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Volume 2, issue 14: June 3 2004

WCA: McCaw goes public with Clearwire and shifts the goalposts again 2

Nervous shareholders seek to hold back Vodafones global ambitions 7

Heightened interest in over the air start-ups as operators seek differentiation 12

Motorola/Avaya handset will require investment in 802.11a 18

PDA marketdown to two players as Sony exits and Dell mulls Palm bid? 21

Nokia confounds critics with European rebound, but needs US gains 24

Worth Noting:

Quorum offers dual-mode phone chip; Wi-Fi Alliance gets new chief; 10% of compa-

nies using voice over WLan; new members for TDD Alliance; Motorola plans dual-

band phone

Investments:

Tropos Networks; AG buys K-Mobile; SyChip; MegaPath; Bluefire

Operator Watch:UK operators must cut wholesale charges; Hutchison rebrands as 3; Greek 3G goes

live

WiMAX Watch:

WiMAX Forum urges spectrum harmony; RadioNet and Wi-Lan team in Finland; Mo-

torola cuts Canopy costs; France Telecom tests WiMAX

WIRELESS WATCHIn-depth analysis of WLan, cellular and broadband wireless markets


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2 Copyright Rethink Research Associates 2003

Craig McCaw has finally gone public on his plans to launch a broadband wireless network across North America that couldshift the goalposts for the cellular industry he helped to create.

As we have detailed in the past weeks, the legendary entrepre-neur has been up to familiar tricks since late last year, buildingup a patchwork of spectrum as he did when he founded McCawCellular, which became AT&T Wireless, and when he was theguiding light behind Nextel. He has also assembled key partner-ships, including a joint venture that is building a pan-Canadiannetwork ( see Wireless Watch issue 52) and, in a key differencefrom his past cellular activities, has also acquired the ability tomake equipment, in the shape of pre-WiMAX vendor NextNet(see Wireless Watch issue 59).

His company, unveiled at the Wireless Communications Associa-tion conference in Washington DC this week, will be calledClearwire the name of one of the operations he has recently ac-quired, a broadband services provider operating in Florida. Otherelements include Flux Fixed Wireless, a new entity McCaw setup in December to house MMDS spectrum, plus NextNet.

The relationship with NextNet - which is committed to migratingits Expedience portable wireless technology to WiMAX once the802.16e specifications are completed next year - shows thatMcCaw believes 802.16 is the technology to underpin his broad-

band wireless push (rather than IPWireless, which is the basis ofClearwires initial network in Jacksonville, Florida). NextNet and

WCA: McCaw goes public with Clearwire and shifts the goalposts again

Clearwire spans international spectrum and equipment manufacture

Gauntlet thrown down to cellcos and wireline operators alike

McCaw move confirms WiMAX as leading BWA technology

Serial entrepreneur Craig McCaw has gone public on his latest venture, Clear-

wire, which aims to establish a pan-American and eventually, international

broadband wireless network based on WiMAX.

McCaw is the first player openly to outline a plan to use WiMAX to create a

national alternative to existing landline broadband and cellular offerings, and

he has the clout, funds, technology, spectrum track record and alliances toachieve it.

His move will force US operators to react, either by partnering, as we expect

Nextel to do, or by accelerating or adapting their own strategies, as Sprint

needs to do. This puts WiMAX firmly on the map and potentially shifts the

economics of the wireless industry forever.


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Copyright Rethink Research Associates 2003 3

its migration path to WiMAX also gives him the ability to move

immediately with existing technology rather than wait for themobile version of the standard. The hesitancy in roll-out of EV-DO and 3G services in the US and the momentum created byWi-Fi behind wireless data access makes this the right time toseize the opportunity.

The Clearwire proposition:

The real attraction of Clearwire is not its limited existing build-out but its access to significant amounts of spectrum through acommercial relationship with the ITFS Alliance, which holds

Instructional Television Fixed Service frequencies. LikeMMDS, this is regarded as a good swathe for delivering highspeed wireless data services. The ITFS frequencies are in li-censed 2.5GHz-2.7GHz bands, originally allocated by the FCCto non-profit and educational organizations for one-way analog

broadcasting of educational television programming, but now permitted to be leased to operators for two-way digital use.McCaw now has spectrum in 100 US markets.

Clearwire will launch its service initially in Jacksonville and inSt Cloud, Minnesota this summer, and roll out to 20 markets by

the spring. Gerard Salemme, executive VP of Clearwire and along time close associate of McCaw, said the company will fo-cus initially on consumer markets delivering internet access at1.5Mbps to 2Mbps to fixed in-home equipment or to portablecomputers. (NextNet is portable rather than mobile anequipped laptop can access the network anywhere in the worldthat it is available, but it does not support hand-off between

base stations at high speed. WiMAX will support portability in2005, when NextNet will migrate to the standard, but a fullymobile version of WiMAX, which can be used at speed in de-vices such as smartphones, is not envisaged until at least 2006.)

It will offer voice over IP and prices, though not yet set, will belower than those of the other options in Jacksonville, these areBellSouth DSL and Comcast cable modem, at around $50, oron the mobile side, Verizon Wireless EV-DO, at $70 per monthand with no voice component.

National footprint:

McCaw was understated about his schemes, focusing on short

term goals and the opportunity to offer alternatives to DSL andcable, but the impact of his actions on the balance of the wire-


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less industry was clear nonetheless. He is not confining himself

to rural or underserved areas like most BWA operators to date,but will launch a national service that will not be afraid to takeon wired alternatives and cellular 3G in large markets too.And by acquiring NextNet, McCaw has gained a readymade

pre-WiMAX installed base with some significant customers,notably the Canadian joint venture of Allstream, Microcell and

NR Communications (run by another old McCaw friend, NickKauser); and MVS major network in Mexico City. Salemmeconfirmed that Clearwire had also been accumulating spectrumin Europe (see Wireless Watch issue 63).

We are still looking to a tie-up between Clearwire and Nextel.Without it, the company remains confined mainly to tier twocities and rural regions, which plays against the national net-work idea. That would be fine for fixed wireless, residential ser-vices but in stressing these as his first area of focus, we feelMcCaw was being disingenuous, cloaking his real and fargreater ambition to create a mobile network appealing to pre-mium users such as business travellers.

This would necessitate presence in major cities, but the vastmajority of 2.5-2.69GHz licenses in these areas are held by

Nextel and Sprint, both themselves dabbling with possible broadband wireless services to offer on this underused spec-trum. An alliance between Clearwire and either or both of the

Nextel companies, in which McCaw still holds stakes, wouldmake perfect sense the main Nextel to bring in the big citiesand provide integration with cellular services, the associated

Nextel Partners to involve the large rural regions that it targets.Growth in Wi-Fi and

WiMAX laptops

Source: Intel


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The impact of McCaw:

Believers in the potential of broadband wireless, and particularlyWiMAX, have been pointing for a year to its potential to providenational networks and to change the economics of the mobile in-dustry by delivering higher data rates than 3G at lower cost, andeven with an unlicensed spectrum option. But McCaw is the first

player of such influence in the communications world and withthe ability to raise massive funding to put his money behind thetheories.

