Subject: [NEXTEL-1] GSM heads for 50pc of US phones

From: [email-masked]
Date: Fri, 23 May 2003 13:30:07 -0400

GSM heads for 50pc of US phones
By Andrew Orlowski in Texas
Posted: 22/05/2003 at 18:00 GMT

While the battle to set Iraq's mobile phone standard may be over,
Nokia thinks that GSM can grab 50 per cent of the market back in
the Homeland. And analysts seem to agree it's far from impossible.
You might be as skeptical as we are, but the global GSM standard
and its variants are indisputably on the rise in the United States.

Before the champagne corks start popping in Stockholm and
Espoo, it's worth remembering a couple of things. Firstly, and rather
obviously, the protagonists in the rival camps are increasingly
mixing it. Nokia showed us its CDMA handsets at its Irving HQ, this
week and the high end model outclasses the offerings that CDMA
buyers currently face. Nokia's precise involvement in bringing Texas
Instruments dominant OMAP platform for smartphones to CDMA,
which we reported last week, remains unclear. OMAP is used in
high-end Symbian smartphones from Sony Ericsson and Nokia, but
is GSM/GPRS only. Now these vendors will be able to sell OMAP
variants to CDMA network operators - a major boost for CDMA.

Meanwhile, Qualcomm itself seems to have remembered that it is,
primarily, a radio company. It's following the market for 3G by
providing software and infrastructure for W-CDMA, the
not-Qualcomm 3G standard, as the final picture in our GSMWorld
Cannes photo gallery illustrates.

Secondly, any discussion of winners and losers is meaningless
without the context of the operators. In the aftermath of inflated
telecoms evaluations, today's debt-ridden carriers have had to cut
their cloth for leaner times. The vast sums paid for 3G licenses
[MMO2, formerly BT Cellnet, wrote down its fee yesterday] are only
part of the problem. As
https://www.sys-con.com/wireless/contact.cfm editor points out, the
consolidation will come, but right now, they're too broke to buy each
other.

Going for broke

But the US, with its four incompatible digital standards, is a less
mature market, and has not yet reached the saturation point carriers
abroad discovered a couple of years ago. It has yet to face the
crunch. While there are so still so many potential subscribers out
there who are phoneless, the network operators feel that they can
justify spending huge amounts of money to gain share. And one
remarkable statistic we learned this week is just how much they
spend.

The figures range from $450 per new subscriber for Nextel, to $250
at Verizon. T-Mobile, AT&T Wireless, Sprint PCS and T-Mobile
range between $300 and $400. Clearly, this is an expensive
business, and one that isn't sustainable in the long run, given that
churn rates are likely to rise dramatically when browned-off US
cellphone users are finally given the freedom of changing their
network, but keeping their phone number. This is due to take place
in November, and industry watchers have their own sweepstake on
who'll fall the hardest and fastest.

Odd man out Nextel, the only carrier to use Motorola's iDEN system,
reports the lowest churn and highest satisfaction. But Nextel's long
term future may be in the nichest of niche markets.

The others have been nibbling at each other's market share without
dramatic shifts in power between the camps. The new GSM player
T-Mobile has gained at the expense of old Cingular, and Verizon
has gained at the expense of Sprint PCS. AT&T is making strides
converting its TDMA network to GSM/GPRS, and the market share
of the GSM players combined (38 per cent) is larger than the two
CDMA flagbearers at 34 per cent.

However , come the churn, one factor will play into the GSM
operators favor - if they're shrewd enough to realize it. The SIM card
model already allows you to take your phone number and address
book with you and use it in another handset, while CDMA handsets
are closed. And number portability allows you to change the network
entirely. This puts more pressure on the carriers to offer more
attractive handsets (which the model was designed to do, as much
as it was intended to increase competition between network
operators). And competing on features and style plays into the GSM
operators hands, as the coolest kit and the widest variety of models
have always come from the GSM boys, serving a far larger global
market.

Add to the mix that Verizon is adopting the MMS picture messaging
standard, and you have a potential for mass momentum behind
standards: exactly what the US market has been lacking.

Do network operators have souls?

As with the GSM networks abroad, the US GSM operators may
finally realize that a rising tide raises all boats.

By adopting GSM and MMS global standards the network operators
will share significant competitive advantages, and can compete on
features - features that give them important and very visible (from
the high street) advantages of differentiation.

Assuming network operators have souls, this appeals to their kinder
side. Right now the carriers offer near-identical selections of
handsets, and compete on minutes. Anti-consumer practices are
rampant. The changing landscape offers them a way to leave all this
behind, and compete on features - both service features and more
feature-rich handsets. All they have to do is turn to the light.

http://www.theregister.co.uk/content/59/30831.html

------------------------ Yahoo! Groups Sponsor ---------------------~-->
Get A Free Psychic Reading! Your Online Answer To Life's Important Questions.
http://us.click.yahoo.com/Lj3uPC/Me7FAA/uetFAA/61FxlB/TM
---------------------------------------------------------------------~->

Your use of Yahoo! Groups is subject to http://docs.yahoo.com/info/terms/