MOBILE PHONE INDUSTRY - GLOBAL MARKET

Worldwide mobile phone sales grow 26% in 3rd quarter
According to Gartner strong North American sales led to a surprisingly strong third quarter this year, and also allowed several manufacturers to move up the sales scale.

Worldwide mobile phone sales grew to over 167 million units in quarter 3 of 2004 according to research firm Garter, a 26% increase from the same quarter last year.

Unusually strong sales, particularly in North America, reaffirmed several market leaders but undermined others. Nokia in particular just barly captured 30% of the market for the first time since last quarter. That is still a drop from its 34% of sales for the same quarter last year. Samsung, buoyed by a diverse set of handsets in multiple markets, also surpassed Motorola by only a few thousand units to take the number two spot worldwide away from Motorola with 13.8 % of the market to Motorola's 13.4%. Siemens came in at fourth place with 7.6%, while LG recaptured the 5th place position from Sony Ericsson, 6.7% to 6.4%, respectively.

Despite Samsung's surge, Motorola remains the top phone manufacturer for North America. Its iDEN (Integrated Digital Enhanced Network) phones in particular sold well, as the company has a near-monopoly on the few networks using that technology. Siemens, however, nearly doubled its North American market share, while LG saw very strong growth in North America as well as strong relative sales in 3G markets in Western Europe.

In all, North American sales alone grew 22.6% from quarter 3 2003 to quarter 3 2004. Much of those sales were new and first-time mobile phone buyers wooed by new promotions and new handset models. Western European sales were driven mostly by existing users upgrading to newer models as prices came down. Latin America, however, had the strongest growth with a 66% year on year growth in sales to 17.2 million phones sold. Brazil and Mexico were the leading growth markets as the price per phone steadily dropped there as well.

India, the Philippines, and China drove Asia Pacific growth as carriers offered incentives for existing users to switch networks and lowered prices on handsets. Hong Kong and Australian operators both made heavy subsidies on phone prices to drive WCDMA 3G sales. The one weak spot was Japan, which saw a 12.8% drop in sales from the same quarter in 2003. Gartner believes that is due to camera phone sales peaking last year in Japan. Handset makers there are also trying to cope with lower profit margins on 3G handsets over 2G handsets, as Japan has been one of the fastest adopters of 3G technology.
Source: Gartner. December 2004



- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -



MOBILE WIRELESS - USA

The U.S. market for graphics for cell phones will grow from approximately $150 million this year to $1.1 billion by 2008
The market research company also predicts that total annual graphic downloads will rise to 616 million in 2008, up from a mere 80 million this year.
The U.S. market for graphics for cell phones will grow from approximately $150 million this year to $1.1 billion by 2008, according to a new study by IDC.
The market research company also predicts that total annual graphic downloads will rise to 616 million in 2008, up from a mere 80 million this year.

The growth is notable considering that the U.S. wireless market is expected to experience slowing subscriber growth over the next five years, decreasing from 10.8 percent in 2004 to 3.3 percent in 2008.

The market for graphic content, which includes wallpaper, caller ID images and screensavers, among other types of images, leapt 360 percent this year, up from $47 million in 2003, the IDC study estimates.

According to the market researcher, graphic content has emerged from the shadow of its more high-profile application cousins-ring tones and games-to become a unique market with its own characteristics and dynamics.

In terms of market penetration, IDC expects nearly a quarter of all subscribers to be using graphic content by 2008, when penetration will surpass the 52 million mark. IDC also anticipates that the number of downloads per user will rise rapidly. In 2004, the company said, each user on average downloaded one piece of graphic content every three months; in 2008, each user will download one piece of content nearly every month.

"Graphical content such as wallpaper is phenomenally popular, especially among youths and young adults," IDC research analyst Lewis Ward said in a statement. Youths and young adults are five times more likely to pay for and download graphics than are their adult counterparts, he said.

"Furthermore," Ward added, "bundling graphical content with other similarly themed content should become prevalent over the next few years, as will tying such content to movie and album releases, all of which should propel revenue through the content ecosystem."

Helping the graphics market to grow will be a fundamental shift that the wireless industry is currently undergoing: from a voice-centric industry to one that is driven by data.

Most wireless service providers in the United States, including AT&T Wireless, Cingular Wireless, Sprint, T-Mobile and Verizon Wireless, are already bundling limited graphical content as part of different plans for a price.

