announced a partnership with Qualcomm to jointly develop a line of "smart phones," as well as deals with AirTouch and other telephone carriers to transmit MSN e-mail and other services to their portable phone customers.

"AOL, MSN and Yahoo! are already battling for the mobile customer," said Josh Bernoff, an industry analyst for Forrester Communications, a Boston consulting firm. "That's true even though the number of users that can access [the information] today is close to nil."

The deals were among several timed to coincide with the annual Cellular Telecommunications Industry Association trade show, which opened Monday in New Orleans. Taken together, they underscore the Internet industry's recognition that delivering data to owners of mobile phones stands to become a tremendously lucrative business over the next few years.

"It's amazing to see people like Bill Gates and Steve Case here," said Mark Lowenstein, global wireless analyst for the Yankee Group, referring to the chairmen of Microsoft and AOL. "You couldn't drag these guys to this meeting two years ago."

Surveys project that there will be more than 1 billion mobile phones in use worldwide by 2003, with more than half capable of accessing data via the Internet. That has set off a land rush among web companies vying to deliver e-mail, stock quotes, localized maps and entertainment information, and even music and video to wireless devices.

"There's one view that this is about moving the home [Internet] environment into the wireless space," said Dennis Patrick, the former Federal Communications Commission chairman recently named president of AOL Wireless. "But we probably haven't even begun to think about all the applications that will only exist on wireless."

For Internet service providers such as AOL, MSN and Earthlink, partnerships with wireless service carriers are crucial to ensuring they can reach their subscribers via any technological device.

AOL's "AOL anywhere" strategy, means its service must be available over telephone lines, cable television networks, wireless systems and any other networks that emerge.

For now, that means making deals with the cell phone companies, which monopolize the customer relationship with their subscribers. AOL's partnership with Sprint, for example, guarantees AOL a spot on the display on most Sprint PCS telephones, allowing its subscribers to access its service with the press of a button. But it must share that window with Yahoo!, Earthlink and, all of which also have non-exclusive deals with the telephone company.

From Sprint's standpoint, the partnerships are valuable now because they are likely to bring in new customers - including AOL's 22 million subscribers - and increase existing customers' use of their networks. In the future, however, the telephone companies hope to claim a share of actual commercial transactions completed over their telephones - by callers buying books from Amazon over the cell phone, for example.