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We Offer Multiple User Discounts:

THE INTERNATIONAL BUSINESS NEWSLETTER OF NEXT-GENERATION MOBILE COMMUNICATIONS

Have you been forwarded this email by a colleague?

Unless your company has a corporate or multi user discount with us, thisPDF and any files attached to it are a Single User license registered

to the person to which it has been sent by us, the publishers. The PDF iscopyright and must not be forwarded or distributed to any other within oroutside the company, nor be placed on any internal or external network

that can be accessed by any other. Breach of copyright law is punishableby fines of up to US$100,000 per infringement.

To arrange additional user licenses for other users please contact:

[email protected]

or visit:

www.baskerville.telecoms.com/corporate

We Offer Multiple User Discounts:

We offer generous discounts on multiple users. For further information,please contact:

[email protected]

or visit:

www.baskerville.telecoms.com/corporate

Have you been forwarded this email by a colleague?

THE INTERNATIONAL BUSINESS NEWSLETTER OF NEXT-GENERATION MOBILE COMMUNICATIONS

LUCENT TECHNOLOGIES and Nokia demon-strated their respective High Speed DownlinkPacket Access systems at the CTIA Wireless2003 show in New Orleans recently whilekeeping a firm eye on the upgrade plans ofone operator in particular.

Only NTT DoCoMo has publicly an-nounced plans to deploy HSDPA (3G Mobile,22 Jan, 2003), with trials scheduled to startlater this year and commercial services fol-lowing in early 2005. But Lucent and Nokiaseem to be more concerned with what is go-ing on in the U.S. than in Japan – and withAT&T Wireless (16%-owned by DoCoMo) inparticular.

In fact, when Nokia confirmed plans todeploy HSDPA as part of its G-WCDMA ini-tiative in December (3G Mobile, 8 Jan, 2003),it was firmly targeted at the U.S. market,with the availability of infrastructure coin-ciding with the auction of 1700MHz and2100MHz 3G spectrum by the FCC in 2004-05.

“The U.S. market clearly has shown itsreadiness to widely deploy GSM-based EDGEtechnologies,” Heikki Kasko, senior vicepresident of Nokia Networks, said in NewOrleans. “The Nokia G-WCDMA solution weare demonstrating will be a natural comple-

Volume 5, Number 7 April 2, 2003

published by

2 UMTS850 restricted to Americas market

3 Will Sprint follow Verizon’s EV-DO path? �

Airvana hopes for Unicom windfall

4 Russians pursue national 450 network �

Industry votes for universal short codes

5 Short Cuts

6 3G Mobile Data: Messaging data by selected

operators, 4Q02

8 Business Analysis: IMS deployment is a

strategic decision, claims UMTS report

9 News Analysis: UWB spectrum raises

interference concerns � T-Mobile turns off

lights on E-OTD

10 Company Profile: Openwave Systems

12 Viewpoint: Oksana Falenchuk looks at 3G’s first

steps into Europe

HU T C H I S O N 3G UK’S announcement thatit had secured amendments to the terms of itsloan facilities and an extension for an addi-tional year does little to quell questions aboutminority shareholders’ level of commitmentin the startup.

Hutchison 3G UK secured financing untilMarch 2005 (see fig.) after its lenders agreedto extend and amend the terms of its loan fa-cilities to support the next-stage rollout of its3G network. The facilities were provided bya consortium of 16 international banks, to-gether with vendors NEC, Nokia and Siemensand H3G’s majority shareholder, HutchisonWhampoa.

But the banks were thought to be reluctantto agree to the revised loan-covenant packageand one-year loan extension arranged in2000, totaling £3.2 billion (US$5 billion),unless Hutchison 3G UK secured an addi-tional £1 billion from its shareholders. A 3

UK spokesman denied that was the case, say-ing the two matters were “entirely separate.”

Since Hutchison 3G UK made its £1 bil-lion funding call to shareholders on March 7,only Hutchison Whampoa, with a 65% share,has agreed to the “pro rata” £650 millionpayment.

Both NTT DoCoMo (20%) and KPN Mo-bile (15%) have been given until April 15 todecide whether to meet their commitments,though KPN has already flatly refused to con-tribute unless it is forced to, confirming to 3GMobile that it is looking to unload its stake inthe company.

Meanwhile, 3 UK says it “is now an oper-ational mobile operator” (see Viewpoint, p.12) and is in the process of distributinghandsets to the 10,000 customers that pre-ordered. 3 Italy has received 50,000 pre-orders. Suppliers have committed to deliver700,000 handsets by end-May.

C O N T E N T S

Lucent, Nokia demonstrateHSDPA systems in the U.S.

I M T - E V O L V E

F I N A N C E F U N D I N G

Hutchison still waiting on shareholders

Continued on page 2 �

0

5

10

15

20

Opex

Capex

Licenses

Italy - banks

Italy - vendors

UK - banks

UK - vendors

Hutch loans

Licenses paid

Sources: Company data, Merrill Lynch estimates

Funding required by 2005

Funding secured

US

$ (b

il.)

Analysts welcome RIM deals • Mobile growthgood news for chipset firms • Balancedportfolios key to growth • Java deals shouldlay Qualcomm-vs.-Sun headlines to rest

INCORPORATING

Hutch 3G peak funding (on a 100% basis)

2 3G Mobile April 2, 2003 M u l t i p l e o n l i n e s u b s c r i b e r s p a y l e s s . V i s i t : w w w . b a s k e r v i l l e . t e l e c o m s . c o m / c o r p o r a t e

N E W S

Editor

Gavin Patterson

[email protected]

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Senior Reporter

Michael Carroll

Research Analyst

Julia Gretton

Chief Sub Editor

Charles Gordon

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Felicity Agyemang

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[email protected]

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Mark Newman

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Mortimer House

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www.baskerville.telecoms.com

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© 2003 Baskerville

PR O P O S A L S T O S T U D Y the devel-opment of UMTS850 will be re-stricted to North and SouthAmerica after Hutchison 3G UKraised “serious objections” to theaddition of new spectrum bandswithin the IMT-2000 family ofstandards at last month’s 3GPP TSGRAN meeting in Birmingham, UK.

The objections were raised by 3’sdirector of research, HashemMadadi, who said the addition ofmore bands “will eventually affectthe business plan of companieshaving paid for UMTS licenses inthe core bands.” The draft reportfrom the meeting noted that “therewas considerable debate on theeventual applicability of this[850MHz] frequency arrangementin Europe,” but it was finally agreedto explicitly mention that the bandwould only apply to deploymentsin ITU Region 2 (North and SouthAmerica).

“UMTS850 is a work item thathas just started to derive the neces-

sary requirements to use UMTSFDD in the 850MHz band [824-849MHz uplink, 869-894MHzdownlink] in ITU Region 2,” CesarGutierrez Miguelez, of the ETSIMobile Competence Center, told 3GMobile.

Other bands investigated at themeeting were Japan’s 800MHz andthe 1.7/2.1GHz band, though therewas more clarification that the Eu-ropean GSM bands would not becovered (see 3G Mobile, 19 Mar,2002).

3G Mobile previously reportedthat moves by France Telecom/Or-ange to start development work ona UMTS900 system had to be puton the back burner because of alack of support from the operatorcommunity. In fact, France Tele-com/Orange wanted to includeUMTS900 as a work item in lastmonth’s meeting, claiming itwould have been easier to studysome coexistence issues, such as in-terference, at the same time for

both the 850MHz and 900MHzbands.

Although operators were notready to discuss UMTS900, dele-gates at the Birmingham meetingdid recognize potential crossoverwith the 800MHz band, and it wassuggested that the Japanese band beconsidered as an addition toUMTS850 – in other words tomerge the proposals.

“It was clarified that the scope ofUMTS850 is wider and thetimescale substantially different[from that of UMTS800],” the draftreport from the meeting noted.“However, it is agreed that they areclosely related, and companies aresuggested to share efforts for thesimulation work.”

NTT DoCoMo’s Takehiro Naka-mura confirmed that the uplinkand downlink bands for 800MHzwould be clarified by the next WG4meeting, in Japan in April, and thatthe proposal is for FDD only andthat TDD is not considered.

ment to EDGE and will do the samefor WCDMA that EDGE does forGSM. G-WCDMA provides the ca-pability for virtually unlimitedwireless services and applications.”

HSDPA, which is being offeredas a capacity upgrade for WCD-MA/UMTS networks around theworld, lifts maximum peak datarates from 10Mbps in a 5MHzchannel while increasing through-put and attendant spectral efficien-cy. It is not surprising, therefore,that DoCoMo was at the head of thequeue for HSDPA, given the partic-ular capacity problems in theJapanese market.

But North American GSM oper-ators are facing similar problems,having to roll out WCDMA servicesin the 1900MHz PCS band or even850MHz cellular band. AT&TWireless plans to launch WCDMAservices in four markets by the endof 2004 and, without new spec-trum, could do worse than deploy-ing HSDPA soon after.

“Without a doubt our targets arealigned with the AT&T’s targets,”

said Paul Mankiewich, CTO of Lu-cent’s Mobility Solutions Group. Heprefaced the statement by sayingthat Lucent has been working witha lot of operators. “I’ve had discus-sions with every European serviceprovider, as well as AT&T and Cin-gular, and everyone is very interest-ed in HSDPA,” he said.

Lack of legacy limits upgrade The problem for Lucent, however,is that its HSDPA upgrade wouldonly work in Lucent UMTS basestations. “You wouldn’t be able totake an HSDPA channel card fromLucent and put it in a Nokia BSS,”Mankiewich said. And Lucent doesnot have any commercial UMTSdeployments – just two trials inEurope, with Telefonica andT-Mobile.

Nokia, meanwhile, has a lot oflegacy equipment, includingGSM/GPRS/EDGE upgrades forAT&T in the U.S. But Lasse Maki-nen, systems marketing managerof WCDMA RAN marketing for IPMobility Networks at Nokia Net-works, says there was a need for

AT&T to install HSDPA fromscratch. Makinen said that WCD-MA would come first and thenHSDPA would be added slowly toimprove efficiency in certain areas– the same way EDGE will be usedto increase UMTS operators’ GPRSefficiency.

Lucent, however, is a little morehopeful. “AT&T is planing to de-ploy UMTS, and AT&T has been avery good customer of ours in thepast, and I hope it will be again,”Mankiewich said. He added thatLucent is also talking about supply-ing WCDMA equipment to DoCo-Mo, which is conducting its ownR&D on HSDPA, as it did withWCDMA.

