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Industry News

The Commercial Market

January 1, 2000
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The Commercial Market

PCS Subscribers Forecast to Reach 65 Million by 2003
Telecompetition Inc. has released a report, “US Metro Wireless Forecast: 1999-2003,” which forecasts that revenues for personal communication services (PCS) will exceed $40 B by 2003. The report also projected that 23 percent of the 96 million US wireless subscribers would be PCS users by the end of 1999. By 2003, there are expected to be 156 million US wireless subscribers due to a higher penetration into younger and less affluent market segments and the increasing demand for mobile Internet access. Completion of the PCS system build-outs is also expected to lead to more than $40 B in annual revenue from 65 million PCS subscribers. In the top US markets, which include New York, Los Angeles, Washington, DC and San Francisco, 1999 wireless subscribers are estimated to total 21 million with PCS market shares averaging 26 percent. (The highest PCS portion in any one of these markets is estimated at 35 percent.) PCS subscriber growth in three of the market areas is expected to grow 2.6 times by 2003; in the Los Angeles market, a 2.9-times growth is forecast. The full report provides five-year forecasts for cellular, specialized mobile radio (SMR)/extended SMR and PCS service in US metropolitan areas by business and residential segments. For additional information, contact Telecompetition Inc. at (800) 403-5005 or visit its Web site at www.telecompetition.com.

Bell Atlantic and Vodafone AirTouch to Form US Wireless Business
Bell Atlantic Corp. and Vodafone AirTouch plc have entered into a definitive agreement to create a new wireless business with a national footprint, a single brand and a common digital technology. The new business will combine the assets of Bell Atlantic Mobile, AirTouch Cellular, PrimeCo Personal Communications and AirTouch Paging, and will be strengthened by the addition of GTE Corp., which is expected to finalize its merger with Bell Atlantic in the first quarter of 2000. Including GTE’s wireless assets, the new business will serve approximately 20 million wireless customers and 3.5 million paging customers throughout the US with a value in excess of $70 B. The new enterprise’s footprint will cover more than 90 percent of the US population and 49 of the top 50 US wireless markets. Under the terms of the agreement, Bell Atlantic and Vodafone AirTouch are expected to cooperate on global business synergies such as handset and equipment purchases, global corporate account programs, global roaming agreements and new service, technology and application development. The wireless business formation is expected to be completed in six to 12 months.

New Technology to Reduce Delays at US Airports
The National Aeronautics and Space Administration (NASA), the Honeywell Technology Center and Honeywell Airport Systems have developed new technology that is intended to significantly reduce the ever-increasing number of operating delays at US airports. Designated Airborne Information for Lateral Spacing (AILS) and Closely Spaced Parallel Approaches (CASPER), the systems expand on existing communication and navigation technology that will allow planes to land safely in bad weather on parallel runways spaced as closely as 2500 feet apart. Currently, the minimum runway separation requirement is 4300 feet during low visibility, which forces busy airports such as Detroit, Seattle, Minneapolis and Memphis to shut down closely spaced parallel runways when weather conditions deteriorate. Using the AILS and CASPER systems, landing aircraft will be able to communicate with one another through Automatic Dependent Surveillance - Broadcast, a technology currently under development by the Federal Aviation Administration and industry, and differential Global Positioning System signals will provide information about each aircraft’s position. Simultaneous use of the Traffic Alert and Collision Avoidance System, AILS alerting functions and simple, consistent pilot procedures will ensure safe approaches and landings. NASA and Honeywell conducted in-flight demonstrations of the systems at the Minneapolis/St. Paul International Airport in November 1999.

Market Strategies for 3G Mobile Operators
Ovum Inc. has released a report, “Third Generation Mobile: Market Strategies,” which examines the opportunities offered by third-generation (3G) mobile systems and the challenges that system providers will face when attempting to take advantage of the enhanced service capabilities. While the success of second-generation systems has relied almost entirely on voice services, 3G operators will have the potential to launch a much broader array of services based on increased capacity and high data rates. Therefore, operators will have to decide if the significant investment required to upgrade networks to 3G is likely to lead to reasonable returns.

The initial 3G vision was to provide mobile multimedia services throughout the world by significantly increasing transmission speed and network capacity. However, the report notes that the focus of 3G has narrowed somewhat, and many people believe the central reason for developing 3G is to make the Internet available on mobile systems. The report also argues that 3G development is responsible for creating an unprecedented level of cooperation around the world to develop the global standards necessary for its implementation. In addition, licenses for new 3G spectrums will increase competition and operators required to replace base stations, switches and network upgrades will sustain the mobile network infrastructure market. Because implementing 3G is highly complex and the cost of equipment and licenses is undetermined, locating investment money to implement the new systems may be difficult.

The report notes that the current vision of 3G as a provider of multimedia and the Internet over mobile networks is flawed. For example, subscribers will not use the Internet over a mobile network in the same way it is used over a fixed platform due to the small display format and the airtime cost. Notwithstanding the changes in perception and investment costs, the report forecasts that a large 3G subscriber base will develop in the long run. Rapid growth is expected to start in 2007 and one billion users worldwide, or 63 percent of the world’s cellular subscribers, are expected to be on 3G networks by 2010. Reportedly, the principal driver of 3G growth will not be the demand for high speed services, but the decreasing cost of terminal equipment and increasing coverage of 3G as it becomes the standard connection for subscribers. For additional information, contact Ovum Inc. at (800) 642-6886 or see www.ovum.com.

Wireless Cellular Phone Headset Introduced
Ericsson Inc. has introduced the Bluetooth™ Headset, a cellular phone headset that connects to a mobile phone by a radio link instead of a cable. The headset is the first hands-free accessory to incorporate Bluetooth technology, a future standard for wireless communication between devices. The lightweight, wireless mobile phone headset features a built-in Bluetooth radio chip that acts as a connector between the headset and plug on the Ericsson phone. When answering the phone, users can simply press a key on the headset; likewise, when making a call, users can press a key on the headset and use voice recognition to initiate a connection. The Bluetooth Headset is expected to be available this year.

Bluetooth is a wireless technology standard that was introduced by Ericsson, IBM, Nokia, Intel and Toshiba in May 1998. The industry is presently focusing on incorporating the technology into mobile devices, but Bluetooth also may be used with any product that performs on/off switching for household appliances, cars, consumer electronics or office equipment. For additional Bluetooth information, visit www.bluetooth.com.

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