M-Comm in Europe

Mobile data and
m-commerce in Europe
- A mobile network operators’

revenue perspective, 1999-2003
Author
Carl H. Marcussen,
Senior Researcher, PhD,
Centre for Regional and Tourism Research
(was: Research Centre of Bornholm),
Denmark, www.crt.dk, 16 Aug. 2001,
last updated 31 May ’02 (and 20 Sept. ’02).
© Centre for Regional and Tourism Research and Carl H. Marcussen.
Overview
• The model
- Two user categories: Prepay and postpay.
- Four main categories of network services.
• Activated (registered) mobile phones
- Historic and forecast – for prepay and postpay
• Usage and resulting revenue streams:
A. SMS
B. WAP – Mobile Internet content and Mobile Internet access,
including mobile e-mail and advanced messaging.
C. m-commerce – Operators’ share
D. Voice – non-voice and TOTAL
service revenue - for the mobile network operators
• Talking a global view – discussion.
Part 1 – SMS and WAP – A global status (2000):
emphasising Asia Pacific.
Part 2 – ’American’ approaches to wireless Internet.
Part 3 – Broadband Internet access, wired ... fixed.
Introducing the model
A mobile network operators’
perspective of voice and non-
voice revenue
Non-voice = SMS + WAP + m-commerce
(see next two slides)

The model (I)
Non mobile network Mobile phone usage Not included:
services revenue: • Paging services
• No. of users per year
• Handsets sales … • Average revenue per user
(One-way messaging)
• Dedicated mobile
and other hardware data device services
• Total service revenue
• Non-mobile services • ’Fixed-wireless’
Pre-pay phone usage Post-pay phone usage

• No. of pre-pay users by year • No. of post-pay users by year
• Average Revenue Per User • Average Revenue Per User
Voice usage SMS usage WAP usage M-commerce

• Voice per user • SMS per user • WAP per user • Operators’
• Voice revenue • SMS revenue • WAP revenue cut-off per user
• Operators’ share of
Including: Mobile SMS M-commerce revenue
Internet access from • Advertising revenue
PC’s and traditional Mobile data: SMS+WAP&m-@ (other than from SMS)
PDAs via wireless
voice channel modems Non-voice usage: Mobile data + M-commerce
The model (II) : A=B*C
(a) Total mobile network service revenue =
(b) No. of activated M phones * (c) Average Revenue Per User ..
For (a), (b), (c), p.a.: Pre-pay Post-pay Total

Voice
SMS
WAP
- mobile Internet content
- mobile Internet access incl. m-@
m-commerce
operators’ cut-off, adds ..
Total
In other words: a=b*c, first per mobile network operator and then per market and then for W. Europe; First for historical years, and then forecast, that’s all.
Activated mobile phones
(also known as ”registered users”)
… in W. Europe
1999 and 2000
with forecast to 2003
… and with split into
prepay and postpay
End of year usage rates Western Europe, 1999-
2003: Mobile phones, SMS, WAP – and Web
90%
80%
M phone density
70%
60% Unique M phone
users (%)
50%
Unique Internet
40% (Web) users (%)
30% Unique SMS
users (%)
20%
Unique WAP
10% users (%)
0%
1999 2000 2001 2002 2003
Source: Carl H.Marcussen, Centre for Regional and Tourism Research, www.crt.dk, 31 May 2002.
Activated M phones in W. Europe, end of
Source: Carl H.Marcussen, Centre for Regional and Tourism Research, www.crt.dk, 31 May 2002. year, 1997-2003: Post-pay and pre-pay
350
Million M phones, end of year
Pre-pay
300
Post-pay
250
200
150
100
50
-
1997 1998 1999 2000 2001 2002 2003
Activated M phones in W. Europe, middle of year, 1999-2003
350
Prepay phones,
middle of year, mill.
Million M phones,middle of year
300
Post-pay phones,
250 middle of year, mill.
200
150
100
50
0
1999 2000 2001 2002 2003
SMS usage
- including commercial SMS usage,
which is significant in some countries *
*) Year 2000: ”In Germany, over 33% of text messaging is driven by information services
delivery” (Vodafone plc, presentation to the investment community on ”Delivering and Adding
Value”, 7 March 2001). Given the source, 33% may be for D2 only, and the percentage may
therefore be somewhat lower for the German market as a whole. Even so, the statement
probably goes some way in explaining why SMS usage in Germany was the highest in Europe
in year 2000, both in absolute and in relative terms. With its large national user base, German
network operators are at an advantage compared to those in other European countries, in the
field of ”info. services delivery” via SMS. Other markets in Europe will probably follow the
direction of Germany in this field (with its high percentage of info. services delivery included in
the SMS traffic), but will hardly be able to achieve the same same advantages of scale as
operators in Germany. Therefore the percentage of info. services delivery – currently under
20% in general (EMC, at Morgan Stanley presentation 29 March 2001) – may remain
permanently lower in the rest of Europe than in Germany, although the ”info. services
percentage of SMS’ transmitted” will no doubt increase in both Germany and other European
countries.
Year 2001: About 850m SMS per month for Vodafone D2 in Germany, according to D2’s
press department, Jan. 2002.
Billion SMS sent per year in W. Europe -
2001: 78½ bn.; Up 89% from 41½ bn. in 2000.
Germany
UK
1999
Italy
2000
Spain 2001
France
ROE
- 5 10 15 20 25
Billion mobile short text messages sent p.a.,
by country/region in the world,
2001: 223 bn.; Up 126% from 99 bn. in 2000.
ROW
USA 1999
2000
China
2001
Philippines
Japan
W. Europe
- 20 40 60 80
SMS by country in W. Europe, year 2001: 78½ billion!
ROE (13)
Germany
26%
28%
France
4%
Spain
UK
12% 16%
Italy
14%
SMS by region in the world,
year 2001: 223 billion in total!
ROW
17%
USA
2% W. Europe
China 35%
3%
Philippines
12%
Japan
31%
SMS per activated M phone (i.e. per ”registered user”)
per month - W. Europe 2000 and 2001
Germany
Spain 2000
UK 2001
Italy
France
ROE
W. Europe
0 10 20 30 40
Sources for the previous graphs
For the two largest markets by volume of SMS transmitted:
Germany: regTP.de (2000 only)
UK: Mobile Data Association
Rest of W. Europe: National telecom