However, there are several hitches related to graphic content, including relatively low penetration of advanced handsets that support rich animation and full-motion video. Another problem is the absence of digital rights management standards.
Source: IDC. December 2004



- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -



WCDMA - EUROPE

Vodafone's WCDMA equipment opportunities to top $7 billion
With 2004 witnessing the simultaneous launch of its 3G networks across Europe, Vodafone is all set is to continue spending heavily on WCDMA over the next five years in its bid to expand 3G coverage beyond the metro cities of its various affiliates.

The estimates WCDMA equipment opportunities arising from Vodafone's global operations will be close to $7 billion over the 2005-2009 period, with an estimated 85,000 Node B yet to be deployed. This represents a whopping 16% of global WCDMA equipment CAPEX through 2009, which will be primarily generated by Vodafone's properties in Japan, Sweden, and the United Kingdom. Driving this equipment CAPEX will be nationwide coverage requirements in Sweden and the UK, and enhancing indoor coverage in Japan. This will require the three operators combined to deploy an additional 38,000 WCDMA Node B's over the 2005-2009 period. Outside of these three countries, the graph below highlights seven additional Vodafone affiliates that will see strong WCDMA equipment spending through 2009.

The size of these countries, along with the importance of each market to Vodafone necessitates the high expenditure level. These top 10 markets will cumulatively account for six of the seven billion dollars that we expect Vodafone to spend on its WCDMA networks over the next five years. The remaining 16 countries are expected to spend just under $1 billion in WCDMA CAPEX as most of those regions have yet to develop mature markets for high-speed data. Even in markets such as Australia, and New Zealand, where Vodafone is currently deploying WCDMA, the coverage and capacity requirements will not be at the scale similar to that of Japan or the UK. Vodafone will deploy WCDMA in only the top cities of its remaining 12 markets, providing service to the rural countryside by either employing GPRS or deploying EDGE instead.

Overall, spending on WCDMA infrastructure will peak in France, Germany, and the UK in 2005. However, spending will decline simultaneously in Italy, Japan, Spain, and Sweden as they complete their initial coverage-oriented networks. WCDMA infrastructure spending in Vodafone's Asia Pacific, African, and Eastern European operations will peak in the beginning in 2006-2007, as demand for data services increases in those regions.

Nokia and Ericsson are best positioned to tap into the vendor opportunity for Vodafone's WCDMA equipment needs as they have supplied much of the company's existing GSM network. However, Nortel falls close behind as they have received several key 3G deployment contracts with Vodafone in Italy, Portugal, and Spain.
Author: LuisB. December 2004



- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -



TELECOMUNICATIONS - AUSTRIAN MARKET

Tele2 a potential threat to incumbent Austria Telekom
The long-predicted consolidation in Austria's fixed sector has finally taken place. In the space of four weeks spanning September and October 2004 eTel acquired comquest, Tele2 purchased UTA and Kapsch BusinessCom bought CS Communications & Systems Austria. Of the consolidation, Tele2's acquisition of UTA has received the most attention. UTA and Tele2 are respectively Austria's largest and second largest alternative telcos. Their combined market power is seen as a considerable threat to incumbent operator Telekom Austria (TA). Yet TA appears calm.

Although the merger of a country's two largest alternative telcos would ordinarily be viewed by an incumbent as a rather unfavourable scenario, TA has so far expressed little concern over Tele2's acquisition of UTA. The company has deemed it unnecessary to decrease its financial targets or revise its long-term aim of maintaining a voice market share of over 50%. TA justifies its nonchalance by highlighting that Tele2 has yet to elaborate on how it will position itself in the market. Until it does so TA has said it will maintain a neutral opinion on the acquisition. TA is also taking solace in the fact that Tele2 could be preoccupied for some time as it grapples with the integration of the far larger UTA (Tele2 has 28 employees in Austria; UTA has 461) and the management of the combined entity. That Tele2 has no experience of operating infrastructure, and must thus reorientate itself away from the pure reseller model, is a further cause of TA's relaxed stance.