Cellcos such as Nextel are playing with broadband wireless as a

potential overlay for 3G, to deliver premium services; wirelineoperators are interested in it to plug gaps in the DSL network andgive them a wireless play; large WISPs see the potential finallyto deliver on what was promised for Wi-Fi. But so far this hasamounted to vague plans and early trials and real services haveremained the preserve of the specialist operators, mainly in ruralareas or developing nations. By announcing a concrete roll-out

plan for the whole of North America, McCaw has thrown downthe gauntlet to the major operators in no uncertain terms. Theynow need to make some firm decisions about how they fend offthe challenge, and whether they now need to embrace WiMAX

rather than risk losing some of their more lucrative customers, particularly the business laptop carriers, to the pre-WiMAXNextNet technology.

The broadband market:

As well as launching his company, McCaw offered a vision forthe broadband wireless market at large. He said it would not beenough just to be cheaper and faster than landline and cellulardata services, or to duplicate cellco strengths such as voice byrunning it over WiMAX in VoIP mode. Instead, the whole pack-age needs to be clearly differentiated and offer a premium on topof anything available from the telcos.

Sceptics pointed to previous broadband wireless failures in theUS and said even McCaw could not create a customer demandthat was not there. Indeed, McCaw himself was not ignoring thecorpses of past wireless ventures. "Cable and telephone industrieshave done a good job of putting new reptiles in the moats aroundtheir monopoly businesses," he told the WCA audience. Wecome into this opportunity with our eyes open to the challenges

and difficulties associated with competing against giants in thecommunications arena.

Cable and telephone

industries have done a

good job of putting

new reptiles in the

moats around theirmonopoly businesses

Craig McCaw


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But he went on to point to the strengths that make Clearwire a

very different proposition from past, highly publicized US fail-ures such as Monet and Teligent. We have worked diligently tocombine a team of people that have a track record for providingexceptional customer experiences in wireless that we believe canmake a difference with a unique and powerful technology. Wire-less technology can open the gate that has restricted widespreadaccess to broadband services and provide a very simple and satis-fying consumer experience.

Among his advantages - the NextNet system will be well priced,user installable and portable, significant advantages over failed

schemes, and McCaw will have the resources to engage in sig-nificant marketing. Few would doubt that two of his core compe-tencies are those that have been seriously lacking from previous

broadband wireless ventures creative financing, and the abilityto establish a national brand.

McCaw is also well known for his ability to draw former aidesaround him and exploit his web of company alliances. This time,he could even finally reap some rewards from his relationshipwith XO Communications, the internet backbone company hefounded as NextLink but which is now owned by telecoms inves-

tor Carl Icahn, who bought it out of bankruptcy. XO could pro-vide fiber or wireless backhaul plus telephony capabilities.

Next move: Sprints?

Whatever the months ahead hold for Clearwire, McCaw hasthrown the cat among the telco pigeons, raising the profile, andthe stakes, for the broadband wireless market. Major playerslooking to offer wireless last mile, such as AT&T, will have toreact to this move, as will the cellular operators most urgently,

perhaps, Sprint.

Sprint holds significant MMDS spectrum for its mobile arm PCS,but has been hesitant about WiMAX even though it would alsocomplement its long distance wireline business. It has pinned its

broadband wireless plans on leaping early into the next genera-tion of CDMA, EV-DV. Although this would enable it to leap-frog Verizon Wireless, which is rolling out the more limited,data-only EV-DO (and has no MMDS spectrum), EV-DV willnot be a viable option until 2006. By that time, Clearwire shouldhave established its national footprint, with data rates higher than

EV-DV can achieve. Like many other players, Sprint may be re-examining its strategy in the light of McCaws move.


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Vodafone may be the closest the UK gets to global influencethese days, but the way it is treated by its investors remains quin-tessentially British. The more its power grows, the more it is re-garded as being too brash, too daring, too above itself some-how lacking in class and sporting behaviour.

Its investors seem to live in quivering fear of Vodafone embark-ing again on the acquisition trail, despite the fact that this is howit put itself so far ahead of its more timorous competitors. Themass panic that surrounded the companys interest, earlier thisyear, in acquiring AT&T Wireless made us wonder why suchrisk-averse investors were not putting their money under the mat-tress rather than into one of the industrys most audacious play-ers.

Similar hysteria bubbled up last week when the company made

the far less controversial move of buying out the minority inves-tors in its Japanese subsidiary for about 2.6bn. Despite meetingexpectations on revenues and profits ( see Wireless Watch issue63), the companys stock fell back 5% in a day, making it thesecond worst performer in the UK FTSE 100 last week.

The market was disappointed that Vodafone had not exceeded itsforecasts, but was primarily shaken by the Japanese move andfears that this signals a renewed acquisition strategy. Even a 3bnshare buyback program and a 20% increase in the annual divi-dend, both designed to reassure investors, were not sufficient to

win over the shareholders.

Nervous shareholders seek to hold back Vodafones global ambitions

Cash or expansion? Sarin at odds with investors

Verizon buy-out could fund key acquisition

Vodafone bets on a future in Japan

Vodafone has to decide by mid-August whether to exercise its option to sell half

of its stake in Verizon Wireless, which has highlighted the clash between its

global brand strategy and its shareholders desire to avoid risk and cling on to

cash.

This has reached such a peak of near-hysteria, as reaction to Vodafones plan to

buy out minority stakeholders in its Japanese arm shows, that it threatens se-verely to clip CEO Arun Sarins wings in pursuing world leadership.

But without buying into key territories from the US to India, Vodafone risks los-

ing its buying power and its ability to turn advanced technology into rapid prof-

its, to the eventual detriment of the shareholders themselves.


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The Verizon Wireless decision:

A new factor is throwing a harsh light on Vodafone CEO ArunSarins continual dilemma please the shareholders by holdingon to cash, or pursue global expansion through acquisition? Vo-dafone has a two-month window from June 10 to exercise itsright to sell its first option in its joint venture with Verizon, Veri-zon Wireless, a deal that could net it $10bn in cash money thatcould be spent on a major purchase, perhaps of a wholly ownedUS arm - but would incur heavy taxes and lose one of its most

profitable units.

Verizon Wireless generated about $9.5bn in cash last year and$3bn in profit, $1.4bn of that going straight into Vodafones cof-fers. A second option can be exercised between 2005 and 2007and Vodafone is allowed to ask for up to $20bn in total for itsstake. If the value of its 45% is worth more than the $20bn cash-out ceiling, Vodafone would retain a stake equal to any amount

beyond $20bn.

How much is Verizon Wireless worth? Since it is not separatelylisted, this would be down to a team of appraisers to determine,should Vodafone decide to exercise its option. One factor in the

valuation would be the price that Cingular paidfor AT&T Wireless, $41bn. Verizon Wirelessshould be worth significantly more than AT&TWireless because it has 45% more subscribers,a better financial record and lower churn. (Ofcourse, Vodafones decision to bid for AT&Tand push up the price, though much reviled byshareholders, will have been done partly to in-crease the value of its Verizon stake.)

Therefore, Vodafone would almost certainlyend up still holding shares in its US venture after claiming its$20bn but not so many as to prevent it bidding for another UScellco. And there would be tax advantages to taking some of thedeal in stock rather than cash the tax liability being one of themajor reasons not to cash out now, at least not unless Vodafonespies an irresistible prey for which it needs to free up the money.