In the meantime, Lucent isworking on the next developmentof HSDPA, High Speed UplinkPacket Access. “The proposal was toput HSUPA in Release 5, but we’llbe lucky to get it in R6 now,”Mankiewich said. “Whereas HSDPAcompetes on a data level with1xEV-DO, HSUPA is the equivalentof Release D in EV-DV.” 3G

[email protected]

continued from page 1

W C D M A

UMTS850 restricted to Americas market

April 2, 2003 3G Mobile 33 G M o b i l e m a n a g e m e n t r e p o r t s n o w a v a i l a b l e . V i s i t : w w w . b a s k e r v i l l e . t e l e c o m s . c o m / r e p o r t s

N E W S

U.S. S T A R T U P AI R V A N A has pro-vided five network operators withits all-IP 1xEV-DO equipment andhopes its relationships with NortelNetworks and Ericsson will providea windfall if China Unicom up-grades its 1xRTT network, whichwas due to launch by end-March.

“Unicom would be a very signif-icant deal for us,” said Airvanaproduct manager Amit Jain. Whenthe Chinese operator awarded itsfirst 1xRTT supply deals in Octo-ber, Nortel took US$276 millionworth of business, while Ericssonwon a contract for US$150 million.

Airvana supplies both vendorswith their EV-DO solutions and hasseen Nortel deploy EV-DO for Ver-izon and Tawian’s APBW, whileboth Ericsson and Nortel signeddeals with Brazil’s Vesper Wireless.Airvana has also picked up deals it-self with Wireless Indonesia andAlaska Communications.

Jain said four more EV-DO con-tracts are under discussion in Asia-Pacific and the Middle East. In Asia,Unicom is obviously the big one,though Nortel has also suppliedAustralian operator Telstra with its1xRTT network. In the Middle East,only Israeli operator Pele-Phonehas a CDMA network.

Jain added that the company hasnot made a decision about whetherto expand its offering to include1xEV-DV equipment. “We will waitand see,” he said.

Will Sprint follow Verizon’s EV-DO path? Airvana hopes forUnicom windfall

C D M A 2 0 0 0 1 X E V - D O

S P R I N T C O U L D make a dramaticU-turn on its decision to migrateits 1xRTT network directly to1xEV-DV if the launch of VerizonWireless’ 1xEV-DO network laterthis year proves successful.

Verizon recently announcedplans to upgrade its 1xRTT serviceto 1xEV-DO, starting with its twotrial markets, in San Diego andWashington, D.C. If the 3Q03launch is successful, “a very ag-gressive deployment of EV-DO”could follow, Verizon CTO DickLynch said.

While Verizon awarded Norteland Lucent the EV-DO contracts forSan Diego and Washington, respec-tively, no more contracts have beensigned. But future deployments ofEV-DO are expected to be based onlegacy equipment, and Lucent hasdeployed about 85% of Verizon’s1xRTT network.

Verizon claims the launch of thehigh-speed EV-DO network willoffer average throughput speeds of300-800Kbps. But EV-DV – which,based on comments from seniorpersonnel last year, Sprint is eagerto deploy – is likely to offer averagespeeds of 2Mbps.

But speculation is mounting thatSprint could follow Verizon and up-grade its 1xRTT network with EV-DO in order to increase capacity fordata traffic sooner. “The trouble is,some high-up people in Sprint havestaked their interest on EV-DV,” onesource said. Recent changes in man-agement, including the appointment

of CEO Gary Forsee, could result in adramatic turnaround in the opera-tor’s strategy.

Dan Wilinsky, director of mediarelations at Sprint, said the officialline, at the moment, is that “we[Sprint] continue to plan to go toEV-DV and skip EV-DO.” But headded that “things can change.”

“Sprint will always do what’s inthe best interest of the customer,”said Wilinsky. And for now, thatwill mean migrating directly to EV-DV in 2004-05, a time frame that isin keeping with industry estimatesof the first EV-DV product fieldtests next year and commercialavailability in 2005.

The source countered that Sprinthas changed its position internallyregarding EV-DO. “If Verizon’s EV-DO launch proves successful by theend of 2003, Sprint is likely to eval-uate its own network strategy,” hesaid. “Qualcomm, Lucent and Nor-tel are all known to be knocking onSprint’s door regarding EV-DO.”

The 1xRTT deployment hasmore than doubled Sprint’s voicecapacity and should see it throughto 2007 before an upgrade is re-quired, the source said. “Sprint hasplenty of spectrum and could rollout EV-DO the easiest,” the sourceadded. “All it would have to do isplug in [EV-DO] channel cards intoits base stations.” While the finan-cial cost of upgrading from 1xRTTto either EV-DO or EV-DV is com-parable, EV-DV is considered to bethe capacity upgrade of 1xRTT.

1XEV-DO UPDATE

Nortel Networks has

completed 3G wireless voice

and data calls using the

1xEV-DO and 1xRTT

standards over 2.1GHz

radio spectrum at its Global

Technology Center in

Ottawa, Canada. The

demonstration is

particularly significant for

wireless service providers in

the Asia-Pacific region,

where 2.1GHz spectrum is

being considered for use in

delivering commercial

wireless services. Nortel is

working with the CDMA

Development Group to

develop 2.1GHz 3G wireless

data network equipment.

News bites

M u l t i p l e o n l i n e s u b s c r i b e r s p a y l e s s . V i s i t : w w w . b a s k e r v i l l e . t e l e c o m s . c o m / c o r p o r a t e4 3G Mobile April 2, 2003

N E W S

ME M B E R S O F leading wireless op-erators have voted in favor of creat-ing a common SMS short-codepool in North America. The imple-mentation of universal short codes,based on technical and business cri-teria essential for industrywideshort codes, means cross-carriershort-code applications could beavailable to wireless carriers withinsix months.

The board of directors for theCellular Telecommunications andInternet Association, which com-prises the majority of the industry’swireless operators, approved theplan in New Orleans two weeksago. CTIA will play a pivotal role inthe successful adoption of the com-mon SMS short-code pool. Its du-ties will include overseeing the listof agreed-upon codes, ensuringrevenue settlement and acting asthe negotiation agency for mediacompanies and other businessesthat want to develop short-codeapplications.

“We think [short codes are]critical to support the develop-ment and acceleration of thebroadly defined mobile marketingindustry in North America,” saidJim Manis, chairman of the Mo-bile Marketing Association-Glob-al group and vice president ofindustry development at mobilemarketing solutions provider m-Qube. “The task begins withdefining an organizational entityresponsible for managing thecommon-short-code pool. Mysense is that we will have deci-sions, procedures and an organi-zational entity in place within thenext six months.”

But some operators might stillneed convincing to adopt a moreopen approach that contradicts theidea of exclusivity. IndividualNorth American operators havesuccessfully used short codes in ex-clusive relationships with contentproviders, thus creating walled gar-dens in which only a certain opera-tor’s customers can access givencontent.

Russian pursues national 450 network Industry votes foruniversal short codes

C D M A 2 0 0 0 U . S .

RUSSIA’S F IXED-LINE “Baby Bells”are hoping to go on the offensivethrough the nationwide deploy-ment of cdma2000 networks in the450MHz-frequency band after fail-ing to gain a foothold in the mobilecommunications market. A consol-idation process has left Russia withseven regional, wireline “super op-erators,” compared with roughly 90in the late-1990s. Each of the re-gional operators holds majoritystakes in several of the country’sroughly 60 NMT450 carriers.

Russia’s three national GSM op-erators – Mobile Tele Systems,VimpelCom and MegaFon – aredominated by international in-vestors – Deutsche Telekom, Te-lenor and TeliaSonera, respectively.But rollout of cdma450 might offerthe regional wireline operators afighting chance to claw back mar-ket share. That is particularly so inthe provinces, where GSM penetra-tion is still well below 10%. Theoverall market share for NMT,however, has declined from about40% in 1995 to less than 2% ofRussia’s 20 million cellular sub-scribers currently.

Russia’s Communications Min-istry is actively promotingcdma450 as a means of moderniz-ing outdated analog networks andgiving a boost to the domesticfixed-line operators. “Competitionis often limited in the regions,” saidan official at the CommunicationsMinistry. “A cdma450 playerwould be beneficial both from atechnological point of view and interms of increasing competition.”

Rapid consolidation is underway among NMT operators, which

are aware they will need to moveswiftly in order to get a piece of theaction. A St. Petersburg-basedholding, Accord-Tel, already hasstakes in some 40 operators and isactively seeking to create a networkwith national presence. The gov-ernment-owned holding Svyazin-vest also has stakes in 25 NMTcarriers.

So far, two operators, DeltaTelecom in St. Petersburg and Cel-lular Communications of Bashkor-tostan, have commerciallylaunched cdma450 networks. Theywill be followed, probably in 2Q03or 3Q03, by Moscow-basedMoscow Cellular Communication,which accounts for some 80,000 ofRussia’s estimated 450,000NMT450 subscribers. Other opera-tors considering cdma450 invest-ments are Uralwestcom in theUrals region, operators in Kuzbassand Novosibirsk in Siberia and inUlyanovsk on the Volga.

Analysts estimate the cost of dig-itization of Russia’s NMT450 net-works at more than US$1 billion.In order to recoup this investment,cdma450 operators will have toseek a premium for their offerings.Delta in St. Petersburg has tariffplans starting at US$30, comparedwith GSM ARPU of typicallyUS$15-25.

Some market observers areskeptical about the prospects forcdma450. “It’s still early days interms of judging whether there isreal demand for 2.5G services at apremium cost,” said one Moscowanalyst. “Beyond Moscow and Pe-tersburg, only a few people will beable to afford this.”

CDMA450 UPDATE

China’s Huawei

Technologies has signed a

contract with Belarussian

operator BelCel to upgrade

its existing NMT450 network

to cdma450. The contracted

network covers the Belarus

capital, Minsk, and a vast

majority of Belarus regions

and includes 55 BTSes as

well as BSC and core

network equipment.

BelCel’s NMT450 network

will continue to operate for

several years while BelCel

changes over to the new

standard network.

Chinese local-loop

operators will be banned

from using the 450MHz

spectrum to offer CDMA-

based WLL services,

according to reports in the

Chinese business press. The

ban is unlikely to affect the

Little Smart service offered

by fixed-line operators

China Netcom and China

Telecom because it is a

PHS-based service using

1900MHz spectrum. The

prohibition was also

expected in order to clear

the spectrum for 3G

services, they added.

News bites

NMT 450 systems in Russia

Russia Russia has decided that cdma2000/450 will be a so-called federal standard,

and test networks in Moscow and St. Petersburg are in the process of being

commercialized. Thirty-nine Russian NMT 450 networks can be replaced by

cdma450 in the same frequency band.

