America: Land of the crummy-sounding cell phoneJuly 18, 2011: 8:51 AM ET
Want to buy a high-definition cell phone? You can now get one in 22 countries, including Uganda — but not the U.S.
FORTUNE -- Thirty years of experience have taught people to expect conversations over mobile phones to be low-fidelity affairs. But around the world people are quickly learning it doesn't have to be that way.
Today, the technology exists to make mobile phone calls sound not just good, but flat-out great. This month Uganda became the 22nd country in the world to offer users "high-definition" mobile phones. Ads around the capitol city of Kampala boast of a dramatic increase in voice quality. "Hear better, feel closer with these HD-enabled phones," reads one Ugandan ad.
The global trend of rapidly improving voice quality may come as a surprise to America's 270 million cellular subscribers, who never see an ad for a high-definition phone. The reason: Not a single American company sells an HD cell phone. Not AT&T (T), not Verizon (VZ), not Sprint (S). No one.
HD phones exist elsewhere in North America thanks to Wind Mobile, an upstart Canadian carrier that began to offer the service in January. Wind Mobile customers who buy a Google (GOOG) Nexus S handset can now make HD calls in Vancouver, Calgary, Edmonton, Ottawa and Toronto. Roam into Detroit, Seattle or New York, however, and the phones simply drop back to the traditional shoddy voice-quality levels.
Asked why high-def phones are available in countries from Uganda to Canada but not in the U.S., AT&T and Verizon declined comment. A Sprint spokesperson said in an email that "Sprint is closely looking at this capability and assessing if we will add it." A spokesman for the U.S. industry's main trade group also declined to offer an explanation.
The answer isn't that the American companies are too cheap to spend money improving their networks. They have been pouring money into upgrades, spending a collective $25 billion on their wireless networks last year. Industry giant AT&T jacked up its capital spending by a more than 50% in an effort to improve its wireless network quality.
And yet while selling phone calls still accounts for a majority of the companies' wireless revenue, the billions that get put back into network upgrades went into making the data side of the network better. Phone calls still sound just like they always have. The incentive is obvious: The companies want to invest in the side of business that is growing, and after three decades of growth, cellular voice revenue has begun to shrink. Subscribers willing to pay more for smartphones that run all sort of new apps are now the industry's all-important engine of growth.
There are ways to slow any decline in voice revenue, including the obvious option of getting people to talk on their cell phones more by making their phone calls sound better. Unfortunately, doing so would chew up a big chunk of capacity, capacity the carriers don't have to spare since most of it goes to smartphone users downloading maps, video clips or other bandwidth-hogging apps.
While networks vary, they all compress phone calls into tiny digital streams, sacrificing sound quality to save network capacity. A typical call in the U.S. might use 8,000 bits per second of wireless capacity. The new HD systems springing up around the world typically boost that by 50%, to 12,000 bits per second. They also use better software to encode the human voice more cleverly, further helping preserve its fidelity. (So-called "adaptive multi-rate wideband technology" results in a broader range of audible frequencies; traditional landlines and cell phones clip off low tones below 300 hertz and high pitches above 3300 hertz. The current crop of HD phones double the frequency range.)
While the first generation of HD phones now being deployed around the world offer a big step up in audio quality from today's low-definition phones, calling the phone calls "crystal clear," as many ads do, is a bit of a stretch. "Moderate definition" might be a fairer description of their audio fidelity than "high definition." Here's a sample of a regular cellular call vs. an "HD" call on the Wind Mobile network.
But if the first generation of HD cell phones stop short of truly high fidelity, HD phones that sound indistinguishable from face-to-face conversations are coming. The new 4G cellular networks use a standard called LTE that will ultimately make deploying full HD even easier. For the first time, the new LTE networks will treat phone calls just like any other "app," making it much easier to ratchet up the bit-rate of individual calls. Engineers say that with 25,000 to 30,000 bits per second they can achieve sound quality that's all but indistinguishable from a face-to-face conversation.
LTE will also improve other parts of the call beside audio fidelity. Most importantly, the LTE systems have been designed to eliminate the annoyingly noticeable lag that plagues today's networks, including the current HD systems.
Still, the improvement in sound quality from regular cell phones to the first generation of HD phones now on sale around the world is dramatic enough for companies to base advertising campaigns around those little subtleties of human communication that can now get conveyed in a cell phone call.
Such ads are increasingly common in cities such as London, Paris, Moscow, Cairo, Istanbul and Sydney where the HD phones are now sold. One cute ad on Romanian TV explores the different meanings "hmmm" can take in life — subtle meanings that would never come through on an American cell phone.
Meanwhile in the U.S., Verizon ads continue to ask the increasingly archaic question: "Can you hear me now?" That slogan was born in an era when consumers were happy with any cell phone network that didn't garble their words or cut off their call mid-conversation. Today the phrase feels more like a testament to the middling ambitions of the American cellular industry. Around the world cellular customers have moved on to a new question: "Can you hear how good I sound now?
Verizon president Lowell McAdam will be interviewed on stage at Fortune's Brainstorm Tech conference on Wednesday. Sign up here to see it live.