Such a prey is not obviously on the horizon right now, certainlynot in the US. The most attractive would be T-Mobile USA,which uses GSM technology and has been highly creative in

boosting its ARPU and service range, but parent Deutsche Tele-kom is not looking to sell and would certainly put up a vicious


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fight against any unsolicited bid, as well as having German

takeover law on its side. Sprint and Nextel do not use GSM, andso Vodafone would have the same mismatch with its other net-works that it suffers with CDMA-based Verizon Wireless.

So for now, it seems that Vodafone will sit on the profits of itsUS venture and wait for a new opportunity to come along. Veri-zon is not kidding itself that this situation is permanent though.We believe Vodafone's bid for AT&T Wireless represents aclear signal that over the longer term Vodafone might have adifferent design on how they would like to participate in the USmarket," said a spokesman for the US company. "We stand

willing and able to take whatever steps necessary should theydecide to go in a new direction."

Investor hostility to acquisition:

Vodafone may take the cautious route, for now, in the US, be-cause better options are not available, not because it has givenup on taking full control of an operator in this critical territory.What is concerning, though, is the hostility of its investors toany form of expansion activity, even when this brings clear

benefits.

They are worried about slowing growth in a maturing Europeancellular market, as witnessed by their dissatisfaction with Voda-fones 10% increase in revenue and 19% rise in pre-tax profitsfor the year ended March 31. Yet they are unsupportive of theattempt to balance that slowdown with aggressive expansioninto less saturated markets.

Although Vodafone wrote down over 15bn in assets, draggingits fiscal year into a 9bn net loss, it is still generating hugeamounts of cash and has strong underlying profitability, whichwould seem to give it a strong basis for building new businessesout of its usual orbit. There lies the nub of the problem inves-tors want to get their hands on more of the $15bn cash moun-tain, while Sarin wants to store it in order to have the freedomto grab a strategic acquisition when one presents itself.

Investors had been hopeful that Sarin would be more cautiousthan his high spending predecessor, Christopher Gent, but theirhopes appeared to be dashed when Vodafone bid a hefty $35bnfor AT&T Wireless (losing out to Cingular, which was forced

to overpay to an even greater extent) and when it pursued a stillunsuccessful strategy to acquire Vivendis French mobile car-

Vodafone might have a

different design on

how they would like to

participate in the US

marketVerizon


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rier, SFR Cegetel. What really shook the Vodafone bears in both

these examples was Sarins willingness to hint at Gent-style au-dacity of tactics, stoking rumors that Vodafone might bid for ei-ther the whole Verizon company or even the entire Vivendi inorder to gain the full control of a coveted cellular division.

Despite these high profile actions, Sarin is no reckless bountyhunter. Indeed, he is building a reputation, also under-valued byshareholders, for aggression in turning advanced technologiesinto revenue very swiftly. Live! has been the best example, itsroll-out accelerated under the new leadership and moving rapidlyinto additional functions such as video download.

Now 3G is becoming real at last in several key European territo-ries, and is the best hope for 2005 onwards for generating seriousgrowth in mature markets. More surprisingly, Vodafone is dab-

bling in broadband wireless technologies, with a Japan-basedglobal trial of the Flarion Flash-OFDM platform, which could beintroduced as a premium, high speed data overlay in some mar-kets, boosting ARPU and range of services beyond the scope ofUMTS.

Japan:

The hostility to the buyout of Vodafone Japans minority inves-tors showed that the desire to hold on to cash has become irra-tional among the cellcos shareholders.

The sense in taking full ownership in Japan is obvious the unitcontributed over 1bn in operating profit last year, and Sarin hasno wish to share its profitability with the other partners, but it isslipping back in terms of profit, ARPU and market share andneeds a shot in the arm that only a single controller can achieve.

Some argue that Vodafone should ignore Japan, given that it is just a number three player, with market share of 18.4%;DoCoMos i-Mode content service is well established comparedto Vodafone Live!; and KDDI got into the 3G market earlier andmore smoothly than its rival.

While that argument actually makes more sense than retainingthe current, unsatisfactory halfway house, Vodafone cannotreally omit Japan from its map if it still wants to be a truly global

player.


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The global brand strategy:

Some analysts, reflecting the nervousness of Vodafone stock-holders, have started to question whether the company needs itsglobal brand strategy at all. In most countries, they argue, userexpectations remain highly localized and advertising, service

packages and content choices cannot be the same everywhere.

This is to miss the point entirely. The glamorous element of Vo-dafones global strategy is the attempt to emulate the hugeAmerican brands like McDonalds and Coca-Cola, offering thesame logo and the same basic service everywhere in the world.

But it is not heart of the matter. Just as McDonalds, in reality,sources its ingredients locally, adjusts to local pricing and evenoffers different menus behind the consistent yellow arches, souniformity is not the point for Vodafone either.

A global footprint brings it advantages with the business travellermarket, though these are diminished by roaming deals, butmainly it brings it unparalleled negotiating power. It can collectinternational revenues itself rather than paying roaming partnersand it can buy handsets and infrastructure at the most competitive

prices, supporting its margins even as its core markets become

more and more commoditized.

Beyond all that, it can even wield the power to dictate to equip-ment vendors exactly what features it requires in its handsets, andcan use its weight to sign up the best content partners, thus set-ting an agenda in which other carriers can only be followers.

Only a global leadership achieves this level of influence and thechance to remain the worlds number one player and to deliverthe rewards the shareholders crave in a tough environment. Butglobal cannot mean just Europe and Japan, even in the cellularworld it has to embrace full control of a US operator and lookfor purchases among the emerging super-users of mobile technol-ogy, such as India and Russia.

In stark contrast to the US cellcos and even Japans DoCoMo,what could stop Vodafone achieving its goal is less likely to beits own poor decisions or indecisive management, but the shorttermism and hesitancy of its own shareholders.


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Once a recognized brand, a smart handset and a competitivevoice tariff were sufficient to bring success to a cellular operator,

but increasingly they are now having to adopt more sophisticatedapproaches to reducing churn. Differentiated content and highlevels of service are becoming key to the big players, and both ofthose bring new levels of cost and unfamiliar business models.

Against this backdrop, carriers and the handset makers jostlingfor their attention have invested huge hopes in over the air(OTA) technology, which allows bugs to be fixed and new appli-

cations downloaded remotely. This improves user satisfaction,since they no longer have to send handsets away to be repaired;reduces time to market for new applications or phone features;and cuts the operators costs on both fronts.

Many start-ups have focused in the past three years on creatingOTA servers, and 2003 saw two clear signs that the market wasstarting to become real acquisitions by major players, includingSun of Pixo and Motorola of 4thPass; and moves towards stan-dards, mainly driven by the Open Mobile Alliance (OMA). In2004, some OTA facilities are starting to be used in earnest, in

high end, Java-enabled handsets, and this trend should pick up asinteroperability issues are addressed and as 3G platforms andcontent-driven services such as Live!gather pace.

OTA technology allows wireless carriers or handset makers to broadcast bits and bytes out to users' mobile phones, providing patches, applications and on the fly upgrade of handsets. In thefuture, the vision is to create cognitive radios that support multi-

ple wireless links and can swap different connections in and outover the air, according to requirement. OTA has to be supported

by the handset makers, since client software is embedded in the

phone, and also by the carrier, which needs to deploy the serverfunctionality on the network. This creates a complex business

New interest in over the air start-ups as operators seek differentiation

Technologies for fixing bugs and delivering applications to phones over the air

are taking center stage as operators battle for competitive edge.