As of March 2001, NMT 450 systems were in operation in Bulgaria, Denmark,

Estonia, the Faroe Islands, Finland, White Russia, Iceland, Croatia, Latvia,

Lithuania, Moldavia, Norway, Poland, Romania, Russia, Slovakia, Slovenia,

Sweden, the Czech Republic, Turkey, Ukraine and Hungary.

Source: Norwegian Ministry of Transport and Communications

April 2, 2003 3G Mobile 53G Mobi le management reports now avai lable. V is i t : www.baskervi l le . te lecoms.com/reports

S H O R T C U T S

M E S S A G I N G

E-Plus deploys MMS LogicaCMG has announced a European

framework agreement with KPN Mobile

to deliver multimedia messaging ser-

vices. E-Plus in Germany is the first KPN

Mobile company to benefit from the

framework agreement, launching MMS

services using LogicaCMG’s MMSC.

Ericsson demos PTTEricsson recently demonstrated its

push-to-talk solution over cdma2000

and GSM/GPRS networks. The technolo-

gy, expected to be commercially avail-

able in 2H03, enables operators to offer

full PTT interoperability across different

network and handset technologies.

Denmark gets free SMS On March 24, Telia Denmark launched its

Telia Xpress postpaid service, which in-

cludes unlimited SMS free of charge.

Telia Denmark said “young mobile users”

are willing to pay a higher subscription

price if they can have unlimited SMS

consumption at the same time. The ser-

vice costs DKr120 (US$17) per month.

W I R E L E S S L A N

Verizon pens dealVerizon Wireless is expected to begin

offering wireless LAN access following

an agreement signed with Texas-based

WLAN operator Wayport. The deal will

see Verizon subscribers able to roam

to WLAN networks in airports and ho-

tels throughout the U.S.

T-Mobile sees growthT-Mobile USA has seen a more-than-four-

fold increase in user Wi-Fi sessions since

August. T-Mobile USA had “tens of thou-

sands of users” accessing its hot spots at

Starbucks coffee shops each month, ac-

cording to reports quoting Cole Brod-

man, T-Mobile USA’s chief development

officer. Brodman also said that begin-

ning this month, T-Mobile would offer

Wi-Fi as an add-on to cellular services.

T E C H N O L O G Y

Mobile sticks with CDMA China Mobile is unlikely to adopt TD-

SCDMA and will probably adopt WCD-

MA, according to reports quoting an

executive of the main TD-SCDMA de-

veloper, Datang. Chief operating offi-

cer Tang Ru’an said that although

China Mobile has participated in

Datang’s TD-SCDMA network testing,

that “does not represent China Mo-

bile’s intent in the future.” Tang said

it is “technically logical and easier for

[China Mobile] to choose WCDMA.”

V E N D O R S

SingTel short-lists three Singapore Telecom is reported to have

narrowed the list of potential suppliers

of its WCDMA network to Nokia, Ericsson

and a consortium comprising Siemens,

NEC and Itochu. The contract is expect-

ed to be awarded by mid-2003. Nokia

has already won a US$200 million con-

tract from MobileOne and signed a letter

of intent with StarHub. Under license

obligations, operators must roll out a

national 3G network by end-2004.

Bouygues expands GPRS French cellco Bouygues Telecom will

develop its i-mode service by extend-

ing its GPRS network rollout using

equipment from Nortel Networks. The

five-year contract will extend GPRS

coverage to more than 3,000 base sta-

tions across France. Since launching in

November, i-mode has signed up more

than 100,000 subscribers.

D E P L O Y M E N T S

T-Mobile to launch in 3Q03 T-Mobile Austria says it will launch

commercial UMTS services in 3Q03 af-

ter spending about US$57 million on

3G capex last year. The company said

that sales in its core business rose

from US$927 million in 2001 to

US$955 million in 2002, with a 40%

increase in data traffic. ARPU rose

from US$30.10 in 2001 to US$32.25

in 2002, with the proportion of data

revenues rising 30%.

TM to trial 3G this year Telekom Malaysia will begin trialing 3G

mobile services this year, but it will not

make a decision on a full launch sched-

ule until 2004. TM intends to study the

3G rollout plans of operators in other

countries before committing itself to a

timetable.

Maxis plans get approvalMalaysian regulator Communication

and Multimedia Commission has ap-

proved cellco Maxis’ 3G business plan

and granted 2x15MHz FDD and 1x5MHz

TDD spectrum blocks. The spectrum will

be made available from April 2003 to

April 2018. Maxis had originally

planned to roll out its network in 2H04.

S E R V I C E S

live! reaches 1 mil. subs Vodafone said it has reached its target

of 1 million subscribers for its live! ser-

vice ahead of schedule. The service,

available in 10 European countries, en-

ables users to send and receive photos,

download games and ring tones, and

visit certain web sites using multimedia-

capable mobile phones. Vodafone had

set a March 31 goal for reaching the

milestone.

Telstra extends 1x service Australia’s leading mobile operator,

Telstra, last week launched a range of

multimedia services on its 1xRTT net-

work, targeting the consumer market.

The Telstra Mobile Loop services in-

clude chat, e-mail, games, music and

information services. Telstra also said

it would offer MMS interoperability be-

tween its GPRS and 1x networks be-

ginning this month.

L I C E N S I N G

Romania to license fourThe Romanian government intends to

announce its plans for 3G licenses by

July 1, according to press reports. The

Ministry of Communications and Infor-

mation Technology is reported to have

said it will issue four 15-year 3G licenses

and will specify a price of US$35 million

per license.

Croatia to tender licenses Croatia plans to open tender for three

UMTS licenses and a third GSM license

during 2Q03, according to Transport

and Communications Minister Roland

Zuvanic. The UMTS licenses will be

sold for a fixed fee of Kuna132 mil-

lion (US$18.33 million) each, al-

though the price might yet be

lowered. “Personally, I deem it too

high,” Zuvanic said. “We are current-

ly studying the experience of other

European countries before making a

final decision.” Under the proposed

license conditions, each 3G operator

would also have to pay a Kuna12 mil-

lion fee every year on top of the ini-

tial cost. The GSM license was set at

Kuna105 million.

SOUTH KOREAN UPDATE

South Korean cellco KTF is

reported to be postponing

its WCDMA trials, due to

start next month, citing a

lack of handsets, delayed

standardization of a

wireless Internet platform

and uncertainty over

network sharing with SK

Telecom. Analysts say that

the MIC might force KTF to

meet a minimum of its 3G-

service launch obligations

before year-end, but that

operators will only launch

service on a test basis.

“There continues to be a

lack of significant

differentiation between

cdma2000 1x EV-DO and 3G

WCDMA at this time,

making the widespread

adoption of the latter more

difficult,” ABN AMRO’s

Julius Kim says. “We think

that the operators should

concentrate on maximizing

their investments in 1xEV-

DO for another year or

two.”

MOBILCOM UPDATE

Troubled German cellco

Mobilcom last week said it

had received two offers for

its 3G network assets from

two unnamed bidders. CEO

Thorsten Grenz said its 3G

equipment installed at 900

sites throughout Germany

and a total of 3,600 sites

under lease had attracted

two very similar offers in

the region of €10 million

(US$10.72 million) to €30

million. Grenz added that a

sale of its 3G license, for

which it paid €8.4 billion

in 2000, was less likely

than a sale of just its

network.

Bid news

AS

IA

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IF

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UR

OP

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AT

IN

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A3 G M O B I L E D A T A

6 3G Mobile April 2, 2003

Messaging data by selected operatorsCountry/ 4Q02 SMS 4Q02 SMS/ 3Q02 SMS 3Q02 SMS/ 4Q01 SMS 4Q01 SMS/ Quarterly growth Yearly growth

operator traffic (mil.) sub/quarter traffic (mil.) sub/quarter traffic (mil.) sub/quarter SMS/sub/month (%) SMS/sub/month (%)

Australia

Telstra 320.00 53.41 300.00 50.74 210.00 38.01 5.28 40.53

Optus 270.00 60.82 246.00 57.43 200.00 50.55 5.90 20.31

Bangladesh

Grameen Phone 13.00 17.65 9.70 14.60 1.30 3.11 20.92 468.23

China

China Mobile Hong Kong 10,454.00 91.25 10,423.00 108.72 3,320.00 49.53 -16.06 84.23

China Unicom 4,523.00 110.94 4,020.00 110.91 565.00 22.25 0.03 398.66

Malaysia

DigiCom* 171.00 99.71 132.00 87.13 61.00 51.48 14.44 93.70

Maxis 459.00 152.37 378.00 132.72 210.00 94.89 14.80 60.56

New Zealand

Telecom New Zealand 59.60 48.12 27.50 21.52 24.64 18.14 123.63 165.21

Philippines

Globe Telecom 3,600.00 654.21 3,550.00 690.76 3,440.00 815.28 -5.29 -19.76

Smart 3,845.0 595.54 3,850.00 662.85 3,600.00 780.84 -10.15 -23.73

Singapore

MobileOne 700.00 669.92 680.00 655.55 495.00 512.95 2.19 30.60

Starhub 550.00 911.35 552.00 1,027.93 150.00 335.27 -11.34 171.83

Argentina

Telecom Personal 12.00 5.53 10.00 4.69 5.00 2.31 17.93 139.28

CTI 0.12 0.09 0.09 0.07 0.05 0.04 29.84 123.56

Brazil

Oi 40.00 42.04 22.00 82.10 0.00 0.00 -48.79 n/a

Austria

Mobilkom 130.00 43.76 126.00 43.52 126.30 43.85 0.55 -0.21

Connect (One) 71.00 53.79 70.91 49.24 84.00 63.40 9.24 -15.16

T-Mobile (Max.Mobil) 110.00 54.36 105.00 52.42 85.00 40.52 3.70 34.14

Belgium

Mobistar 237.00 104.74 205.00 84.86 171.00 79.46 23.43 31.81

Belgacom Mobile (Proximus) 500.00 123.52 450.00 112.84 390.00 99.05 9.46 24.70

Denmark

Telia Denmark 55.00 120.22 58.00 134.57 15.00 53.00 -10.67 126.81

Sonofon 149.00 124.11 148.00 132.44 140.00 136.59 -6.28 -9.13

TDC 139.00 81.50 133.00 80.51 140.00 76.69 1.23 6.27

Orange Denmark 81.00 149.58 80.00 138.05 90.00 150.88 8.36 -0.86

Finland

Telia Finland 23.00 84.10 18.00 74.69 19.00 89.41 12.59 -5.95

Radiolinja 111.00 83.96 100.00 77.20 105.00 79.20 8.76 6.01

Sonera 215.00 86.15 197.00 79.03 203.00 81.94 9.01 5.14

France

Orange France 727.10 40.52 700.00 39.67 495.00 29.75 2.15 36.20

SFR 728.49 56.62 600.00 47.96 314.00 26.52 18.06 113.51

Bouygues 298.71 53.40 245.00 42.70 143.00 22.69 25.05 135.38

Germany

T-Mobile 2,900.00 119.88 2,800.00 119.00 2,400.00 105.18 0.75 13.98

E-Plus 800.00 111.86 780.00 110.43 700.00 93.23 1.29 19.99

Mannesmann Vodafone 2,100.00 102.49 2,000.00 100.65 1,500.00 75.48 1.83 35.79

O2 Germany (Viag Interkom) 361.00 81.43 308.00 73.54 249.70 70.84 10.73 14.96

Gibralter

Gibtel 0.48 40.64 0.45 40.48 0.34 35.73 0.41 13.77

Greece

Cosmote 423.00 123.05 412.00 125.22 365.00 128.43 -1.73 -4.19

Vodafone (Panafon) 320.00 130.44 300.00 125.01 284.00 115.51 4.34 12.93

Stet Hellas 196.00 80.48 185.00 79.72 176.00 85.33 0.95 -5.68

M u l t i p l e o n l i n e s u b s c r i b e r s p a y l e s s . V i s i t : w w w . b a s k e r v i l l e . t e l e c o m s . c o m / c o r p o r a t e

EA

ST

ER

N E

UR

OP

EW

ES

TE

RN

EU

RO

PE

(C

ON

T.)

