Subject: [NEXTEL-1] US mobile industry sends global message

From: Marcel <[email-masked]>
Date: Sat, 22 Mar 2003 20:12:51 -0500

US mobile
industry sends a global message
By Jonathan Moules
Financial Times; Mar 22, 2003

Winston Churchill once famously noted: "America will do the right thing, after it has
exhausted all other options." He could have been talking about the country's mobile
phone industry.

For the six main US carriers, the past year has been marred by price wars, slowing
growth and in some cases, subscriber losses even though barely half the US
population uses wireless services.

Many of these problems have been brought on by the carriers themselves, which have
been criticised for failing to agree on a common national wireless standard, unlike
elsewhere in the world, and resorting to price competition.

However, the future is looking a lot brighter, according to delegates at the industry's
annual CTIA Wireless conference in New Orleans this week.

"2003 is going to be a better year for wireless than most people are giving it credit,"
said Tim Donahue, president and chief executive of Nextel Communications, the
nation's fifth-largest carrier.

His comments were echoed by other attendees, who expressed surprise at the
event's popularity. "This was bigger than Comdex," said one wireless software
engineer, referring to the computer industry's annual extravaganza in Las Vegas.

There are good reasons for the optimism. Despite its relatively low rate of penetration
compared to European and Asian markets, the US boasts more than 140m
subscribers with average revenues per user (ARPU) that many of its international
peers can only dream about.

"While the US has often been perceived as being behind other mature markets, it is
the second-largest domestic market in the world," noted Mike Woolfrey, research
manager at telecoms analyst group EMC.

Only China has more users, Mr Woolfrey noted, although this market has far lower
ARPU.

US carriers have also called a halt to price competition and have begun to compete on
service elements, such as network quality and new uses for handsets.

CTIA also showed that US carriers could lead the world in several wireless
developments. For example, one of the hottest topics at CTIA was the fusion of mobile
phone data networks with local fixed wireless networks, called Wi-Fi, in which the US
has taken an early lead.

T-Mobile USA, the sixth-largest carrier, announced a partnership with wireless internet
service provider Boingo to develop software that enables customers to roam between
Wi-Fi hotspots in cafes, hotels, airports and the company's GPRS data network when
on the move.

"These two technologies really belong together," said Sky Dayton, founder and chief
executive of Boingo. "It really serves as a model for the industry."

New Orleans also generated a lot of excitement about push-to-talk (PTT), a
walkie-talkie application that gives mobile users instant connection to a list of
pre-selected 'buddies'.

Nextel has led the world in PTT with its Direct Connect service, which is used by 93
per cent of its 10m customers over its iDEN wireless network. Other US carriers are
working furiously to produce versions of PTT and the expectation is that they will take
this service to other countries.

Sonim Technologies was one of several companies demonstrating PTT products for
GPRS data networks, which operate on GSM, the world's most widely used wireless
standard. Sonim's solution operates more like an instant messaging service on the
phone, enabling users to see if their buddies are available to talk.

John Burns, Sonim's chief executive and president, said PTT had enormous potential
outside America and Nextel's core market of blue-collar construction workers and lorry
drivers.

"It is not clear to me that this is a US-centric phenomenon," Mr Burns said. "PTT
provides compelling means of communications for families, as well as to young
adults that are attracted to the simplicity and convenience."

The US wireless industry has not, however, put all its structural problems behind it.
Network standards, for example, remain a particular roadblock.

But the buzz in New Orleans showed that US carriers can still show their European
and Asian peers a thing or two.
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