Once mainly used for advanced content provisioning, OTA tools could now save

the carriers $8bn a year in maintenance costs and reduce their time to market

for new features, from security updates to the latest game.

Standards are emerging, and several start-ups are poised to make their for-

tunes. OTA doesnt make the operator shift from basic voice services to a con-

tent-driven business model based on complex devices any less painful, but at

least it makes it cheaper.


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model for the start-ups and it is only recently, as carriers have

become more dependent on rapid time to market with new ser-vices, and handset makers have seen their devices becomingmore complex, that both have had a strong motivation to investin OTA.

DoOnGo:

This week we have seen Intel forming a partnership with one ofthe key independents, DoOnGo Technologies, which has always

been interesting because of its strong presence in Asia, the trendsetter in terms of mobile phone usage. DoOnGo and Intel will

collaborate on an application programming interface that will en-able the software houses DeltaUpgrade Client OTA technologyto work with the chip giants flash memory, speeding time tomarket for devices using those chips. Intel also made an invest-ment of undisclosed size in its new partner to accelerate productdevelopment, a sure sign that it aims to make OTA a differenti-ator for its cellphone architecture.

DoOnGo has also announced that DeltaUpgrade will be used insome handsets by LG Electronics, mainly in China, where thesize of the country and the heavy demand for content makes

Player Product Selected partners Funding

DoOnGo DeltaUpgrade LG, Panasonic,

Sharp

Intel, DoCoMo

Intel, VantagePoint, Vertex,

CDIB, Mitsui, Nippon VC,

NTT Leasing, Gemtek

Bitfone mProve LG, DoCoMo,

Motorola, Sony

Ericsson

Nokia, Prism, St Paul, 3i,

Motorola, Flextronics, Nexit,

Orange, KTB, CIR

Elata Senses Hutchison 3,Optimus, Orange

Royal Bank of Scotland,nCoTec Ventures, Hugh

Symons Group, NewMedia

Spark

Openwave Mobile Device

Manager

Cingular, T-Mobile,

Orange

Publicly quoted on Nasdaq

Red Bend vCurrent Siemens, Symbian,

AOL,

RealNetworks

Pitango Venture Capital,

Infinity Ventures, Carmel

Ventures, Poalim

Insignia Secure SystemProvisioning

Symbian, IBM,Metrowerks

Publicly quoted on Nasdaq

OTA start-ups


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OTA an urgent requirement. LG already uses a rival technol-

ogy, mProve from Bitfone, in some of its high end models.DoOnGo also has deals with handset makers NEC, Sharp andPanasonic and with operator China Unicom.

Improved service:

OTA clearly offers the potential for far better service and reli-ability for mobile phone users. In the past the only way to fix

bugs was to send phones back to the shop, a method so expen-sive that it rarely happened, with faults being left untended untilthe handset was replaced. Gene Wang, CEO of Bitfone, esti-

mates that software bugs cost the global industry $8bn a year tofix, while Insignia claims it costs $50-$100 to repair or update a

phone.

A more viable approach could raise perceptions of cellcosstandards, and for phonemakers, a reputation for problem-freehandsets will increase their appeal to those carriers, sensitive tocharges of poor customer service (especially in the US, wherethe introduction of number portability has put cellco customercare under a new spotlight). Motorola scored many negative

points last year when some of its new phones were delayed by

software glitches.

DoOnGos OTA

platform for 3G


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Sceptics fear that OTA, combined with the pressure to come out

with new features and downloads all the time, will encourage op-erators to rush out phones before they are fully ready, on the ba-sis that flaws can be easily fixed in the field. However, the facili-ties will be essential to the development of rich content platformsand will be a significant boost to services such as DoCoMos i-Mode, Qualcomms Brew and all the Java-based options such asVodafone Live! , as well as making it more realistic for the com-

plex smartphone to challenge the laptop as an enterprise tool.

It's a very encouraging indication of an increasing level of so-phistication for mobile applications. It indicates the industry un-

derstands that to truly enable mobility, it will require some so-phisticated tools and support, commented analyst John Jacksonof Yankee Group.

The second half of 2004 is likely to see the launch in volume ofOTA-enabled handsets. Companies like LG, which initially de-

ployed the technology in just one model, will step up their activi-ties after the summer, as will Motorola, which licensed BitfonemProve last year. However, mass roll-out, though driven by theexpansion of 3G networks and complex handsets, will also bedelayed until standards are set, to reduce the cost of server and

client software and to instil carrier confidence in installing suchsystems.

Standards:

The development of standard software agents to go into the hand-sets is being addressed by the OMA and by a related group calledthe OTA Flash Forum, which was formed last year by Bitfone,Gemplus, Motorola, Orange and T-Mobile USA. The aim is forany OTA-equipped handset to work with any network.

In a standards-based world, the survival of most of the start-upswill be dependent on big partnerships. A good example wasIBMs decision earlier this year to back Insignia Solutions and itsSecure System Provisioning server application, which came as ashot in the arm for the struggling company. 18-year old Insigniahad taken the high stakes decision earlier in 2003 to move out ofits traditional Java virtual machine business and pin all its hopeson its unproven OTA technology.

Revenue plunged by over 90% and the company had five con-

secutive quarters of negative cashflow before it turned a cornerby raising $5m in equity transactions and signing the IBM deal.


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Insignia also ships with the Symbian sourcecode and numbers

Motorola division Metrowerks among its clients.

Now, the new partners plan to develop standards for over the airdevice management and to extend the range of functionality toareas such as securing stolen handsets, or performing diagnos-tics on specific phones. All this is important to the goal of thesmartphone industry and of companies like IBM that seek acounterweight to the PCs dominance of the enterprise client

platform to make their products sufficiently robust to be core business tools. Remote management, diagnostics and simpleupgrades are all taken for granted on the PC, and will become

important as the smartphone becomes as complex as its rival.

Despite the new momentum, there are other inhibitors besideslack of standards. Fears over security and reliability are para-mount, especially in a corporate context. Operators fear that anyglitches in the process could increase, rather than decrease, thecalls on their customer service teams and damage their reputa-tion, even if the update has been issued from the handset maker.

On the end user side, there is suspicion of being swamped withnew and unwelcome updates and promotions. Marketing and

advertising are, of course, applications for OTA as well asmaintenance and content delivery, and ones that must not beabused if users are not to be turned off a service. Handset mak-ers have mixed feelings too, worried that if customers becomeaccustomed to receiving frequent, free OTA updates, they will

be less willing to upgrade their devices on a regular basis.

But the need to cut time to market and keep always one stepahead in terms of quality and available content will outweighthese doubts, especially as standards emerge. There will also beincreasing interest in the related class of technologies that han-dle over the air applications and content provisioning and bill-ing, particularly for Java environments. Companies in this fieldare concerned with complex content and applications distribu-tion and work with standard J2ME implementations.

OTA for Java content provisioning:

Over the air provisioning is seen as important in boosting theadoption of Java-based content platforms and in reinforcing theleadership of that technology over rivals, notably Qualcomm

Brew, which also uses OTA techniques. In the Java world, theimportance of the ability to supply and bill users over the air


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has been illustrated by a scramble to buy up start-up technol-

ogy. Most notably, Motorola acquired 4thPass in late 2002, andSun bought Pixo last year.