Country/ 4Q02 SMS 4Q02 SMS/ 3Q02 SMS 3Q02 SMS/ 4Q01 SMS 4Q01 SMS/ Quarterly growth Yearly growth

operator traffic (mil.) sub/quarter traffic (mil.) sub/quarter traffic (mil.) sub/quarter SMS/sub/month (%) SMS/sub/month (%)

Guernsey

Guernsey Telecoms 4.75 132.07 4.58 131.86 3.80 123.12 0.16 7.27

Iceland

Iceland Telecom 28.20 160.08 28.00 159.97 18.50 106.62 0.07 50.15

Ireland

Vodafone 381.00 223.01 350.00 207.41 276.00 171.82 7.52 29.79

Meteor 20.00 217.39 19.00 200.00 15.00 193.30 8.70 12.46

O2 Ireland (Digifone) 259.00 212.47 221.00 187.37 179.00 157.92 13.40 34.54

Isle of Man

Manx 8.00 145.45 7.00 137.25 4.80 117.04 5.97 24.28

Italy

TIM 2,485.00 99.69 2,080.00 85.33 1,862 78.88 16.84 26.39

Wind 850.00 93.92 700.00 86.42 600.00 76.92 8.68 22.10

Netherlands

Vodafone 245.00 79.96 234.00 77.01 126.00 42.44 3.83 88.41

O2 Netherlands (Telfort) 99.00 78.04 98.00 76.18 79.60 61.73 2.45 26.43

KPN 245.00 48.62 206.00 40.27 123.00 23.58 20.75 106.16

T-Mobile* 36.00 25.13 57.00 41.50 45.00 39.93 -39.44 -37.06

Norway

NetCom 217.00 190.02 197.00 179.58 147.00 139.47 5.81 36.24

Telenor* 454.00 189.52 444.00 186.20 376.00 163.62 1.78 15.83

Portugal

TMN 350.00 81.10 334.62 80.87 255.00 67.75 0.28 19.71

Vodafone 240.54 89.87 230.00 88.17 200.00 76.30 1.93 17.78

Optimus 230.00 112.61 220.00 109.18 200.00 107.90 3.14 4.36

Spain

Telefonica 2,490.00 136.29 2,360.00 132.02 1,649.00 101.76 3.24 33.94

Sweden

Telia 131.00 35.79 134.00 37.22 110.00 31.47 -3.85 13.72

Switzerland

Orange 205.00 204.69 180.00 177.51 150.00 166.11 15.31 23.23

UK

O2 UK (BT Cellnet) 1,483.00 126.75 1,225.00 108.31 931.00 84.47 17.02 50.05

T-Mobile (One2One) 900.00 74.37 680.00 59.50 551.00 54.15 24.99 37.34

Orange 1,213.00 91.99 1,170.00 90.48 989.00 80.51 1.67 14.26

Vodafone 1,250.00 103.24 1,087.00 91.01 905.00 82.99 13.44 24.39

Bulgaria

Mobikom 0.58 3.98 0.59 3.86 0.17 0.92 3.25 331.99

Czech Republic

Eurotel Praha* 650.00 171.74 472.00 130.30 311.63 103.15 31.81 66.50

T-Mobile* 1000.00 294.42 850.00 264.26 250.00 94.25 11.41 212.38

Hungary

Pannon* 205.00 86.12 188.00 84.36 120.00 65.88 2.08 30.72

Westel 160.00 47.64 148.00 47.13 143.00 60.07 1.07 -20.69

Lithuania

Omnitel 90.00 111.87 77.00 107.06 40.50 77.36 4.49 44.60

Poland

Polkomtel 315.00 72.83 256.00 65.43 160.00 48.02 11.31 51.66

Era 290.00 60.74 240.00 54.58 145.00 39.84 11.27 52.44

Slovakia

Eurotel Bratislava 80.00 64.08 74.15 62.74 62.00 65.96 2.13 -2.86

Ukraine

Kyvistar 60.00 34.14 50.00 32.05 n/a n/a 6.52 n/a

*Both mobile originated and terminated

Sources: Operator data, Baskerville estimates

April 2, 2003 3G Mobile 73G Mobi le management reports now avai lable. V is i t : www.baskervi l le . te lecoms.com/reports

8 3G Mobile April 2, 2003 M u l t i p l e o n l i n e s u b s c r i b e r s p a y l e s s . V i s i t : w w w . b a s k e r v i l l e . t e l e c o m s . c o m / c o r p o r a t e

A UMTS O P E R A T O R ’ S timing fordeploying the IP multimedia sub-system is a crucial strategic decisionrather than a network-technology-based decision, according to Strate-gic Considerations for IMS – the 3GEvolution, a new report published bythe UMTS Forum.

The IMS, included in 3GPP’sspecifications in Release 5, is con-sidered to be the operator’s finalstep toward an all-IP-based net-work architecture and will integratemobile voice communications andInternet technologies. IMS willprovide person-to-person real-time services, such as voice, over thepacket-switched domain. It also al-lows the creation and deploymentof IP-based multimedia services in3G networks, thus enabling IP in-teroperability for real-time servicesbetween fixed and mobile networksand delivering the promise ofseamless converged voice/data ser-vices, the report states.

Moreover, the IMS is the linch-pin upon which the 3GPP and3GPP2 agreed to harmonize theirWCDMA and cdma2000 IP multi-media core networks to enable ap-plication-level roaming. “[This]cooperation is a demonstration ofthe industry’s recognition of users’needs for the capabilities that IMSoffers,” the UMTS Forum claims.

An all-IP network is inevitablewhen based on the economies ofscale derived from the fixed Inter-net and evidence that all currentdevelopment work in the fixed

environment is IP-based, the re-port claims.

Timing plays crucial roleBut the success of the IMS deploy-ment will depend on the timing ofservice launches. Network-invest-ment costs must be balanced againstmarket and competitive demandsfor services. “If one [operator] an-ticipates the market too much, thencosts will be incurred sooner thanrevenue can be created,” the reportclaims. “If investment is delayed fordemand to be more fully devel-oped, then market share may be lostto earlier competitors.”

Operators are therefore facing aCatch-22 situation. “IMS invest-ment has more to do with servicedelivery than infrastructure costsavings,” the report states, thoughit notes that “compelling servicesmust be created in order for oper-ators to leverage maximum valuefrom IMS investment.” And inlight of the current financial envi-ronment, operators will not investin equipment unless they can seeimmediate gains. Though invest-ing in IMS does not by itself de-crease cost structure or improvenetwork efficiencies, the service-feature differentiation IMS poten-tially offers will become a moreimportant source of competitiveadvantage. The report claims thatthe total incremental cost to de-ploy the IMS within a 3G networkwill work out at about 4% for theoperator.

The ATM-installed baseIn addition, whether certain costsare incurred depends on the oper-ator’s network configuration, capa-bilities and capacities. For instance,operators might keep MSCs and de-ploy IMS as an overlay and reducerollout costs.

The report provides increasingevidence that operators will belooking to migrate their networksfrom an ATM-installed base usingthe 3GPP’s Release 3 specifications.But there are fears emanating fromthe operator community that theIMS could place additional re-quirements on the infrastructurecomponents that transport the IPpackets. The report tries to allaythose fears by stating that an in-stalled base using ATM transport(IP over ATM) is capable of sup-porting IMS as an alternative to onebased on all-IP transport.

“A feasible path for an operatoris to introduce all-IP transportwhen it is justified for other rea-sons, in addition to IMS,” the reportstates. “For example, network ex-pansion can be done with IP trans-port whilst keeping the installedATM transport. Thus the overallbusiness plan can decide when theATM transport network should bereplaced by all-IP.” The report alsonotes that the backbone packettransport network supports thequality-of-service requirements forIMS. Otherwise, upgrades might benecessary in some operator cases.

[email protected]

B U S I N E S S A N A L Y S I S

NOKIA UPDATE

Nokia plans to extend its

3GPP IP multimedia

subsystem to include

cdma2000. “We are making

products for cdma2000

[operators’] core network

products,” Markus KanTola,

director of marketing and

sales for IP multimedia

subsystem at Nokia

Networks, told 3G Mobile.

Nokia expects to start

shipping 3GPP/3GPP2 IMS

during 2H03. KanTola

confirmed that Nokia is

talking with cdma2000

operators regarding trials

later this year. 3GPP2

adopted 3GPP’s IMS work as

part of the breakthrough

core network harmonization

agreement in April 2002.

3GPP2 is expected to freeze

its first version of IMS by

mid-2003.

News bites IMS deployment a strategic decision, claims UMTS report

Operators face 4% incremental cost to deploy IMS in 3G network

Advantages and disadvantages of IMS market-entry timingEarly entry Later entry

Advantages Capture early adopters Reduce costs

Obtain demand while prices higher Service/demand requirements better known

Can define market expectations Can learn from competitors’ success and failures

Opportunity to create entry barriers

Disadvantages Higher costs sooner Prices might have dropped

Pioneering demand for other providers More competition already in the market

No history – trial-and-error service definition Less market experience, competitive disadvantage

Source: UMTS Forum and Telecompetition, January

3G Mobi le management reports now avai lable. V is i t : www.baskervi l le . te lecoms.com/reports April 2, 2003 3G Mobile 9

N E W S A N A L Y S I S

REGULATION

UWB spectrum raises

interference concerns

A REPORT commissioned by the UKRadiocommunications Agency(RA) has called for a laboratory-based investigation to measure theeffects of ultra wideband (UWB)devices on UMTS handsets. Thereport, which defines UWB as“those where the fractional band-width of the system is at least 25%of the total, or the absolute band-width itself is greater than 1GHz,”reveals that UWB devices couldsubject 3G handsets to high levelsof interference.