TA would be wise not to become complacent. Tele2 is an experienced and formidable pan-European operator, accustomed to making headway in tough markets. Operators are shifting their focus from the immensely mature fixed-voice sector to the less-developed, and more lucrative, broadband arena. It is here that Tele2, leveraging UTA's unbundled lines to differentiate on service, is likely to provide the strongest competition to TA. The fact that broadband pricing is still relatively stable in Austria provides the company with scope to undercut TA and its other rivals in a bid to win subscribers and a greater portion of Austria's fixed revenues. Given the importance TA attaches to broadband as a means of sustaining top-line growth in the face of largely stagnant fixed-voice activity and its small mobile footprint, such a development could prove damaging to the company.
Author: LuisB. December 2004



- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -



UMTS - NORWAY

Telenor to Launch 3G
Telenor opened its new UMTS mobile network for commercial use. The network offers very high data transmission speeds, and Telenor Mobil's customers will have access to third generation mobile services such as video calls and Mobile TV. At the time of launch, the network covers 70 cities and densely populated areas in Norway.

UMTS stands for Universal Mobile Telecommunications System. The new technology will give customers of Telenor Mobil even better access to the new mobile services commonly known under the heading 3G services. This involves opportunities for transmissions of live images, and faster Internet connection speeds than what customers have been accustomed to from existing mobile systems.

At the time of launch, Telenor's UMTS network covers more than two million people in 70 cities and densely populated areas. By March 2005, 132 cities and densely populated areas will be covered, and all areas with more than 200 people will have full coverage by 2007.

During an introductory phase, Telenor Mobil customers will be able to make video calls free of charge. During the campaign period, customers in the consumer market will not be charged more than NOK 5 per day for Mobile TV and other Internet access (packet switched).

Facts about Telenor 3G services:
To enjoy access to the new 3G services, customers will need EDGE or UMTS handsets, and users must be within an area that has 3G coverage. Mobile phones that support Telenor's 3G services will be easy to identify in sales outlets, and customers should have few problems finding the right models.
Regular phone calls will be charged as today, depending on subscription plan. From next year, regular consumer prices will be NOK 20 per downloaded MB, with a maximum limit of NOK 30 per day. Video calls will be charged NOK 2.24 (Post-paid) and NOK 3.74 (Prepaid) per minute, in addition to a NOK 0.99 start up fee. Regular business prices will be NOK 10 per MB for the first 50 MB per month, and NOK 8 per MB exceeding 50 MB. A full price list will be made available on our web site.
Author: LuisB. December 2004



- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -



3G - CHINA

The Chinese approach on 3G
For those who want to cash in on China's lucrative third generation (3G) of mobile telecommunications, patience seems to be a must.

Despite an increasing outcry for the release of 3G licences as soon as possible, the Chinese Government has continued to be cautious, reported China Daily on Wednesday.
However, the 3G era is approaching China.

It was reported last week that the State Development and Reform Commission (SDRC) has submitted a report containing suggestions about the issuing of 3G licences to the State Council.
Sources close to the commission said that the report hinted that the Chinese Government is to release four 3G licences in all.

According to the report, both China Mobile and China Unicom are to get one 3G licence each. China Mobile will be awarded one based on European WCDMA and China Unicom for CDMA2000.

China Telecom and China Netcom are each to hold a 3G licence based on TD-SCDMA. But they have been constrained to deal in 3G businesses inside their own territory southern China and northern China.

Also according to the commission blueprint, China Telecom is to build commercial trial TD-SCDMA networks in Shanghai, Jiangsu, Zhejiang and Guangdong.

Trial commercial use is scheduled to start in March next year. Official commercial use will be launched in June next year.

Test results from the commercial networks will be used as the main reference to help decide if TD-SCDMA will be the single 3G standard for China Telecom and China Netcom, according to the SDRC.

If the test result is not adequate, both fixed-line carriers are likely to adopt a combination of WCDMA and TD-SCDMA.

In another development, sources said that the SDRC suggested that TD-SCDMA change its frequency band from 2.1G to 800M, in an effort to meet the development of the digital trunking business of China Railcom and China Satcom, who are unlikely to obtain 3G licences.

"I am quite for the SDRC suggestion, if the message is correct," said Zeng Jianqiu, a professor with Beijing University of Post and Telecommunications.

"It is rational for the Chinese Government to release no more than three 3G licences," he told China Daily.

The cost of building up a nationwide 3G network will cost almost 250-300 billion yuan (US$30-36 billion).

If the Chinese Government issues four licences, the total cost will amount to about 1 trillion yuan (US$120 billion).

The cost for the 3G networks is excessive when compared to the yearly revenue from the telecoms industry.

Figures from the MII show that the revenue of the industry was 461 billion yuan (US$55.5 billion) last year.

"It will take years to get the money back," he said.

