Subject: [NEXTEL-1] Nextel's New Slogan-"If you're looking for cheap minutes, go down the street," said Donahue.

From: Marcel <[email-masked]>
Date: Fri, 15 Nov 2002 04:18:55 -0500

Timmy really knows how to win customers.

<Snip>
Nextel Communications President and CEO Tim Donahue also said that they would compete on
quality, not price, in the market for enhanced services for businesses

 "If you're looking for cheap minutes, go down the street," said Donahue.

http://www.wirelessweek.com/index.asp?layout=story&articleId=NEx1113003.2id

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Telcos must grasp new business models, execs say

November 14, 2002 12:00am

Copyright © 2000 InfoWorld Media Group, Inc.

Nov 12, 2002 05:49 AM, InfoWorld.com via NewsEdge Corporation : NEW YORK -- Can telecommunications providers offer more easily manageable, faster, and cheaper services, especially in the wireless market? It's a tall order, but that's what they need to do if they want to escape their current doldrums, according to industry leaders meeting here Monday at the Seventh Annual Global Telecom Conference put on by investment bank UBS Warburg.

Though the goals are clear, the devil is in the details. In the U.S., former Bell monopolies and competitive operators continue to battle over regulatory policy, providers still struggle to come up with attractive service bundles, and the question of how low pricing can go for value-added wireless services remains a prickly issue.

The problems facing the telecommunications industry have been well documented and were recited by several vendors here. User wariness about spending in the midst of a recession has been exacerbated by U.S. vendor bankruptcies, accounting scandals, and Securities and Exchange Commission (SEC) investigations, AT&T President, Chairman, and Chief Executive Officer-elect David Dorman told attendees here.

In Europe, carriers are saddled with about $150 billion in licensing debt, said Pascal Debon, president of wireless networks at Nortel Networks.

But behind these problems there is a more fundamental reason for the decline in the telecommunications market, Debon said during a presentation here. Up to now the telecommunications business has been grounded in voice services, but providers have not yet learned how to adopt a new business model for value-added digital services.

"We've been in the voice businesses market, and there was lots of money in that, but we are leaving that model behind and moving toward an application business model and the challenge we have is how to accelerate this model," Debon said.

The new telecommunications business model will embrace a range of applications, including wireless, multimedia, data, messaging as well voice services, that will move over packet-based networks, he said.

Debon had one caveat: "If we don't make sure the user has an experience that is nice and simple, however, then we will lose this market."

Other industry leaders agreed.

"We want to simplify and add services," according to Ivan Seidenberg, Verizon Communications' chief executive officer. "We want to move to single-bill provisioning [for multiple services] and we will be able to do more electronically."

Seidenberg is also expecting that much-debated and long-awaited regulatory permission to offer long-distance data services across LATA (Local Access Transport Area) boundaries (typically there are several LATAs within a state) will allow them to offer simplified, bundled services to businesses.

The 1996 Telecom Act lets the former Bell monopolies offer long-distance services, but only after they provide the services and infrastructure, including unbundled network elements (UNEs) necessary for competitors to offer local services in their regions.

Removal of inter-LATA restrictions will allow Verizon to connect dense wave division multiplexing (DWDM) rings around individual cities.

"Once [long-distance data] limitations are removed, Verizon can bid in any business focused on high-speed data storage connecting multiple campuses. We can provide one solution integrating all customer sites into a single network," Seidenberg said.

Meanwhile, simplified and value-added consumer wireless services are imminent.

"We will be introducing a communications portal that allows customers to integrate wireless and wired service and even manage things like messaging and other services," including address book, directory and pager services, he said. Value-added wireless applications are a key to profitability, since mobile services are a bright spot in the market.

"The numbers speak for themselves," Seidenberg said, noting that the number of wireless subscribers grew 9.9 percent from the first to the third quarter this year, to 31.5 million users, and the number of CDMA (Code Division Multiple Access) wireless digital data subscribers grew 35 percent, during the same period, to 26.8 million users.

One of the challenges on the wireless data front, however, especially for businesses, is speed, noted Michael Sievert, executive vice president at AT&T Wireless Services Inc. Wireless data transmission starts to get interesting for users at about 100Kbps, he said.

One thing AT&T is doing to boost wireless data speeds on its GSM (Global System for Mobile Communication) network is to overlay EDGE (Enhanced Data Rates for Global Evolution) technology on top of a GPRS (General Packet Radio Service) network this year. AT&T plans to roll out the EDGE service in 2003, he said.

In theory, AT&T officials at the conference said, top speeds for EDGE hit 384K bps, though that was subject of some debate at the conference. For example, Irwin Jacobs, CEO of Qualcomm, which derives revenue from CDMA-related patents, put EDGE speed at a maximum of 150Kbps

The big question for users, especially business users that may want value-added services such as higher mobile data rates, is pricing.

While Sievert said that moving to standards-based mobile technology will help cut costs, he said he was not sure whether the company would pass the savings on to customers. Verizon's Seidenberg as well as other speakers here, such as Nextel Communications President and CEO Tim Donahue also said that they would compete on quality, not price, in the market for enhanced services for businesses

"If you're looking for cheap minutes, go down the street," said Donahue.

However, both the economics of network construction and mass market forces will act to force prices down, according to service providers and analysts.

"On a 125-mile section of a ... network it costs $125 million for the first OC-192, or 10-gigabit wavelength; the next one will cost $50,000," Dorman said.

While there were few if any corporate users at the conference, some analysts gave voice to the user side of the next-generation equation.

"No one wants to feel like they're getting screwed. Wireless voice technology took off once carriers came out with inexpensive mobile phone plans," said Larry Seibert, managing director at New York investment management company Barrett Associates.

"The carriers will realize to expand the market out for all these great next-generation services, they're going to have to do that with the new applications as well. After you've paid the up-front costs, adding users is just a small incremental cost to the carriers, so they're going to bring prices down and go for volume," he said.

Marc Ferranti is executive news editor for the IDG News Service, an InfoWorld affiliate.

Copyright (c) 2000 InfoWorld Media Group, Inc. InfoWorld.com is a member of IDG.net

<<InfoWorld.com -- 11-12-02>>

<< Copyright ©2002 Copyright © 2000 InfoWorld Media Group, Inc. >>

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