4thPass MAS product allows the mobile user to continuallyupgrade and personalize applications like games, increasing theamount of time they spend on the application and therefore itsrevenue potential, as well as their loyalty to the service.

When Sun bought Pixo, it was a clear move to enable the Javacontent platform to catch up with Brew in some key areas.Brew has been very popular with CDMA operators and service

providers because of its simple distribution, digital rights man-agement and billing framework, and its largest user, VerizonWireless, claims its Brew-based Get It Now content servicegenerates an average of $7.50 more monthly revenue per userthan other offerings. Pixos flagship product is MobileDownload Server 3.6, which numbers Hewlett Packard and BellMobility among its users. The product also includes direct mar-keting tools.

But of course, efficiency of delivery is not the only factor hold-ing these content platforms back. Momentum is mounting rap-

idly behind the big brands, where operators like Vodafone haverecognized the opportunity to spend large sums on establishinga differentiated service at an early stage.

But for smaller cellcos, the attractions are far less obvious.They are worried about the possible negative impact on corevoice revenues, and the fact that, in a switch of usage towardsdata, they have to share the takings with other parties. Part ofthe reason for i-Modes massive success in Japan was thatDoCoMo took only 10% of the proceeds, leaving the rest forthe content makers, in order to build a huge range of downloadsin a short time. Western operators are looking for a share closerto 50%, and even then, begrudge the loss of margin. If they lackthe timeliness or funds to create a strong brand, they are likelyto license i-Mode or Live! rather than seeking to establish theirown platform, but this eats further into their profit potential.

But cellcos will be dependent on interesting content for marginand market share in the years to come, however ill at ease theymay be with that new world. The development of OTA toolswill, at least, enable them to reduce the cost and resources that

need to be ploughed into supporting a complex mobile environ-ment, and claw back a few fractions of margin for themselves.


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The long awaited Wi-Fi/cellular handset and voice over WLansystem from the partnership of Motorola, Avaya and Proxim willlaunch in September, but will require enterprises to invest in

802.11a systems.

Mandating 802.11a may be a double edged sword. On the onehand, in the enterprise market that the trio is targeting with itsvoice over Wi-Fi development, 802.11a will certainly produce

better performance, since it runs in 5GHz spectrum and thereforeis less susceptible to interference, latency and packet dropping

problems that arise in the overcrowded 2.4GHz band.

On the other hand, it will compel organizations to upgrade theirWLans, and so may slow uptake in companies where VoWLan

does not have an urgent business case, by adding to the requiredcapital investment and disruption especially as a systems donot interoperate with older b-only networks.

Also, by providing only one network option, the Motorola groupis backing a technology that some observers believe is dead inthe water. Although a has generally been accepted as beingmore suitable to enterprise use than the other fast option, 802.11g

because of its lower interference levels and the higher realworld speeds it achieves through having 21 non-overlappingchannels - the latter has been adopted enthusiastically. It provides

an easy migration from b, and a fairly cheap one, since feweraccess points are required than with a, so that its momentummay now be unstoppable.

However, there is now a range of dual-radio a/g equipment on themarket and the high quality of service requirements of voice orvideo over WLan could well create a new surge of interest in a.At a recent mobile enterprise summit in London, several integra-tors said they were recommending customers to implement dualWLans a viable option given the relatively low cost of equip-ment with g being used for data and either b or a for voice.With a, a heavy voice user could allocate several channels to

Motorola/Avaya handset will require investment in 802.11a

A partnership of Motorola, Avaya and Proxim promises the most robust enter-

prise system yet to emerge for voice over Wi-Fi, but it will work only with the

802.11a variant of the standard, requiring most users to invest in new equipment.

As chip and battery improvements herald a wave of new voice-optimized WLan

equipment, will users make the leap to gain the advantages of a, or turn to a

more flexible rival platform?


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voice and so ensure that the system did not fail because of poor

performance and therefore low user support a very real risk insome early deployments.

A more compelling option for 802.11a is via products that havemultiple radios or multiple channels in a single box, such as

products powered by Engims chipset. In that model, becauseeach access point could have several hundred Mbps of actualthroughput through bonded or standalone channels, it would beworth deploying the denser installation required by 802.11a.802.11b and g have substantial limits on total system speed be-cause of their staggered and overlapping channels.

Proxim claims that only a is well suited to enterprise classvoice applications because it has 21 non-overlapping channelsrather than a staggered channel scheme like g, and so can sup-

port about 25 VoIP calls at a time from one access point. Itpoints out that savings on cellphone bills should cover the costof upgrading to 802.11a within a few months.

Improved handsets:

Motorola launched its first Wi-Fi/cellular handset, the Win-

dows-based MPx100, in February, but this was targeted at op-erators, while the Avaya/Proxim system will be sold throughenterprise channels. The giant claims that the so-calledEnterprise Phone will have a lightweight battery that will pro-vide talk time of 10-12 hours and standby time of 24 hours, nottoo far from high end cellphones in terms of battery efficiency,one of the key user criteria when adopting handsets.

New chipsets are helping to improve the battery life and Mo-torola is thought to be using silicon from Texas Instruments.Broadcom and Philips started the trend towards low power, of-ten single-chip implementations of 802.11b, with a sharp eye onthe handset market, last autumn and have been followed intothe space by TI, Atheros and Conexant, with TI predictably,given its power in the phone market taking the technologicalhigh ground in dual-mode handsets.

In March, it came up with a roadmap that showed it determinedto dominate the dual-mode platform and so far it is workingwith both the majors that have already launched Wi-Fi-/cellulardevices, Nokia and Motorola. Its 802.11g/b and 802.11a/g/b

offerings, also launched in March, are the first of the highlycompact Wi-Fi chipsets on the market to support 802.11g and


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be targeted at phones. (Atheros, which was the first to launch a

single-chip solution supporting g, says it has no plans to targethandsets.)

The two-chip TI product builds on the companys recent work onshrinking down the components to achieve chipsets compact and

power efficient enough to be viable for phones. It is working on asingle-chip solution for the future based on its ground breakingDigital RF architecture, which it outlined at Februarys Interna-tional Solid State Circuits conference.

The chipset is designed to be used with TI's OMAP application

processors, GSM, GPRS, CDMA and EDGE chipsets and single-chip Bluetooth solution. Architecture innovations in theTNETW1250 such as on-chip power management, reuse of cellu-lar clock frequencies, and low pin-count host interfaces were in-cluded to eliminate barriers for integration of WLAN into cellu-lar handset designs.

As important as battery life to a successful voice over WLanstrategy will be hand-off and Motorola says it has developed,with Proxim and Avaya, new techniques to hand off the call be-tween a WLAN and a cellular network, although there are no de-

tails as yet.

Proxims input:

The full system from the trio will work with Proxim switches andwill provide the functions of a wired corporate desktop phone ona mobile handset, working through an Avaya PBX and able tohandle four incoming lines. Features such as forwarding calls andconferencing will use soft buttons that mimic the functions of

buttons on a desktop telephone, which could be entirely replacedby the new system.

The main Proxim contribution to the system will be based on theOrinoco Switching System it launched earlier this year, as a chal-lenge to the Wi-Fi switch start-ups. The system is optimized forVoWLan and promises to support seamless hand-off betweensubnets and between cellular and Wi-Fi connections, as well asload balancing and fast authentication, all features essential forvoice quality of service.

