Subject: [NEXTEL-1] Fierce competition, hot new technology, number portability, all point to shakeup as firms jockey for market superiority

From: Marcel <[email-masked]>
Date: Mon, 21 Apr 2003 19:08:28 -0400

Apr. 21, 12:27 EDT

Who will win the wireless war?

Fierce competition, hot new technology, number portability, all point to shakeup as firms
jockey for market superiority

Peter J. Howe

The Boston Globe

Raging competition in the wireless telecommunications industry is spurring services well
beyond
free nights and weekends and sexy new handsets. Consumers are seeing pictures on phones,
more walkie-talkie services and a growing push to get landline customers to go
all-wireless.

As industry analysts look ahead to competitive battles this year, another issue could be a

long-delayed U.S. federal mandate that would let cellphone owners keep their own phone
number when they switch carriers. The move, set to finally take effect in November, could
potentially unleash a wave of millions of disgruntled subscribers jumping from carrier to
carrier.

Wireless carriers who have battled the switch will be in federal court tomorrow proposing
to
raise the ante: They want landline carriers to be required to let customers keep their old
home
or office number when they sign up for wireless service. That could turbocharge the small
but
growing trend of Americans using a cellphone as their only phone.

The multiple competitive fights take place against the backdrop of a slowing industry.
More
than half of all residents of the United States now own a cellphone. The U.S. industry
added
just 6.2 million customers in the second half of last year. That 4.6 per cent growth rate
was the
slowest since the launch of U.S. cellular service in 1984, according to the Cellular
Telecommunications & Internet Association.

In Canada, there were more than 12 million cellphone users at the end of 2002 representing
a
penetration level of about 40 per cent. It's expected to reach 50 per cent by the end of
2004.

The industry remains hot, perhaps too hot. "Wireless carriers are facing the clear and
present danger of competing
themselves to death," said Roger Entner, a Boston wireless exec.

Many carriers have begun stabilizing prices to slow down a fierce price war. Still, they
are finding other ways to compete.
Such as:

* Pictures. American carriers generally began selling handsets with full-colour screens
only last summer and fall. But already
players such as AT&T Wireless and Sprint PCS are exploiting their capabilities to push new
services, including phones that
can take and transmit digital photos with built-in cameras or keychain-size attachments.
They are hoping the services prove
as popular here as they have in Japan, where an estimated 10 million camera phones are in
use, driving demand for
high-speed data services.

Jeff Hallock, senior director of consumer marketing at Sprint, said owners of its camera
phones, such as the $350 Sanyo
SCP-5300, are now sharing an average of 14 pictures a month. Sprint six weeks ago launched
a slide-show news offering
called 1KTV, which for $4 a month gives viewers 60- to 90-second news, sports,
entertainment and weather broadcasts
with stamp-size colour images accompanying narrated news. Sprint is rolling out two more
camera-phone models this
spring.

Verizon Wireless has launched a $5 service offering access to Web cams through certain
models of cellphones. It hopes to
see markets evolve for people using their phone to check traffic cameras or home "nanny
cams" or even units that show the
lineup at a car wash or fast-food drive-through.

* Walkie-talkie. Nextel Communications, with average monthly revenues approaching $70 per
subscriber and the industry's
lowest rate of "churn," or customer loss, has become the envy of other carriers that
credit much of Nextel's popularity to its
Direct Connect walkie-talkie feature.

Verizon Wireless, Sprint and AT&T Wireless say they expect to launch trials or similar
services within a year. Vendors such
as Comverse Technology Inc. and the European troika of Ericsson, Nokia and Siemens are
offering systems they say would
allow people to connect directly to subscribers from multiple carriers, not just within a
one-carrier system like Nextel's.

Nextel is countering by expanding Direct Connect from regional markets to cover
coast-to-coast U.S. direct calls by
summer. It has highlighted predictions that other carriers' services might take several
seconds to connect initially.

"My sense is that we will be able to deliver a service that customers will find very
usable, moving well beyond a certain
carrier's proprietary technology," AT&T Wireless chief technology officer Rod Nelson said.

* Number switching. Nov. 24 remains the stated Federal Communications Commission deadline
for wireless carriers to
adopt the same "local number portability" system that landline carriers such as Verizon
and SBC have adopted to let
residential and business customers moving to competitors or cable telephone systems keep
their old number.

Because carriers now spend as much as $300 just to get a new customer, any change
increasing carrier-switching by
customers could shred already anemic profits for the industry. Just who emerges as the
biggest losers remains unclear, but
some analysts cite Cingular and Sprint PCS as companies with weak customer satisfaction
records that could face
defections.

Tomorrow, the CTIA and carriers will be arguing the FCC lacks authority to mandate the
change, but if it does, it should
apply it to people switching a home phone for a wireless phone. It's estimated landline
carriers are facing an $18 billion US
loss in revenues by 2010 from replacement of home and office lines with cellphones.
"There's a huge youth market that is
more likely to cut the cord," an executive said.

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