To date, only the U.S. has setaside spectrum for UWB use. Butthe Federal Communications Com-mission’s decision to reserve spec-trum from 3.1GHz to 10.6GHzprompted the RA to commission thereport investigating possible conflictwith the 2GHz UMTS spectrum.

The RA claims the proximity ofUMTS and UWB spectrum will beof concern to UMTS network oper-ators. The FCC says interference on3G handsets from UWB will be in-significant, but concedes that UWBcould cause interference to 3G ter-minals at the edge of the UMTS cellif the devices are in close proximity.But U.S. mobile operators have al-ready said that they expect interfer-ence caused by UWB to have beenaddressed by the time they roll out3G in the 2004-2005 time frame.

In the meantime, the high-bandwidth capability offered byUWB makes it an ideal technologyin domestic environments linkinghome-entertainment systems, “atleast until 2005-2006,” the reportclaims. But it is the UWB transmit-ter located within the home thatcould potentially subject 3G hand-sets to high levels of interference –especially, the report notes, hand-sets within 5m of a UWB transmit-ter, resulting in 3G handsets notworking.

From the UMTS operator view-point, the report warns that it is ofconcern that the pulse-like natureof UWB means that the UMTS re-ceiver is subject to very high in-

stantaneous powers, highlightingthe downlink to the UMTS handsetas the potential problematic link.

Consequently, “the performancedegradation in the UMTS downlink[to the UMTS handset] can either becorrelated by a loss in range orthroughput,” the report says, addingthat mobiles would become over-loaded by adjacent UWB devices re-sulting in dropped calls. This wouldmean that “UMTS drop rates candegrade, typically by a few parts of apercent for values of device densityand UMTS user densities whichhave been argued to be representa-tive of a realistic but near worst-casescenario,” the report continues.

But performance degradation ofthe UMTS downlink varies withthe separation distances from theUWB device to the UMTS handsetand the power spectral density ofthe UWB device.

“UWB will have a detrimentaleffect on a UMTS handset when thetwo devices are within close prox-imity of the order of a few meters,”the report claims, leading todropped calls. “The UMTS networkwould always be theoretically sus-ceptible to UWB interference.”

E911

T-Mobile turns off

lights on E-OTD

E-OTD’ S F U T U R E role in NorthAmerica has been reduced to a pe-ripheral one after T-Mobile USAlast week announced that it has alsoabandoned the location-basedtechnology for fear vendors wouldnot widely support it.

T-Mobile was the last of thethree GSM operators in the U.S. toabandon E-OTD, after CingularWireless and AT&T Wireless bothwalked away from the network-based E911 location technology lastyear.

AT&T switched to a TDOA-so-lution from Grayson Wireless forits GSM and TDMA networks, andon March 10, Cingular entered amultiyear pact to use TruePosi-tion’s U-TDOA solution for itsGSM network. T-Mobile claims itwas also forced to switch to TDOA

because of concerns that the big in-frastructure vendors would be lesseager to develop E-OTD withoutthe backing of AT&T and Cingular.

Chris Wade, CEO of CambridgePositioning Systems, the UK com-pany behind E-OTD, is attemptingto maintain a brave face. “The U.S.,from our point of view, only rep-resents about 10% of the marketcurrently,” he says.

Wade admits that E-OTD suf-fered because of its GSM focus.“[TDOA vendors] have made someprogress in the U.S. because they’vebeen able to effectively cover thecost of putting LMUs out there bycovering two networks: both theTDMA network and the GSM net-work,” he said.

There were also worries that E-OTD would not meet the October2003 U.S. regulatory requirementfor handset-based technology toachieve accuracy of 50m. CPS saysit has reached an interim industrybenchmark of 75m. “So we’re wellon our way to meeting the 50m re-quirement,” said Wade.

In the meantime, CPS is adamantthat E-OTD’s U.S. struggles will notaffect its adoption elsewhere. Trialsare ongoing in Singapore, another isplanned for Taiwan and CPS says E-OTD is gaining traction in China.

The company is also eyeingSouth America, says Wade. Andunlike days past, operators in Cen-tral and South America probablywon’t be influenced by U.S. opera-tors’ technology selections, saysCarlos Rodriguez, a senior analystat Pyramid Research.

“Latin America used to doeverything that the U.S. did, andthat’s how Latin America ended upwith TDMA,” says Rodriguez. Butthe region is now more influencedby European operators such as TIMand Telefonica, which have built astrong GSM presence in the region.

Wade is bullish about CPS’ newCursor Matrix – ME-OTD technolo-gy that does not require an LMU andreduces operator costs for E-OTD65%. CPS plans to trial ME-OTDduring 3Q03 in Asia and Europe.

And Wade still expects to seeU.S. opportunities for ME-OTDonce initial E911 deadlines are metwith current technologies.

10 3G Mobile April 2, 2003 M u l t i p l e o n l i n e s u b s c r i b e r s p a y l e s s . V i s i t : w w w . b a s k e r v i l l e . t e l e c o m s . c o m / c o r p o r a t e

Openwave SystemsCorporate Headquarters 1400 Seaport Blvd.

Redwood City, CA 94063

U.S.

✆ (1) 650 480 8000

fax (1) 650 480 8100

[email protected]

Don Listwin: vice

chairman, president and

CEO

Kevin Kennedy: chief

operating officer

Alan Black: senior vice

president, corporate affairs

and chief financial officer

Bruce Martin: co-chief

technology officer

David Hose: vice president

and general manager,

infrastructure group

Valdur Koha: senior vice

president, partner alliances

Mike Mulica: senior vice

president, strategic

customer development

Richard Wong: senior vice

president, marketing

C O M P A N Y P R O F I L E : O P E N W A V E S Y S T E M S

O P E N W A V E S Y S T E M S – one of the pioneers of themobile Internet and the one-time darling of the day-trading crowd – has seen its overall revenues shrinkrapidly as wireless and wireline carriers around theworld have put significant capital spending on hold.The company’s stock – which nearly reached US$250in January 2000 – is now trading at about US$1.45 af-ter recently dropping to a low of US$0.45.

But in spite of the overall doom and gloom, Open-wave has managed to survive. Through some of its ac-quisitions, the company has branched out into newsegments in the software market, and it has managedto ride the downturn by rapidly cutting costs. It hasalso announced two rounds of layoffs and repositionedits business away from messaging and mobile Internetaccess to newer areas, such as location-based services(LBS), wireless gaming and wireless entertainment.

Openwave was the pioneer in driving the mobiledata revolution with its much-maligned WAP, alongwith the mobile browser. Formed in 2000 as the re-sult of a merger between WAP pioneer Phone.comand messaging vendor Software.com, Openwave isstill a dominant wireless software vendor.

The company’s software is being used by more than

84 wireless carriers worldwide. It counts five of thesix major U.S. carriers as its customers. Openwave’sWAP-based mobile browser powers more than 70%of all web-enabled phones in use today and is featuredin more than 200 handset models, from vendors suchas Motorola, Nokia and Sony Ericsson.

These are pretty good statistics for any company,but with the entire telecoms sector in turmoil andmore economic uncertainty in store over the next fewquarters, Openwave needs to significantly diversify itscustomer base and sources of revenue. The companyrecorded revenues of US$66.78 million, with a loss ofUS$29.4 million, in 4Q02 (see fig 1.). It has never hada profitable quarter.

With global handset sales still sluggish and indus-try analysts still pessimistic about where the nextround of growth is going to come from for the wire-less industry, Openwave has suffered from the con-sequences of relying on a few large carrier customersfor a majority of its revenues. The company admits asmuch in its recent 10K filing with the SEC, whichstates that KDDI, Sprint, mmO2 and Verizon account-ed for more than 30% of its revenues in 4Q02.

Openwave CEO Donald Listwin, who joined thecompany in 2000 from Cisco, also accepts that thecompany finds itself in a tough operating environ-ment. When Openwave was formed, Listwin predict-ed that it would be a billion-dollar company in thenext few years. That target now seems almost un-achievable for the next four or five years.

While Openwave is best known for its pervasivemobile browser software, the mobile browser busi-ness actually accounts for a very small percentage ofthe company’s revenues. The WAP gateway business,which is about 40% of infrastructure revenues for thecompany, is also under considerable threat. It is beingcommoditized rapidly and is subject to downwardpricing pressures. The company needs to develop newsegments for revenues quickly and is already fightinga whole host of new and very powerful competitors.

Messaging provider Comverse has managed to pen-etrate the Verizon Wireless account with its WAP 2.0gateways, offering a lower cost of operations thanOpenwave. Further, Microsoft has said it intends tointroduce products and services that might competedirectly with many of Openwave’s software products.

Microsoft has also made its Pocket PC operatingsystem for wireless devices, including voice-enabledPDAs and wireless phones, available to a number ofhandset vendors. It is also delivering its own browser,the Mobile Explorer, for these devices, along with ahost of applications. Although still minuscule in termsof deployment, Microsoft represents a significantthreat, given its size and financial wherewithal.

Similarly, Nokia is also nipping at Openwave’s

Diversification keeps Openwaveafloat after WAP debacle

Contacts

Openwave condensed statement of operations

(US$ mil.)

Three months ended

Dec-02 Sep-02 Dec-01

Revenues

License 36.22 39.74 63.40

Maintenance & support services 19.90 17.93 19.50

Professional services 5.92 8.18 10.86

Project revenues 4.74 5.31 –

Total revenues 66.78 71.16 93.76

Cost of revenues

License 0.91 1.31 2.45

Maintenance & support services 7.25 8.44 8.75

Professional services 5.38 5.87 6.60

Project costs 4.33 4.82 –

Amortization of acquisition- 0.30 1.10 –

related contract intangibles

Total cost of revenues 18.18 21.54 17.81

Gross profit 48.60 49.62 75.96

Total operating expenses 75.25 173.66 571.66

Operating loss -26.65 -124.04 -495.71

Net loss -29.50 -138.54 -499.88

Source: Openwave Systems

3G Mobi le management reports now avai lable. V is i t : www.baskervi l le . te lecoms.com/reports April 2, 2003 3G Mobile 11

heels with a WAP server for wireless carriers, corpo-rate customers and content providers, bringing theFinnish vendor into direct and indirect competitionwith the company. Nokia’s corporate WAP server isdesigned to enable wireless-device subscribers to di-rectly access applications and services provided bythese customers, rather than through traditional gate-ways hosted by wireless carriers’ WAP servers. Nokiaalso competes directly with Openwave in the area ofmessaging, offering solutions based on its proprietarysmart messaging protocol and MMS.

