CTIA 2010 is now well underway. An exciting time for the wireless industry as a whole – and especially in the U.S. market – CTIA is one of the major industry events that helps set the tone for the wireless industry each year. Although I’m not attending this year, my colleague, Rob Adler, is in the trenches this week at the show. And as I keep up with the continuous flow of news from the show, I can’t help but wonder what this year’s general conclusion will be.

The way I see it, this is a critical time for the wireless industry – the overarching issue of bandwidth is one each service provider, application developer and consumer is well aware of – and one which everyone is trying to address. In Kevin Fitchard’s article yesterday, “CTIA: De la Vega asks app developers to share the mobile broadband burden,” he references CTIA Chairman, De La Vega’s keynote address which Fitchard says, “for the first time, he asked application developers and Internet services companies to share the burden of bridging that demand-capacity gap. New spectrum and 4G technologies like long-term evolution will solve only part of the problem, de la Vega said, while an applications market more conscious of the network’s limits, developing services optimized for mobility can do just as much to ease congestion.”

With many companies trying to conquer the three screen approach, mobile video on the rise, and new handsets that are trying to keep up with the iPhone’s popularity level, this isn’t an issue that will fade away anytime soon. As De La Vega pointed to in his speech, it’s only one that we can be more conscious of. Service providers are racing to roll out new 4G networks and services to enable the mobile infrastructure needed to keep up with the times. So will the buzz surround these new networks, or will it all be about optimizing our current networks? Only time will tell. There will be plenty more to read – and write about – from this year’s show… be sure to follow @Robadler for live updates.

New technologies are always evolving and changing the way we communicate. According to research from IPG’s Universal McCann and AOL, “One out of every seven minutes of media consumption today takes place via mobile devices…That’s expected to grow by 60 percent over the next two years.” Many of our clients are looking into website redesigns in order to make them more mobile-friendly. It’s interesting to see this shift. No longer is just having a blog good enough. Now it must be mobilized. And in doing so, we are finding that content must be refreshed more frequently, so as not to get lost in the shuffle

MediaPost recently reported on a new survey by Princeton Survey Research International, which found that 90 percent of Internet users between 18 – 29 use video sharing sites, up from 72 percent one year ago. But that’s not all. Online adults ages 30 – 49 also showed big gains over the past year; 67 percent now use video-sharing sites, up from 57 percent in 2008. So we now work with our clients to produce more video content and add pictures and videos to press releases.

Additionally, how we get news and information is changing on a regular (dare I say, daily?) basis. As PR professionals, we focus on people who are influencers. Traditionally, this has been the media or industry analysts. While these folks remain influential, there is a new group of influencers. There are blogs that comment on or repackage the news, some of whom have larger followings than the original content (e.g. Gawker).  People  now regularly forward news to their friends and colleagues via social networks and Twitter.

PR is also an ever-evolving game. Not so long ago, press releases went out via fax. You read that right, fax. That little machine in the corner of the copy room that the interns look at in bewilderment. That was cutting edge. Then came e-mail. Now, as how people get their news is in a state of constant change, we are continually adapting to make sure that we are getting the word out to the right people in the way they want to receive it.  I guess it is not surprising that change has come to news, which after all, is the business of reporting on change.

Recently, the Wall Street Journal reported that AT&T is looking to extend its exclusive deal with Apple to sell in the United States until 2011. This news is not particularly surprising considering the company’s business model for the popular handset.  AT&T’s iPhone business model is like a crack addiction. It delivers a short term high, then sinks into an addiction and ends badly.

The High:Selling iPhones for less certainly helps increase Apple’s sales volume and AT&T’s short term bottom line. There were 1.6 million new iPhone subscribers on AT&T’s network in Q1 2009, with 40% of  those customers new to AT&T. According to the New York Times, iPhone customers are particularly valuable because their average bill is 60 percent higher than the company’s overall customer base. The Times estimates that iPhone exclusivity generates $700 million per year in operating profits.

The Addiction: Where’s the problem in millions of profitable new customers?  As I discussed in AT&T’s Value to iPhone Users: Negative $400/phone?!, these customers are really Apple’s  with little loyalty to AT&T.  AT&T’s business model is based on subsidizing the cost of the iPhone and making its profits from high monthly fees over the life of a 2 year contract. The Wall Street Journal estimates that it has spent upwards of $1.3 billion to discount the iPhone.  So the company relies on higher service fees that is supported through exclusivity.

Given this business model, you would expect that AT&T would make its customers feel like they get great value and service from the carrier to mitigate the effects on the eventual loss of exclusivity. Unfortunately, they do exactly the opposite.  Despite claims of the fastest 3G network,  a Gartner research study found that AT&T customers often receive half the advertised data rate.  Contact from AT&T is pretty much limited to the bill and text messages upselling higher priced services. The popular applications come from Apple and not AT&T. So customers get cheap phones and applications from Apple, and poor service and high fees from AT&T. Not surprisingly,  iPhone customers love Apple. AT&T? Not so much.

 It Ends Badly:  So, what happens when the exclusivity ends? On this issue, iPhone customers fall with three categories: customers who will leave AT&T as soon as they have an alternative, customers who might stay with enough incentives, and AT&T employees. Without customer loyalty, the company will take a significant revenue hit both from lost customers and additional subsidies and lower monthly frees that will be required to keep existing customers.

So AT&T is left with two expensive choices. To feed the addiction caused by its business model, it can pay Apple dearly to extend the exclusivity. Also, Apple will likely hold AT&T’s feet to the fire regarding expensive service upgrades to its 3G network.  Still, this only  staves off the inevitable. Eventually, exclusivity will end. At that time, profits will drop through defections to other providers and lower monthly fees. Cutting corners on communications combined with a poor business model always is very expensive.