Gateway to 3G in Distress

After years of success, followed by a roller-coaster style hype and gloom, the wireless industry seems now to be adapting to the life of a regular industry with average margins. In its 2003 issue of the annual lookout "Wireless Top Trends & Challenges" leading wireless advisor Northstream, points out crucial trends and challenges on the road to sustainable wireless business.

Inset is Bengt Nordström, CEO of Northstream who is quoted below.

After a number of dramatic years we now see a maturing mobile operator
industry with lower margins facing the same challenges as any everyday
industry, says Bengt Nordström, CEO of leading Wireless advisor
Northstream. - The industry suffers from stagnation after a dramatic growth
period over the last 10 years. But with a healthy base of users that
generates $30 billion revenue in a global market with only 20 percent
penetration, the future for the hardworking and clever service providers
with carefully crafted strategies looks quite bright.

The industry now has to act as a mature industry. The Northstream "to-do"
list for the Wireless CEO includes:

· Prepare for normal margins
· Look inwards - improve logistics and organisation efficiency
· Clean up portfolios and partnerships - consolidate further
· Be bold - create new services and kill the unprofitable ones, all at a
faster pace
· Assure delivery of end-to-end solutions, that's how to keep customers

Going forward, Northstream's list of trends and challenges include:

Early lessons from MMS
The market is still handset driven. So far the new terminals with colour
screens, polyphonic sound and games have shown consumers that something new
is being offered on the market. But while MMS terminals are certainly being
promoted, there is a lack of attractive MMS services in a broad enough
variety. With the right approach, reasonable efforts can very quickly make
dramatic changes for the better.

Changes to 3G markets
The entry of 3G challengers with plenty of capacity will most likely lead to
a price and marketing war. Northstream expects prices to come down faster
and more drastically for 3G than it did when GSM was introduced. This change
in the competitive situation is the most important factor for wireless
operators during 2003 and could be the start of a bandwidth demand-spiral
from consumers. 3G as a technology is less interesting than the answer to
question; 'How can we make increased spending an enjoyable and useful
exercise?'

Gateway to 3G in distress
GPRS has the potential to become the gateway to 3G and future growth for the
wireless industry as it will expand end-user behavior to also include data.
But the present embarrassing shortage of GPRS roaming unfortunately gives
end-users a clear message that they cannot depend on wireless data services
to be available when needed. Without efficient and broad scale roaming
wireless data have a long way to success, so this must - and can - be
changed.

Outsourcing on a whole new level - terminal ODM players
With the outsourcing of development as well as manufacturing to Original
Design Manufacturing companies (ODM), the old value chain of the mobile
terminal market goes up in smoke.

- Operators are finding themselves in a position where they have easier
access to customised and self-branded handsets, given that the cost and
logistics challenges can be managed. We also see that traditional vendors
will be challenged not only in the low cost range, but also in the high
quality and high-end segments, says Bengt Nordström.

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