The possibility that Openwave’s WAP gateway rev-enues will increase rapidly once IT spending picks upare also remote, given that the demand for wirelessInternet services is not expected to increase quicklyanytime soon. In addition, the much-hyped MMS ser-vice that uses WAP gateways as part of the protocol isnot gaining momentum as expected. According to in-dustry reports, even in technology-savvy Japan, theaverage use of the MMS-based Sha-mail service hasrecently dropped from 15 picture messages per per-son per week to about 2 messages.

Looking ahead To highlight the urgency of finding new revenue-generating segments, Openwave is betting its futureon the idea that people will use their mobile devicesas more than just phones. It has announced a flurry ofdeals for location-based services and applications,mobile gaming and mobile entertainment.

Openwave announced a number of new deals atthe recently concluded annual CTIA wireless show inNew Orleans. It announced a partnership with RealNetworks and has integrated Real Networks’ Re-alPlayer technology into the Openwave browser, en-abling the seamless deployment of RealPlayersoftware on mobile devices with Openwave browsers.The company is also working with Aplix to support itsJava acceleration technology and has announced dealswith Cellmania and FunMail as its content partnersfor mobile ring tones, enhanced e-mail, etc.

The LBS business contributes about US$5 million inrevenues per quarter for Openwave. But future growthoutlook is challenging, given that the current revenuestability is related to the E112 deployment in Europe(similar to the E911 mandate in the U.S.) and demand isexpected to taper off once the deployment is complete.

But the mandate is not the only driving force be-hind LBS. Providing ways for operators to boost aver-age revenue per unit is the other side of the equation.To push its LBS initiative, Openwave has also an-nounced a collaboration project with Microsoft, Mo-torola, Autodesk and Webraska to develop LBStechnology. Openwave’s acquisition of SignalSoft, oneof the early developers of E911 applications, last yeargave it a foothold in the LBS arena. The acquisitionhas contributed handsomely to Openwave’s revenuesand has been one bright spot for the company.

A key component of Openwave’s business is its mes-saging-infrastructure software. For carriers faced withshrinking voice-services revenues and flattening mo-bile-subscriber growth, text-messaging services have of-

fered a way to earn additional revenue from customers. To further enhance revenue-generating capability

for wireless carriers, Openwave has announced a newproduct, Openwave Voice MMS. It is built on an IP-based MMS platform and uses MMS transport for de-livering voice-messages.

The application removes the barriers associated withperson-to-person voice messaging, such as cross-carri-er interoperability and message addressing. Openwaveis pitching the service to drive stagnant MMS use andadoption and help carriers with new revenue-generat-ing services apart from the traditional picture mail.

As carriers roll out their costly 2.5G and 3G net-works, given the uncertain economic times, many arehesitant to purchase unproven next-generation appli-cations. Such hesitation extends to the purchase ofnew Openwave software, such as its Unified Messag-ing product. Designed to let subscribers access voice,e-mail and fax messages from fixed-line or mobiledevices, UM has had a hard time gaining traction,with only a handful of carriers having deployed it.

With the glory days behind it, Openwave is now amuch more diversified and focused company. It hassuccessfully managed the transition from the “WAP isCrap” days and is now poised to grow in the new seg-ments it is targeting. One big hurdle is the continuedweakness in capital spending by telecoms carriersworldwide and the company’s continuing shrinkagein size. The recent job losses are a significant threat tothe company’s ability to develop newer versions of itssoftware and service its extensive client list globally.

Although its long-term survival is not in doubt,analysts say Openwave might become a high-profilevictim of the current downturn given its very weakstock price and falling revenues. Larger competitorscould easily acquire the company at current valuationlevels, and it is still a pretty attractive target given thealmost ubiquitous presence in mobile devices ofOpenwave technology and a dominant share of themarket in traditional messaging. 3G

[email protected]

Europe officeVantage Point

23 Mark Road

Hemel Hempstead

Herts HP2 7DN

England

✆ (44) 1442 458800

fax (44) 1442 458899

Asia-Pacific officeDah Sing Financial Centre

25th fl.

108 Gloucester Road

Wanchai

Hong Kong

✆ (852) 3416 9000

fax (852) 3416 9222

Japan office17F Shinjuku Square Tower

Bldg.

6-22-1 Nishishinjuku

Shinjuku-ku

Tokyo 163 1117

Japan

✆ (81) 3 5909 6100

fax (81) 3 5909 6101

ContactsOpenwave’s strategic alliances

Strategic alliances

Cisco Systems IBM

Siemens Sun Microsystems

Product and technology alliances

Amdocs BMC Software

Brightmail Steltor

Trend Micro Zi

Channel Alliances: systems integrators

Accenture Cap Gemini Ernst & Young

Telcordia Technologies

Channel Alliances: platform and infrastructure partners

Compaq Network Appliance

Source: Openwave Systems

12 3G Mobile April 2, 2003

TH E UK, M I D-MA R C H, and 3G leaps from con-cept to reality. After unprecedented investment inlicense fees, infrastructure and R&D, 3G has beenlaunched in Europe. But getting the rollout right isgoing to be critical for operators.

Over the past five years, the debate aboutwhether business users or consumers should drive3G has accompanied the speculation over thetimescale for its launch. Now, as 3G takes its firststeps in Europe, there has been no conclusion as towhether more development should be business-or consumer-led. Some operators are geared up totarget corporate users, focus-ing on applications such asmobile office, high-speeddata and video-conferencing.Other operators are alreadyaiming at the consumer mar-ket, with offerings based onmultimedia content, stream-ing and video messaging.

Operators face the chal-lenge of identifying the seg-ments for 3G services andusing targeted marketing to attract those segmentsduring the early stages of rollout. Getting it wrongcan damage and delay the adoption of 3G. Bylearning the lessons from already-implementedmobile services, such as i-mode and MMS, opera-tors can get a better sense of who the earlyadopters of 3G will be. Looking at these examples,three critical success factors stick out: educatingthe public about using new handsets, getting qual-ity applications and establishing interworking androaming agreements.

Familiarity with any new mobile service revolvesaround the handset. Having input into the develop-ment of the interface for their services is very im-portant for operators. Whereas phones were onceonly used for voice, they now cover multiple func-tions, combining a videophone, a personal assistantand a gaming device in one. The difference in inter-faces gives two very different user experiences.While those business customers using laptops orPDAs are likely to find it easier to adopt 3G services,the majority of customers will be confused by a bar-rage of new 3G handsets and their functions.

The challenge for operators will be educatingpeople on how to use the new handsets. By target-ing technologically aware users at the outset, op-erators can devote resources to teaching themabout the range of services available and how touse them. The early adopters can then become ve-hicles for promoting 3G and teaching others howto use the service.

Getting unique and rich content and high-qual-ity applications will be another success factor for3G. Looking back at the rollout of MMS in Turkey,

for example, 75% of Turkcell’s MMS use has beencontent-based. Demand for picture messages andpremium content (horoscopes, celebrity pictures,etc.) has driven the demand for MMS services. It hasbeen generally accepted that video-based applica-tions will differentiate 3G from traditional services,but relying on video services, particularly for busi-ness, will present problems for operators. Video-conferencing has not established a foothold in thefixed-line market, and with the technical problemsof video-conferencing over 3G networks, potentialbusiness users are likely to wait until the quality of

service is right. Finally, the demand for 3G

services will also depend on in-terworking and roaming. SMSservices really took off after in-teroperability and roamingagreements were establishedbetween different networks.For business users, remoteworking drives the attractionfor mobile services, and roam-ing is particularly important.

Based on the experience with MMS, there is a sig-nificant delay from launch to interoperabilityagreements, and that gap will be a major deterrentfor business users. Without roaming and interoper-ability, we can expect little demand for 3G in thecorporate segment.

So where is the market for 3G? Initially, it is notgoing to be a mass service, and the issues of inter-operability, roaming and quality of service willlimit the adoption in the business segment. Early3G users are likely to be a small number of afflu-ent and technology-aware consumers, who willspread the word to the mass market. Not only doesword of mouth carry strong recommendations orcriticisms, it also educates. Most of us have, atsome point, shown a friend or relative how to sendan SMS or enter personal details into the phonebook, illustrating that hands-on learning can bemore effective than detailed manuals.

For H3G, its limited 20,000-customer base inthe first year can do more marketing than a multi-million-dollar advertising budget, if the earlyadopters find services appealing and spread a posi-tive message. By the same token, if they are not sat-isfied with the services, the damage to H3G, and thewhole industry, will be serious. Not only will theylose high-value customers, but word will spreadthat 3G is, quite simply, not all that. Hutchison’scompetitors must be holding their breath. 3G

Oksana Falenchuk is a senior consultant at Cap Gemini Ernst& Young’s global Telecoms Media Network practice. Formore information, e-mail [email protected] orvisit www.cgey.com/tmn/solutions/services_acs.shtml.

Oksana Falenchuk looks at 3G’s first steps in Europe

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delivery of each issue to multiple users as well as a

comprehensive archive search facility. To arrange a

free trial, please contact Corporate Accounts at

Tel (44) 20 7017 5316

E-mail: [email protected].

“The challenge for

operators will be

educating people how

to use the new

handsets”

3G Mobi le management reports now avai lable. V is i t : www.baskervi l le . te lecoms.com/reports April 2, 2003 3G Mobile Devices 1

C A N A D A - B A S E D Research In Mo-tion has recently announced a vari-ety of licensing and operator dealsto expand its BlackBerry wireless e-mail solution into new markets andsegments.

The firm used the recent CeBITand CTIA trade shows as platformsfor the announcements, which in-clude licensing deals with Symbianand Microsoft, for use of their mo-bile operating systems, and anagreement with Vodafone D2, theGerman division of Vodafone.

Of course, new services and dealsoffer a good opportunity to unleashthe latest generation of BlackBerrydevices, and RIM has certainly doneso. A generic upgrade over the first-generation terminals will includevoice functionality – a highly crit-icized omission in the past. Thefirm also announced a licensingprogram – BlackBerry Connect –

that aims to encourage more-tradi-tional handset vendors to producecompliant solutions.

First in the new range of RIM ter-minals is the 6210 model, which issmaller and features greater memo-ry than previous BlackBerries.

