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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.
"There are only so many consumers willing to sign on upfront for data on top of voice plans with today's rates," said Current Analysis analyst Avi Greengart. "There are a lot of people who want smartphones who are held back by the cost of the data plan."
But Gartner's King said that carriers are not ready to budge on retail prices partly because many corporate clients are already renegotiating cellular contracts to cut costs.
One big concern is that big discounts could lure so many new users to a network that performance becomes visibly weaker for carriers, which want to cut capital spending this year.
"The mobile Internet has finally taken off. Now we need to cope with the traffic," said IDC analyst Scott Ellison. "I think carriers are going to be very leery of encouraging usage they can't support."
As a result, discussions about technology alternatives will abound at the show. One option involves installing Wi-Fi on more phones. The short-range wireless technology offers fast Web access but is independent of carrier networks.
Another option is an emerging technology known as femtocells, which boost network coverage indoors and alleviate the strain on carrier networks. But prices for femtocells may take time to reach the $99 or less level needed for mass adoption, Ellison said, compared to more than $200 now.
In the meantime, carriers could experiment with cheaper fees that limit a user's Internet access. As the price of phones and wirelessly connected computers fall, so must service fees, analysts said.
"If they're going to go with lower-priced devices, they'll have to have lower-priced services," said Gartner analyst Ken Dulaney.
(Reporting by Sinead Carew, editing by Tiffany Wu)
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