Besides that, it will also be expensive to operate and maintain networks after completion.

"The cost is far more than US$120 billion for four nationwide 3G networks," he said.
Zeng said he wondered if the domestic market had enough demand for 3G services.

"Currently, we do not see much demand for 3G services driven by value-added service such as video calls, multi-media message service and high speed data services," he said.

For both China Mobile and China Unicom, the country's only two mobile carriers, revenue from value-added telecoms services is very small compared to its main businesses.

"But I believe that the Chinese Government can start the 3G step by step by deploying experimental networks in the country's most developed areas such as Beijing, Shanghai and Guangzhou now," he said.

Then services and experience could be gradually introduced to the other parts of the country, he said.

"This will be a cautious and feasible way to roll out the 3G strategies," he said, adding 3G technologies are reaching maturity.

Nevertheless, Zeng said that given the fast development of China's telecoms industry, the issuing of 3G licences is no longer a matter just for the industry but a key factor that may affect national economic development.

Given the size of the Chinese market, the issuing of 3G licences in China could be a "nuclear weapon" in the world telecoms industry, he said.

Figures from the Ministry of Information Industry (MII) show that by the end of October this year, revenue from the telecoms industry reached 477.1 billion yuan (US$57.5 billion), up 12.2 per cent for the same period last year.

Meanwhile, it had signed up 310.6 million fixed-line subscribers and 325 million mobile subscribers. Broadband users topped 21.7 million.

"It is up to the State Council to hammer out the time and mode to develop 3G in China," he said.

Lou Qinjian, vice-minister of the MII, reiterated last month during the 3G in China Global Summit 2004 in Beijing that the Chinese Government is working to develop a most feasible way to launch the country's 3G development strategies.

"We are to plan 3G technologies and market as a whole and ensure industry sustainability," he said.
Many factors such as technology, system equipment and terminals, as well as the business modes and market demand, will all be considered, he said.

Being cautious about 3G development, the Chinese Government has studied the development of all 3G standards via experimental tests since June 2001.

The three technologies include Chinese TD-SCDMA (Time Division Synchronous), European-backed Wideband CDMA and US-based Qualcomm Corp's CDMA 2000.
Since last month, 3G has drawn increasing attention to the industry home and abroad when three reports focusing on the experimental testing of the three 3G standards during the summit showed the 3G standards are almost approaching full development.

Previously, the Chinese Government said that the test results would serve as a reference for the government to release its 3G licences.

Rumours then had it that China is to release 3G licences in the second half of next year.

Most recently, the frequent visits of world telecoms heads is a reflection about increasing world concerns about China's 3G.

At present, there is heavy competition among telecoms companies home and abroad such as Motorola, Nokia, Siemens, Ericsson, Nortel Networks, Huawei and ZTE over the mobile market in China, where an expansion into next-generation or 3G services is seen as a lucrative opportunity for growth.
Motorola Inc, for example, vowed late last month to watch closely China's 3G-related issues with an eye to keeping its leading position in China.

During last month's 3G World Conference in Hong Kong, Motorola announced the availability of five new 3G handsets.

The new handsets all offer lighter, compact designs, improved battery life and richer camera quality maintaining picture-perfect large screens, according to Ronald Garriques, president of Motorola's Personal Communications Sector.

He claimed that the company expects its sales of 3G handsets based on the European WCDMA standard to surpass those based on the second-generation GSM standard in 2008.
"The Chinese market is important for us," he said.

The company would keep following TD-SCDMA development to roll out corresponding strategies, he said.
Government figures show that a total of 129 3G licences have been awarded worldwide.

For example, a total of 38 telecoms operators has launched commercial WCDMA networks worldwide.

WCDMA subscribers had increased worldwide from 2.93 million last year to more than 10 million by the end of September this year.
Source: China daily. December 2004
Author: Chen Zhiming



- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -



UMTS - FRANCE

French operator links 3G video calls to PC's
Alcatel says that France's SFR has chosen its 3G video solution to create real-time video telephony and videoconferencing services between UMTS handsets and PCs equipped with web cams or IP video terminals.

The solution supplied by Alcatel to SFR is operational since commercial launching of 3G services for the general public by the operator on November 10th. Alcatel's solution was tested by several hundred volunteer users in 2004 before commercial launching of 3G services for professional and corporate users Mai 2004.

Alcatel's 3G video solution improves simple mobile-to-mobile video telephony and allows several members of a company to take part in videoconferences using their UMTS handsets or their PCs, while at the same time enhancing the overall efficiency of mobile teams.