The phone function is worldband, operating in the GSM/GPRS900/1900MHz frequencies, whilethe e-mail functionality has beenimproved with features such as cra-dle-free, two-way synchronizationand integrated attachment viewingsupporting formats such as Mi-crosoft Word, Excel, PowerPoint,WordPerfect, Adobe PDF and ASCIItext.

Although the 6210 was demon-strated at the CTIA event in NewOrleans, it was unveiled at CeBIT inHannover a week earlier, along withthe 6220 device, destined for use onGSM networks in Europe and Asia.

Vodafone D2 is likely to be onecarrier that employs the 6220 ter-minal when it launches BlackBerryservices later this year. But Voda-fone’s German carrier appears un-perturbed by the lack of color,having jointly announced that it isworking with RIM to deployBlackBerry among its corporatecustomers. The carrier joins a list ofmore than 8,500 organizations thathad signed up to RIM’s solution asof Nov. 30.

While Vodafone is vague aboutthe precise launch date, VerizonWireless is much more specific.The U.S.-based carrier plans its firstimplementation of BlackBerry dur-ing 2Q03, when RIM’s 6750 comesto market.

The device, which includesphone functionality, SMS and webbrowsing, has been optimized for

Analysts welcome RIM deals, but remain waryE N T E R P R I S E

THE MARKET FOR handset integratedcircuits is expected to grow by justover US$3 billion in the next fiveyears, driven by increased terminalfunctionality, according to a re-port by Allied Business Intelli-gence.

ABI’s Handset Integrated Circuitsstudy predicts that the market forterminal ICs will be worth aboutUS$12 billion in 2008, comparedto its present value of US$8.7 bil-lion. Of all the elements of an IC, itis the applications processor that isexpected to offer the greatestgrowth potential, with ABI’s re-search estimating sales of this com-ponent alone to be worth morethan US$2 billion by 2008.

For IC firms hoping to take aslice of the pie, the challenge will

be to offer a complete end-to-endsolution, while continuing to focuson reducing the footprint andpower consumption, ABI analystsnote.

Information from the Semicon-ductor Industry Association suggeststhat ABI’s conclusions are correct.Global chipset sales witnessed amodest recovery during 2002 (seefig.), growing 1.3% over 2001.

Much of the growth is attrib-uted to strong demand in the wire-less sector, which accounted forabout one-quarter of total chip de-mand last year. Sales of digital sig-nal processors benefited the mostwithin the category, with DSPgrowth of 3.3% being attributed todemand from the wireless sector.

George Scalise, president of the

SIA, says he expects the overallmarket growth to continue during2003. “We [are forecasting] dou-ble-digit revenue growth for 2003and broad-based strength in ourindustry, driven by a recovery in ITspending, a fast-paced global wire-less market and the emergence ofnew growth sectors [such as] Wi-Fi (802.11),” he says.

C O M P O N E N T S

Wireless growth good news for chipset firms

N E X T - G E N E R A T I O N H A N D S E T S , S M A R T P H O N E S , P D A S , P C C A R D S , C O N S O L E S A N D M E S S A G I N G D E V I C E S

N E W S

Editor

Michael Carroll

✆ (44) 20 7017 4240

[email protected]

Global chip sales by market, 2002 (US$ bil.)

Market 1Q02 2Q02 3Q02 4Q02

Americas 7.60 7.85 7.81 7.88

Europe 6.49 6.66 6.69 7.60

Japan 6.12 6.98 8.24 8.45

Asia-Pacific 10.57 12.30 13.15 13.79

Total 30.78 33.79 35.89 37.72

Source: Semiconductor Industry Association

Continued on page 2 �

M u l t i p l e o n l i n e s u b s c r i b e r s p a y l e s s . V i s i t : w w w . b a s k e r v i l l e . t e l e c o m s . c o m / c o r p o r a t e

COMPONENTS UPDATE

Chipset supplier Intel

announced three new PDA

processors last week, each

demonstrating the

increased functionality of

such devices. The PXA263 is

a stacked solution

incorporating 32MB of 32-

bit Intel StrataFlash

memory with an Intel

XScale processor,

producing a 72% space

saving over the firm’s

current stand-alone

products. Next is the

PXA260, which is “pin-

compatible” with the firm’s

PXA26x family, but is some

53% smaller than previous

chipsets. Both are being

sampled, with production

volumes expected in 2Q03.

The third processor – the

PXA255 – is designed to

extend the system

performance and power

consumption of its PXA250

predecessor. Intel has

doubled the internal

system bus speed to

improve application

performance and lowered

the voltage to reduce

power consumption. The

PXA255 is already shipping

in devices from the likes of

Acer, Casio, Dell, Symbol

and Toshiba.

use on Verizon Wireless’ ExpressNetwork and is the first BlackBerryunit to be configured for CDMAservices.

Cindy Patterson, vice presidentof enterprise data sales at Verizon,says the device “supports our enter-prise strategy to give mobile profes-sionals access to e-mail and otherapplications when they’re awayfrom the office.”

The BlackBerry Connect pro-gram was announced at CTIA, andmany of RIM’s subsequent an-nouncements center on it. The ini-tiative is aimed at vendors and willbring them access to RIM’s push-based wireless architecture and in-frastructure. It is hoped that abroader portfolio of devices willencourage greater take-up of the e-mail solution. The program is ex-pected to complement existingdeals with the likes of Nokia, whichRIM says is planning to launch itsfirst BlackBerry-enabled handset –the 6800 – during 2H03.

Microsoft is among the first to

sign up to BlackBerry Connect,bringing Taiwan-based ODM HTCalong with it. The deals mean thatHTC will start embedding RIM’ssolution into the Microsoft PocketPC and Smartphone products itproduces, though the vendor hasnot said when the first units willbe available or if existing devices –such as Compaq’s iPAQ or Or-ange’s SPV – can be upgraded toinclude it.

To widen the appeal of its solu-tion even more, RIM has alsosigned up to Symbian’s PlatinumPartner program, bringing theCanadian firm access to vendorssuch as Sony Ericsson, Motorola,Samsung and Siemens. The agree-ment between RIM and Symbianwill see them undertake technicalcollaboration and joint businessdevelopment.

Analysts at UBS Warburg seethe licensing program as a positivefor RIM, stating in research thatthe move will “potentially expandthe appeal of BlackBerry as a li-censable technology.” It should

certainly help address one of UBS’concerns about the Canadian com-pany, namely that “the BlackBerrymarket may remain a niche.”

Another concern UBS’ analystshave expressed is RIM’s patent dis-pute with NTP, which they believe“creates a risk as to the value ofRIM’s business model in licensingits technology to other companies.”The analysts acknowledge that suchdisputes are part of the territory forany technology firm, but say theyare “especially important for com-panies that license their technology,such as RIM.”

“The surest route for RIM totake to generate substantial andgrowing profits is for the companyto rapidly grow its subscriber basethrough licensing deals,” UBS ana-lysts continue. “We are encouragedthat RIM and other device makers,such as Nokia and HTC, are enter-ing license agreements. What weneed to see now is evidence thatsubscribers will adopt the Black-Berry system and pay for it.”

[email protected]

T H E T O P S I X handset vendors inwestern Europe – Nokia, Motoro-la, Siemens, Sony Ericsson, Alcateland Samsung – collectively heldabout 90% of retail sales volumes inthe region during 2002, accordingto research GfK Group undertookon behalf of UBS Warburg.

Nokia offered few surprises toUBS, with the analysis showing itsmarket share grew from about 40%at the start of the year to more than45% in the fourth quarter. UBS an-alysts estimate that Nokia’s marketshare by revenue could be evenhigher, “as the company is estimat-ed to hold an average selling price(ASP) higher than the market aver-age (about €156, or US$167, in4Q02 vs. the market average ofroughly €153),” the analysts note.

Below-average ASPs appear tohave benefited Siemens, whichended 2002 with a retail marketshare of about 18% compared to16.5% at the start of the year.“[Siemens] looks to have showedfurther gains in January 2003, in-

creasing its share to roughly18.5%,” UBS notes.

In contrast to global handsetsales figures, Samsung is merelyholding steady in western Europe,rather than growing market share.GfK’s research suggests that thevendor achieved marginal gainsduring 2002, growing from justunder 5% at the start of the year to5% in 4Q02. “January data fromGfK suggests that Samsung main-tained [that level] in the firstmonth of 2003,” UBS analystswrite.

Even so, the South Korean ven-dor is still faring better than Mo-torola, Sony Ericsson and Alcatel,which each lost market sharethrough the year.

Motorola’s drop from 10% toabout 9.4% by year-end is thoughtto be the result of higher ASPs dur-ing the first half of the year becausethe vendor was focusing on high-end terminals. Despite more low-to mid-tier products being intro-duced throughout the year, result-

ing in lower ASPs, UBS analysts ex-pect the firm to “continue to strug-gle in western Europe in 1H03, butcould see a rebound as new product[shipments] ramp [up] in the backhalf of the year.”

A narrow product portfoliolooks to have been the main prob-lem at Sony Ericsson, resulting init losing about 5% market share toend-2002 at about 9%. “Wewould expect Sony Ericsson’s mar-ket share to improve in comingquarters due to the ramp [up] ofrecently introduced new prod-ucts,” UBS analysts state, referringto the raft of new devices unveiledshortly after the 3GSM WorldCongress.

Last among the so-called Big Sixvendors in western Europe is Alca-tel, which dropped about 1 or 2%during the year to finish with ashare of about 5%. “This trendlooks to have continued in Janu-ary, as GfK projects Alcatel’s mar-ket share at just under 5%,” UBSsays.

N E W S

Balanced portfolios key to maintaining growth

Continued from page 1

2 3G Mobile Devices April 2, 2003

S H I P M E N T S

3G Mobi le management reports now avai lable. V is i t : www.baskervi l le . te lecoms.com/reports April 2, 2003 3G Mobile Devices 3

WEARABLE DEVICES

UPDATE

Japan’s leading carrier, NTT

DoCoMo, last week

announced that it was

taking preorders for a PHS-

enabled wristwatch. Dubbed

Wristomo, the waterproof

device opens up to offer full

mobile phone capabilities

via buttons positioned on

the side of the unit.

Wireless e-mail access is

available via the Paldio

E-mail service, a web-based

offering that enables users

to send and receive

messages of up to 6,000

characters in length free of

charge. The device can also

access the Browserphone

Content Web pages of

DoCoMo’s mopera service,

along with sites configured

for i-mode. Information

stored on Wristomo can

also be synchronized with a

user’s PC over the air or via

a cable connection.