It can operate as a standalone 802.11 product, but can also be de-

ployed as a voice-optimized add-on for conventional switchednetworks. Key to voice over WLan uptake in the enterprise will


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be the 802.11e quality of service extension to the Wi-Fi standard,

and a more distant specification for fast hand-off. Proxim has been involved in both developments and says it will support asmuch of the standards as is possible until they are fully ratified,and will also incorporate 802.11i security when that specificationis finalized.

PDA marketdown to two players as Sony exits and Dell mulls Palm bid?

Sony is to quit the European and American PDA markets, a signof the decline of this class of devices, and a blow for its operatingsystem partner PalmSource. But shares in the former hardware

arm of Palm leapt 12% on rumors that Dell could make a bid.These two moves would reduce the once buoyant sector to twomajor players, Dell and Hewlett Packard.

Sony had previously said it would evolve its PDA, the Cli, intoa personal video recorder, in line with its strategy of focusing ondigital media devices. However, with the wireless Portable Play-Station on the horizon, such a product could be a distraction, andit now says it will review its entire PDA strategy, even in Japan,where for now it will continue to sell the Cli.

"Sony is taking this time to examine the conventional PDA busi-ness and how it will transition into the future," the company said.

The Cli has 9.3% global market share but sales of standalonehandhelds fell by 12% to 2.2m units, according to IDC, in thefirst quarter, squeezed between smartphones and ultra-light port-able PCs.

Sony is also the second largest licensee of PalmSources Pal-mOS, after the software houses former hardware arm, PalmOne.Even PalmOne has indicated that it is not necessarily wedded to

PalmOS in the future, saying it evaluates the best operating sys-tem for every new model it produces. Such signals, combinedwith Sonys decision, spell bad news for PalmSource, especiallyas the other smartphone platforms gain ground. Symbian andWindows Mobile have more heavyweight support while Palm-Sources clear advantage over those two its relative malleabil-ity in the hands of the operators is diminishing in the face ofmobile Linux.

It seems likely that Sony will withdraw or reposition its PDA inAsia too, although there are dramatic regional variations in the


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nascent smartphone market. In EMEA in Q1, 60% of high end

mobile devices shipped were running SymbianOS, while inNorth America, the strength of Treo and Sony put PalmOS innumber one position with 47%, compared to only 6% for Sym-

bian and 28% for Windows Mobile also a minor performer inEurope.

In the first quarter, smartphones represented 63% of shipmentsof high end mobile devices, up from 35% a year earlier, accord-ing to Canalys, while standalone PDAs fell back from 40% to29%. Sony suffered the most from the decline in the NorthAmerican PDA market, which accounts for the vast majority of

its Cli sales, with shipments almost halving year-on-year. Thisis because the Cli is very consumer focused, so it has not takenadvantage of the rise in spending on mobile enterprise devices,

but its features, such as MP3 and cameras, are now common-place on midrange cellphones.

Sony may not be the only contender to exit the handheld mar-ket. Toshiba is rumored to be planning to pull out of this gamein the US, and there is also talk that Dell could make a bid forPalmOne. This would reduce the PDA race to two players, HPand Dell, with the latter marginally ahead in share.

A PalmOne acquisition would saddle Dell with two operatingsystems, at least until it could potentially shift the range to Win-dows, but it would also bring it a readymade and strong smart-

phone, putting it several steps ahead of HP, which has not yetlaunched its planned cellular PDA, the iPaq h6300.

The company was keen last summer to move into the smart-phone market, but later backed away from its plans ( see Wire-less Watch issue 32), claiming rivals like Nokia would be toostrong for it to enter the mainstream cellphone game, althoughit would continue to add more wireless capabilities to its AximPDA. Now that the Treo is gaining ground, particularly amongcarriers and resellers that target business users, Dell may be re-thinking its decision.

The problem with the Treo is that it is sold mainly through op-erators. Dell has built its fortune on direct sales and cutting outthe channel and the cellphone business model would sit uncom-fortably with its culture. However, with Nokia trying to enterthe enterprise market and position the smartphone against the

mobile PC, Dell may feel it needs a better defense in a coremarket than the Axim.


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The latest PDA lawsuit: Palm and Xerox

As so often happens when a market contracts, players turn to the law courts to shore up their threatened busi-nesses. This month, we saw the latest twist in a long running patent battle between PalmOne and Xerox con-cerning Palms Graffiti handwriting recognition technology. Xerox sued Palm in 1997, claiming Graffiti in-fringed patents that were part of the Unistrokes platform developed at the Xerox Parc research center in 1993.Palm actually abandoned Graffiti for a multistroke version called Graffiti II. But now, a court has dismissedthe suit and ruled Xerox patent invalid too late for the original Graffiti, but potentially saving PalmOnesignificant damages, if a Xerox appeal fails.

Some other PDA lawsuits:

Pilot Pen vs Palm (1998)

At issue: the brand name PalmPilot, which Palm eventually had to drop.

Palm vs Microsoft (1998)

At issue: Microsoft planned to launch a handheld called Palm PC but was sued by Palm and changed thename to Palm-size PC and then to PocketPC.

Glenayre vs Rim (1999)

At issue: Suit and countersuit over RIMs Single Mailbox Integration Patent, one over which it proceeded tosue several other players.

E-Pass Technologies vs Palm, Microsoft and HP (2000)

At issue: E-Pass claimed the PDA makers infringed its patent for a multi-function, credit card sized com-puter. A federal judge dismissed this in 2002 but the decision was overturned on appeal last year. The wran-gle drags on.

NCR vs Handspring and Palm (2001)

At issue: NCRs patent for a "portable personal terminal for use in a system for handling transactions."NCRs suit was dismissed.

Good Technology vs RIM (2002)

At issue: Good asked a US court to declare RIMs Single Mailbox Integration patent invalid in order to avoida RIM lawsuit. RIM followed up with a string of claims related to various patents plus accusations of misap-

propriation of trade secrets and breach of contract. The rivals settled their differences last year and Good li-censed RIM's wireless technology.

RIM vs Handspring and Palm (2002)

At issue: RIM sued over patents on thumb keyboard design but Handspring licensed the technology and thelawsuit was dropped.

NTP vs RIM (2002)

At issue: NTP claimed certain RIM products infringed on patents held by NTP that cover the use of RF com-munications in email systems. RIM lost and was fined and was also subject to an injunction that, if an appealthis month fails, could force it to pay royalties to NTP or stop selling its BlackBerry products.

Peer-to-Peer Systems vs Palm (2002)

At issue: Peer-to-Peer Systems filed a lawsuit against Palm that alleges that the handheld maker infringes onits patent for interactive wireless gaming. This is ongoing.

Forgent Networks vs HP, Toshiba, palmOne (2004)

At issue: a patent concerning JPEG image creation that Forgent acquired with Compression Labs. Sony andothers have licensed the technology, but Forgent is still suing HP, Toshiba, PalmOne, Xerox, Adobe, IBMand 25 others. Source: Brighthand.com


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Less than two months ago, analysts were adopting sackcloth andashes and not a small dose of schadenfreude as Nokia an-nounced a shock 2% downturn in first quarter sales and the lossof about 3% in market share (see Wireless Watch issue 56). Nowthe Finnish giant has stopped the rot with new models and pricecuts, and see a sharp recovery in sales in its core European mar-ket.

