Mobile software, data fees in spotlight at CTIA

By Sinead Carew

NEW YORK (Reuters) - Move over fancy, pricey cell phones. The buzz ahead of the annual CTIA wireless show next week is all about cheaper data plans and mobile software stores, where a few dollars can get you a game or other cool application to impress your friends.

With consumers more cautious than before about shelling out for new smartphones, vendors are hoping applications will help sales. As a result they are turning to online stores to compete with Apple Inc, which sells downloadable software, ranging from the practical to the ridiculous.

Carriers in turn hope the new applications will increase interest in data services and boost revenue -- though with the economy in tatters, a big debate is brewing over whether phone operators need to lower the price of data plans.

"Last year (CTIA) was really focused on devices like Android and the iPhone. Now people are realizing the power of applications for these devices," said Gartner analyst Michael King. "I think this year it's going to be all applications."

The U.S. wireless showcase will take place in Las Vegas from April 1-3, with attendance expected to be down 15 percent from last year's 40,000 people due to the weak economy. Speakers include executives from Verizon Communications Inc, Research in Motion, Deutsche Telekom's T-Mobile USA, Microsoft Corp and Clearwire Corp.

While there will be many new phones on display, applications have stolen the limelight in the battle to capture consumers' imaginations and their cash.

BlackBerry maker Research in Motion is expected to officially launch its mobile application store at the show and Microsoft is expected to talk up its applications marketplace due out later this year.

Sprint Nextel Corp will also demonstrate Palm Inc's widely anticipated Pre phone, which is designed to stand out by making it easier for consumers to use multiple applications simultaneously.

But some analysts are doubtful if these companies can attract the variety of software developers that were drawn to the hugely popular iPhone and Apple store.

"I think they're struggling to get the massive volume of developers Apple has," King said, referring specifically to RIM which is better known among corporate clients than consumers.

King expects a lot of attention at CTIA to go to new applications that put mobile users in a context, such as their location or if they are online and available.

DATA FEE DILEMMA

While Apple's App Store has proven popular, with over 800 million applications having been downloaded so far, it remains to be seen how many consumers can afford today's monthly data fees on top of voice rates.

Some analysts see data growth slowing unless carriers offer cheaper service plans. "Sixty dollars a month is a lot to ask in a recession," said NPD analyst Ross Rubin, referring to typical U.S. data service charges for wireless connections to portable computers. These are separate to phone data plans.

Monthly data plans for smartphones are cheaper -- usually about $30 for subscribers with contracts of two years -- but are still too high for many consumers, analysts say.