SU N MI C R O S Y S T E M S ’ announcement two weeks agothat Qualcomm has agreed to develop and distributeJava 2 Micro Edition should help clarify how the tech-nology sits alongside BREW, according to Eric Chou,Sun’s group marketing manager for the J2ME platform.“The announcement highlights Qualcomm’s recogni-tion of the importance of Java, while confirming thatthe two technologies are compatible, not competitive,”Chou told 3GMD.

Under terms of the deal, Qualcomm will work tomake J2ME compatible with some of its CDMA MSMchipsets – initially its MSM6000-series – the BREW Ap-plication Programming Interface and system softwarefor wireless devices.

Chou says he hopes the partnership deal will bring toan end “press confusion” about the nature of Sun’s Javatechnology vs. Qualcomm’s binary run-time environ-ment for wireless (BREW), which many perceived as theCDMA pioneer’s attempt to circumvent use of Java.

“Qualcomm has always said that they wanted to doJava, and the deal highlights their recognition of theimportance of embedding J2ME,” he told 3GMD.

Jeremy James, senior director of marketing at Qual-comm Internet Services, agrees. “[The announcement]

is simply a continuation of the strategy we’ve discussedall along with regard to BREW being an open solutionand supporting C/C++, Java, Flash and other types ofapplications and programming languages,” he says.

Other industry watchers, however, view the an-nouncement differently. “This [announcement] looksmore like Qualcomm is listening to what its customersare asking for,” one source said, pointing out that thereare now more than 100 handsets that support Java fromabout 17 vendors (see fig.), compared to 30 BREWmodels from nine vendors.

According to James, that simply isn’t the case. “Thisis the third Java technology-based virtual machine(VM) that we’ve announced as an extension to BREW,”he says, pointing to existing deals with Insignia andIBM. “With this latest announcement, we are simplystating the availability of another VM that will be of-fered as an extension to BREW.”

Although the pair are now working together, Choustill expects the two platforms to compete indepen-dently of one another. “BREW is packaged with a com-plete business model [for mobile applications], whileJava can fit with any business model,” he says.

[email protected]

Java deal should lay Qualcomm-vs.-Sun headlines to rest

BREW, J2ME united as part of broader strategy

Available J2ME terminals

Casio CX300L V67 5100 N400 SH09

C452CA G8000 l90c SE 6800 l330 GX10

A3012CA SD1100 TP226 3510i SCH X110 Siemens

Fujitsu Info Comm VX1 388c 3650 SCH X120 SL45i

F503is Mitsubishi Electric A835 9210 S300 M50

F503is D503i E380 9210i SCH X140 SL42

F504i D05 l58sr 8910i SCH X570 M46

Hitachi FOMA D2101v T725 3585 SCH X600 CT56

C3001H D06 NEC 3590 SCH X700 MT50

C451H Trium Eclipse N503i 6610 SCH X130 U10

SH-P300 Motorola N503is N-Gage SCH X230 C55

Kenwood T280i FOMA N2002 Panasonic SCH S100 S56

J-K51 V60i N05 C3003P SPH S4209 S55

Kyocera V66i FOMA N2051 P503i Sanyo Sony Ericsson

C3002K A388 N504i P503is C3011SA P800

QCP 6035 A830 Nokia FOMA P2101v J-SA51 SO503i

LG Electronics T720 7210 J-P51 A3011SA A3014S

Cnain 2000 Accompli 008 3410 GD87 SCP-4900 SO504i

iBook i90cl 6310i P2002 A3015SA T62U

CX 300L i80s 7650 Samsung Sharp Toshiba

Ex-X1 i55rx 9290 SCH X250 SH51 T06

5350 i85s 6650 SCH X350 SH08 A3013T

Cnain 2100 l50sx 7250 Rainbow SH07 C5001T

SD2100 V600 6100 SCH 460 SH52 T07

Note: Excludes PDAs from Casio, Sony Ericsson, Compaq, Handspring, Palm and RIM

Source: Sun Microsystems

B U S I N E S S

A N A L Y S I S

4 3G Mobile Devices April 2, 2003

S M A R T C A R D S

Samsung signs STK dealSouth Korean vendor Samsung Electron-

ics last week announced it has entered

into a licensing agreement with real-

time accounting and billing technology

supplier Telemac, to extend the perfor-

mance of SIM Toolkit applications in se-

lected handsets. Devices featuring

Telemac-enabled SIMs will fully support

Telemac’s CostControl technology, which

Telemac claims helps lower carriers’

costs in offering programs for imple-

menting prepaid and postpaid spending

limits by eliminating most infrastructure

elements and reducing nonrevenue-

generating network traffic associated

with requests for updated billing infor-

mation.

S H I P M E N T S

Exports LGE’s main driverLG Electronics shipped 1.9 million

handsets in February and has shipped

3.7 million this year, according to in-

formation from Credit Suisse First

Boston. Exports appear to be the main

driver of LGEs performance, accounting

for about 2.5 million of the total ship-

ments to date. The bank’s analysts note

that the figures mean the vendor’s

shipments “are tracking nicely” toward

their estimate of 5.1 million devices in

1Q03. The vendor itself is reported to

be aiming to sell 23 million devices this

year, building on sales of 16 million in

2002.

Will AT&T be next to use HTC?Taiwan-based ODM HTC could be set to

ship Microsoft Smartphone-based ter-

minals to AT&T Wireless in the U.S., ac-

cording to reports from CSFB citing

local press articles. If accurate, the

move would see AT&T join carriers such

as Orange, mmO2 and T-Mobile in de-

ploying Microsoft-based terminals pro-

duced by HTC. “[The move] is in line

with our thesis that Asian vendors will

continue to take share with key global

carriers and that an ODM/carrier part-

nership could aid this trend,” CSFB an-

alysts say.

A P P L I C A T I O N S

PalmSource set to use BDSCDMA pioneer Qualcomm and mobile OS

provider PalmSource are set to enable

over-the-air downloads of Palm OS appli-

cations to Palm devices using Qual-

comm’s BREW Distribution System, as

part of an MOU the pair signed two

weeks ago. Qualcomm’s BDS manages

the delivery, billing and payment of

wireless applications. According to

PalmSource, more than 17,000 com-

mercial applications and 10,000 eBooks

are available for Palm-powered termi-

nals. Qualcomm, meanwhile, says about

40 BREW-enabled devices are available

globally.

W C D M A

Vodafone looking for 3G unitsVodafone CEO Chris Gent has confirmed

that the leading UK cellco is talking with

up to six handset manufacturers about

supplying its 3G phones, reports last

week stated. While Gent declined to say

which vendors the carrier is talking to,

his commitment to launching 3G ser-

vices in time for the Christmas selling

period would put the likes of Nokia’s

6650, Sony Ericsson’s Z1010 and the

NEC and Motorola units being deployed

by 3 in the frame.

G P R S / 1 X R T T

live! device range set to growVodafone Sweden plans to expand the

portfolio of devices on its live! service to

facilitate the rollout of new applications

later this year. Nokia’s 3650 and Sharp’s

GX10i will be the first new terminals of-

fered, with Sony Ericsson’s T610 unit set

to follow at a later date. The carrier says

it is configuring its network to enable

video MMS to be carried – a function of-

fered on the Nokia device – and is also

planning the introduction of instant

messaging, photo-album storage and

Java games.

Braille PDA due in JuneAlva, a firm specializing in IT equipment

for blind or visually impaired people, has

unveiled a smartphone featuring a

Braille display. The Alva MPO features 20

Braille cells, an eight-dot Braille key-

board, a speech synthesizer and the

firm’s Smart-Control user interface.

Phone and PDA functions include SMS,

scheduler, alarm, calculator and MP3

player.

Audiovox unveils 1x PC card U.S.-based CDMA handset vendor Au-

diovox Communications and AirPrime, a

provider of CDMA wireless access solu-

tions for the OEM market, introduced a

new wireless PC card for 1x networks in

North America at the CTIA Wireless 2003

conference two weeks ago. The Audiovox

PC3220 is a dual-band 800MHz cellular

and 1900MHz PCS band solution and

Type II PC card and is based on Qual-

comm’s MSM5100 chip. The card sup-

ports bidirectional data rates of up to

153Kbps and features a patent-pending,

proprietary antenna design the compa-

nies claim maximizes data-rate transfer

speeds, sensitivity and overall power ef-

ficiency. The solution also features a

standard 32-bit CardBus electrical inter-

face for platform interoperability and

extended battery life for notebook com-

puters. The PC3220 is slated for avail-

ability during 2Q03.

SPV sales reach 50,000 markFrance Telecom-owned carrier Orange

announced it had sold 50,000 SPV smart

phones in the UK, France, Switzerland

and Denmark, according to reports last

week. The Microsoft Smartphone OS-

based terminal is produced by Taiwanese

ODM HTC and first went on sale in No-

vember. A more consumer-focused ver-

sion of the device – the SPVx – is set to

ship later this year.

C O M P O N E N T S

Camera modules unveiledAgilent Technologies has announced a

new family of fully integrated CMOS

camera modules for handsets and PDAs.

The Agilent ADCM-1650 and ADCM-1670

components offer CIF (352x288-pixel)

resolution, while the ADCM-2650 version

offers VGA resolution – 480x640 pixels –

which is suitable for phone-to-web and

phone-to-e-mail applications. All three

modules are available in sample quanti-

ties, with commercial volumes expected

in April.

S O F T W A R E

Motorola chooses Beatnik Beatnik, a U.S.-based provider of audio

software solutions for mobile devices,

recently announced that Motorola had

licensed its solutions for use in forth-

coming handsets. Beatnik’s solution

provides support for polyphonic ring

tones, linear audio playback, user-in-

terface sounds, multimedia messaging

and games sound effects via the eXten-

sible Music Format (XMF) standard. XMF

allows samples of digital sounds, in-

struments or vocals to be combined

with synthesized instruments to gener-

ate high-fidelity polyphonic audio.

SHIPMENTS UPDATE

Shipments of smartphones

in the EMEA region are

expected to exceed those of

PDAs for the first time this

year, according to research

by Canalys. The research

house expects shipments of

about 3.3 million

smartphones this year,

compared to 2.8 million

PDAs, and points out that

simply adding phone

functionality to a PDA

might not be enough to

reverse the trend. Lower-

end terminals, offering

color screens and MMS

capability, are still expected

to be the main source of

sales this year, however.

Based on that forecast,

Canalys expects sales of

true smartphones to be

limited until users and

retailers develop an

understanding of their

benefits.

N E W S

M u l t i p l e o n l i n e s u b s c r i b e r s p a y l e s s . V i s i t : w w w . b a s k e r v i l l e . t e l e c o m s . c o m / c o r p o r a t e