Retailers said that Nokia sales were rising quickly in high endand midrange models and Europes largest handset seller, Car-

phone Warehouse, said the Nokia 1100 had displaced Siemens asnumber one entry level device and that the vendors products hadaccounted for 45% of total sales in the past two months.

We have stated our case on this one often enough to risk becom-ing monotonous, so we will just say one more time Nokia is

playing a long game and an ambitious one, which is the only op-tion open to a global leader that aims to retain its market shareand its margins in a price-pressured sector. It will experience

blips, and errors of judgement, along the path to its goal, but ifthe strategy is clearly stated which it is and it rights its errorsswiftly, it will still stand a good chance of success.

The companys rapid price adjustments when it realized how badly it had underestimated the need to provide midmarket

Nokia confounds critics with European rebound, but needs US gains


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phones, particularly clamshells, show that it can react quickly,

and the change in its market share in the ensuing quarter illus-trates the results of that shift. At least it didnt take as long asMotorola did to remedy its mistake over cameraphones.

Although much was made in April of Nokia falling back in itshome European territory in Q1, it is more worrying that it re-mains over dependent on this region. Despite the unwelcome

blips of the spring, Nokia took 48% of the EMEA mobile devicemarket in the first quarter, according to new figures from Cana-lys, but had only 28% of global shipments.

In smartphones, Nokia is dominant, lending weight to CEOJorma Olillas decision to bet a hefty part of the strategy on highend devices focused on business or digital media. In a marketthat is still tiny, it has 73% share in Europe. However, it doesneed to improve its smartphone performance in the US, where

palmOne, with the Treo device acquired with Handspring, leadsthe (even smaller) field with 37% compared to Nokias 25%. InEurope, the Treo commands only a 1% share. In Asia-Pacific,Fujitsu leads in smartphones, followed by Nokia and Motorola.

Another currently small but growing market in Europe is that for

3G terminals, which accounted for 225,000 unit sales, or 2% ofthe total sector, in April, according to GfK of Germany. This wasdouble Marchs shipments figure, with the increase driven bynew and lighter models from LG and Nokia, the latter producingthe best selling 3G model to date.

With six more Nokia clamshell models set to launch in the mid-market in the coming weeks, it seems that the giant Finn haslearned its lessons quickly. And the early signs are encouraging,that areas into which it has ploughed huge R&D and businesshopes are starting to deliver returns, notably in smartphonesand 3G.

The cloud on the horizon, though, is certainly the tenacity ofAmerican brands in holding their own in one of the most criticalsectors for Nokia, the business high end. PalmOne and RIM which does 80% of its sales in North America have US marketshare out of all proportion to their small presence elsewhere, andit is essential that Nokia starts to chip into that position, as wellas into Motorolas in the CDMA sector, if it is to achieve its twingoals of 40% overall market share and an unassailable lead in the

emerging smartphone category.


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Worth Noting:

Quorum launches dual-mode handset chip

Wireless chip start-up Quorum Systems has unveiled a new mobile phone chip that will en-able GSM phones to use both GSM/GPRS networks and voice over Wi-Fi.

The new product, dubbed QC2530, is a single chip solution that allows for seamless roamingbetween cellular and Wi-Fi networks. It covers 802.11b/g and GSM/GPRS/EDGE systemsand competes with offerings from far larger players such as Texas Instruments, which isheavily focused on the compact, multi-network handset opportunity.

Quorum is backed by venture capital firms Kleiner, Perkins, Caufield & Byers and Enter-prise Partners Venture Capital and recently raised a new round worth $9.4m.

Wi-Fi Alliance gets new chairman

Texas Instruments' Bill Carney is taking the reigns at the Wi-Fi Alliance from outgoingchairman Dennis Easton. Carney says he will concentrate on promoting Wi-Fi to the publicand increasing the public's knowledge of new, exciting ways of using Wi-Fi within thehome and enterprise markets.

The Wi-Fi Alliance, which was formed in 1999, has 10 other board members, including PaulMeche of Nokia, Jayne Stancavage of Intel, Liam Quinn of Dell, Sarosh Vesuna of Symbol,Larry Rigge of Agere, Andrew Myles of Cisco, outgoing chairman Dennis Eaton of Conex-ant, Amer Hassan of Microsoft, Stuart Kerry of Philips and Ko Togashi of Sony.

10% of companies now using voice over WLan

A recent survey of business users found that 10% are implementing voice over WLan 48%are considering implementing it. The InStat/MDR report says that, with total handset ship-

ments totaling less than 60,000 in 2003, the market is still small but is growing even beforestandardized quality of service and fast roaming are available.

The researchers expect business class WLan handsets will experience a growth rate of al-most 120% in 2004 and that, by 2008, 15% of VoIP subscribers with wireless home net-works will have Wi-Fi handsets.

Other findings are that most early adopters are companies with over 1,000 employees, andover half of the respondents who run VoWLan use PDAs in the wireless network.


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UMTS TDD Alliance gains new supporters

The Global UMTS TDD Alliance, the industry body behind the data-optimized strand of theUMTS standard, has gained new vendors including LG Electronics. It has now signed upabout 40 members since it was formed in February to promote a little known technology

platform, whose best known proponent is IPWireless, maker of mobile broadband wirelessequipment that rivals 802-based alternatives such as mobile WiMAX or Flarion Flash-OFDM.

The vendor membership list now includes LG, Samsung, Possio and Ericsson South Africa,while operators include Vimplecom of Russia, AtlasOne of Malaysia, Irelands Net2Cell andthe US NextWave and Kite Networks.

In the next edition of Wireless Watch, we will analyze the chances for IPWireless and UMTS

TDD in detail.

Motorola plans dual-band phone for China

Motorola is preparing to launch the first dual-band GSM/CDMA handset in China, throughChina Unicom, in a bid to consolidate its position in the country.

The world phone will be priced 20% above the average high end CDMA handset and will

also be rolled out in India towards the end of the year through Tata and Reliance, andthrough Verizon Wireless in the US.

Motorola, whose market lead in China has been threatened by local suppliers, said it hasbeen regaining ground recently and now controls 17%-21% of sales, compared to about 32%in its heyday.

Investments:

Tropos Networks, maker of Wi-Fi mesh technology to support citywide hotzones, hasraised $15m in a Series D round, which it says will sustain it until mid-2005, by which timeit expects to be cashflow positive. The new round included two new investors, Duff Acker-man & Goodrich and Integral Capital Partners, plus all the existing backers, BenchmarkCapital, Boston Millennia Partners, Hanna Ventures, Intel Capital,Voyager Capital and WKTechnology Fund. Total funding to date is $33m.

AG Interactive has acquired K-Mobile, a European mobile content provider, to bolster itspush to build a global base. K-Mobile and its brand KiWee will be operated by AG Interac-tive's newly established European subsidiary. Terms of the deal were not disclosed.


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SyChip has raised a fourth funding round worth $20m from Austin Ventures, joined by new

investors, The Ignite Group and Silicon Valley Bank Ventures, and existing backers 3i US,Alliance Technology Ventures and New Venture Partners. SyChip specializes in RF Systemin a Package (SIP) modules for PDAs and wireless point of sale terminals.