Alcatel is strongly committed in the domain of video services, which are vital for the development of innovative multimedia services. SFR's subscribers will quickly see the practical benefits of having video access from any place and at any time, to people sitting in front of their PC, This project is a perfect illustration of the possibilities of convergence between the fixed and mobile world, and commitment to user-centric multimedia services.
Source: Alcatel. December 2004
Author: LuisB



- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -



WIRELESS FASTAP - CANADA

Fastap LG 6190 shipping from Telus
Telus - Canadian telco operator - is shipping the world’s first commercial Fastap handset, the Fastap LG 6190. Fastap is a unique keyboard layout the combines a typical number based format with a full alpha keyboard (though not in QWERTY format). A deal between Digit Wireless (maker of Fastap) and LG has been in the works since March.
Features of the LG 6190 include:
- VGA camera with LED flash
- Speakerphone with voice dialing
- 128 x 160 pixel display with 262K colors
Author: LuisB. December 2004



- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -



MOBILE PHONE MARKET - SALES RANKING

Phone sales up, market share close
A report from research group Gartner shows global handset sales up 26% for Q3 2004. Total sales reached 167 million mobile phones. However, the big news is a change in market share: Samsung edged out Motorola. Despite hot phones like the RAZR V3, Motorola was edged out by Samsung with just .4% difference between the two companies. Sony Ericsson and LG are also very close. Here are the latest rankings:

Company Sales
(in thousands) Market share Difference
Q3 2003
Nokia 51,694.9 30.9% -3.3%
Samsung 22,981.2 13.8% 2.6%
Motorola 22,393.0 13.4% -1.3%
Siemens 12,758.2 7.6% -1.5%
LG 11,141.8 6.7% 1.4%
Sony Ericsson 10,683.2 6.4% 1.1%
Others 35,417.4 21.2% 1.0%

Source: Gartner. December 2004



- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -




TELECOMUNICATIONS - SWEDEN

Telia's 3G network rated the best in Sweden - again
Telia's new 3G network is the best in Sweden, according to a test conducted by "Mobil" magazine during the autumn. At the awards ceremony, it was noted, among other things, that Telia's network quality is more even, compared with the 3G networks of other operators in Sweden.

Mobil magazine tested how easy it was to call with a 3G mobile phone in cities and densely populated areas of Sweden, but also how well calling functioned along roads and highways. Based on the overall results, Telia's network proved to be the best of the 3G networks in Sweden.

In their test measurements, the magazine's experts took into account not only the technical quality of the actual network, but also how calls are handed over to and from other networks, including the fixed network, and how well broadband connections functioned from the network to the mobile Internet.

For four consecutive years (2001, 2002, 2003 and 2004) TeliaSonera has received a prize for having the best mobile network in Sweden in annual tests conducted by Mobil magazine.
Source: Mobile Magazine. December 2004



- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -



MOBILE SERVICES - AFRICA

Celtel launches pre-pay roaming service across Congo River
Celtel International, the pan-African mobile phone company, Thursday said it is has launched a prepaid roaming mobile phone service between the Democratic Republic of the Congo and the Republic of Congo.
The service is aimed at improving communications for the thousands of Congolese travelling between the neighboring countries.
The capital cities of the two countries - Kinshasa and Brazzaville - face each other from their respective sides of the Congo River, yet no roaming service currently exists.
Traditionally, calls between the cities were rerouted through European exchanges. Celtel's investment in the two countries means the calls are directly routed, which has significant cost advantages for consumers. Celtel, which is seeking a listing on the London Stock Exchange in 2005, has over four million customers in 13 African countries.
Source: Celtel. December 2004
Author: LuisB



- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -



FOMA - MOBILE PHONE INDUSTRY

Sharp, Sony Ericsson partner to make 3G phones
Sharp this week agreed to work with Sony Ericsson to develop 3G handsets for NTT DoCoMo's FOMA service in Japan. The two companies will use the Symbian OS for the new 3G smart phones. Sharp and Sony Ericsson plan to share some hardware while developing 3G phones that will be unique to their respective brands. The two companies hope their partnership will help them control development costs. The cost of making 3G handsets is high and vendors are forming technology sharing agreements to help them control expenses. NEC and Panasonic forged a similar partnership for developing 3G handsets. No financial details of the deal were released.
Author: LuisB. December 2004