MegaPath Networks, which provides internet services to US businesses, has raised $16.5min venture capital, which it intends to spend on acquisitions and business expansion. Inves-tors in the new round include Comcast and GM Capital Partners, with participation from

previous investors US Venture Partners, Centre Palisades Ventures and Austin Ventures.

Bluefire Security Technologies, a developer of wireless security software to protect hand-held devices, has raised $10m in a Series C round of financing. New investor Grotech Capi-tal Group led the round and was joined by returning backers JK&B Capital, Walker Ven-tures, Maryland's Department of Business and Economic Development and the MarylandAngels Council. The company's flagship product is Bluefire Mobile Firewall Plus. The com-

pany, founded in 1991, has raised $17m to date.

Operator Watch:

UK operators have to cut wholesale charges

The UKs regulator, Ofcom, has confirmed that mobile operators must reduce the wholesalecharges they levy for connecting incoming calls from other networks to their systems.

"Ofcom has concluded that direct controls should be imposed on the charges to operators forterminating calls on the 2G mobile networks of Vodafone, O2, Orange and T-Mobile," theregulator said.

Ofcom ordered Vodafone and MM02, which use 900MHz bands, to cut average terminationprices to 5.63p per minute from 8p, while operators using 1,800MHz bands - T-Mobile and

Orange - should reduce average charges to 6.31p per minute from 9.5p. The cuts are equiva-lent to inflation measured by the retail price index less 30 per cent.

The regulations do not apply to 3G networks.

Hutchison to rebrand mobile family under 3

Hutchison Whampoa is to rebrand all its mobile networks under the 3 name, which was previously reserved for its 3G systems. It will drop the Orange brand that it still uses inHong Kong and apply 3 to its CDMA, 3G and GSM Dualband platforms.


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Cosmote goes live with 3G in Greece

Greek operator Cosmote is the latest European cellco to go live with commercial 3G ser-vices, in time for the Athens Olympics Games, and has also launched the countrys firstvideo streaming service.

Cosmote is focusing, in the marketing of its service, on key applications such as video mes-saging, MMS and 384Kbps internet browsing. Its 3G network will cover 30% of the Greek

population, including Athens and most major cities. The first handsets will be the Nokia7600 and Sony Ericsson Z1010.

WiMAX Watch:

WiMAX Forum to lobby for spectrum unity

The WiMAX Forum has set up a Regulatory Working Group aiming to ensure availabilityand global harmonization of suitable spectrum for 802.16 systems.

The group will lobby and work with regulators round the world to ensure uniform allocationof spectrum, concentrating initially on the unlicensed 5GHz and the licensed 2.5GHz and3.5GHz bands. Particular efforts will focus on increasing European use of 5GHz; pushingfor fewer non-uniform technical requirements for 3.5GHz; and availability of 2.5GHz out-

side the US and some South American and Southeast Asian countries where it has been allo-cated so far.

The Forum will also work to advance the allocation of licensed and license-exempt spectrumin lower frequency bands such as 700MHz. And it is a key goal to support interoperability

between systems below and above 11GHz.

SPECTRUM FOR WIMAX

Unlicensed:

900Hz, 2.4GHz and 5.8GHz: unlicensed systems using spread spectrum technique (NB:5.8GHz is unlicensed in most countries but licensed in the UK).Licensed:1.9GHz (PCS)2.5 GHz US MMDS (Multichannel Multipoint Distribution System)3.5GHz (International MMDS)5GHz: new unlicensed band referred to as UNII (Unlicensed National Information Infra-structure) band. This is indoor only in the US.10.5GHz (International)23GHz: commonly used for microwave LAN systems28GHz: licensed to carriers for LMDS (Local Multipoint Distribution Service)

38/39GHz: licensed to carriers for general purpose communications services


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WiMAX is a complex standard that can support numerous different profiles for different fre-

quencies and technological characteristics, but the more radios that have to be developed, themore expensive equipment will be. Therefore, the Forum aims, as a parallel effort to itsspectrum work, to reduce the initial number of profiles to a small group that can achievemass market rapidly by taking advantage of the most internationally available frequencies.

One objective is a global tri-band radio unit for laptops by 2006 in 2.3GHz. 3.5GHz and5GHz bands, and harmonized spectrum for fixed, portable and mobile WiMAX.

Even when frequencies generally align, other attributes may make them incompatible. Forinstance, at 3.5GHz, not all countries follow the 3.4GHz-3.6GHz plan. China only allows3.4GHz-3.43GHz and 3.5GHz-3.53GHz operations, for instance, while some countries allow

TDD (time domain duplexing) as well as FDD (frequency domain duplexing), others do not(though this is becoming less common).

Radionet and Wi-Lan build Finland network

Radionet and Wi-Lan are working together to provide a regional broadband wireless net-work in southern Finland.

Owned and operated by the local energy company Mntsln Shk, the wireless cloud willcover an area of over 800 square kilometres. Upon its completion in early June the new net-

work, MSoynet X, will cover a population of over 60,000 people.

It will be built on Wi-Lans Libra 3000 W-OFDM gear, which is WiMAX-ready, and Radio-nets outdoor Wi-Fi access equipment, MageIP, which enables seamless subnet switchingfor reliability and improved connection speed. The network also features security featuressuch as VPN and AES.

Mantsalan Sahko and municipalities in the mid-Uusimaa region are exploring the possibilityof extending the wireless broadband network to the cities and municipalities of Kerava, Jar-venpaa, Tuusula and Nurmijarvi. These have a combined population of over 150,000 inhabi-tants.

Motorola cuts Canopy prices

While Motorola continues to hesitate over outlining a WiMAX strategy, it is seeking greatermarket share for its proprietary broadband wireless offering, Canopy, by reducing prices forvolume buyers.

The new MotoBundles are priced at $250 per unit for a pack of 500 customer premisesequipment (CPE) units, $300 per unit for a pack of 100 and $350 apiece for quantities of 50.


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Customers in the service provider community welcomed the move, saying it would enable

them to offer CPE units at no cost to residential customers who sign a 12-month contract,and to undercut cable and DSL alternatives.

Of course, this is one of the primary arguments in favor of fixed WiMAX and it is hard toimagine Motorola not eventually migrating Canopy, which operates in the 2.5GHz band, tothe standard.

Motorola also announced that the technology used in Canopy radios has been certified by theNational Institute of Standards and Technology as meeting the FIPS-197 federal standard forsecure data communication.

France Telecom tests WiMAX in Brittany

France Telecom R&D has rolled out a trial broadband wireless network in Brittany, usingApertos WiMAX-ready PacketWave gear in 3.5GHz spectrum. The system will act as awireline alternative for remote villages in Brittany. France Telecom is the second operator totrial WiMAX in France, the other being Altitude, which has licenses in various regions in-cluding the Vende.


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service for simple or complex questions about Wi-Fi, WiMAX, cellular or

fixed wireless issues. Please contact Peter White for further details.

Wireless Watch provides analysis and research covering the whole wireless world, in-

cluding cellular, wireless Lan and broadband wireless. For a more specific focus on

Wi-Fi and hotspots, you may also be interested in our partner newsletter, Blueprint

Wi-Fi. For details please email Caroline Gabriel on [email protected].

6-2004 wireless watch

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