authorities (in a few instances) or
statements about exact no. of SMS
transmitted by individual mobile networks, or
inferences from statements in annual
accounts or press releases from network
operators about no. of SMS transmitted in
given months.
Assumed percentage of activated M phones
which are used for SMS (short text messaging) –
W. Europe, 1999-2003 (2000: 40%)
60%
50%
40%
30%
20%
10%
0%
1999 2000 2001 2002 2003
SMS per month …
Source: Carl H.Marcussen, Centre for Regional and Tourism Research, www.crt.dk, 31 May 2002. per unique person using SMS and per activated M phone:
W. Europe 1999, 2000 and 2001, with projections to 2003
100
ast
rec
80 Fo SMS send per
SMS sent per month
month per
unique SMS
60
user
40 SMS sent per

month per
activated
20
phone
0
1999 2000 2001 2002 2003
Comments to previous graph
If looking back into surveys (undertaken in 2000 and 2001) you would
expect to find an average of about two SMS’ per day among those who
actually sent any SMS’ at all (within ’the last month’), and the same goes
for surveys undertaken in the current year 2002. - Although various
surveys have been undertaken in some countries, comparable survey
data about SMS usage across European countries is not available. The
European average shown should therefore be considered an assumption
only.
The increase in the number of SMS sent per person per month among
the active SMS users was about 20 from 2000 to 2001, and the same
absolute increase is assumed to continue till 2003 (cf. top curve in the
previous graph).
The lower one of the two curves (in the previous graph), is carried over
into the next graph, where it is located as the middle curve.
SMS sent per M phone per month – with assumed
Source: Carl H.Marcussen, Centre for Regional and Tourism Research, www.crt.dk, 31 May 2002. split into post-pay and pre-pay users 1999-2003
60
Pre-pay
SMS sent per M phone per month 50 Average
Post-pay
40
30
20
10
0
1999 2000 2001 2002 2003
Billion SMS sent p.a., W. Europe
100
150
50
0
1999
SMS
SMS
Pre-pay,
Post-pay,
2000
2001
2002
2003
Billion SMS sent p.a. in W. Europe, 1999-2003
Pre-pay users will probably still account
for 80% of SMS usage by 2003
100%
90%
80%
70%
60%
50% Post-pay,
40% SMS
30% Pre-pay,
20% SMS
10%
0%
1999 2000 2001 2002 2003
Average revenue (~price) per SMS in
W. Europe 1999 to 2001, and assumed
development to 2003
0,14
0,12
Euros per SMS
0,10
0,08
0,06
0,04
0,02
0,00
1999 2000 2001 2002 2003
Resulting revenue streams for SMS (short text messaging)
for the mobile network operators – W. Europe, 1999-2003
14
Post-pay, SMS
Billion Euros p.a.
12
10 Pre-pay, SMS
8
6
4
2
0
1999 2000 2001 2002 2003
About the estimated no. of mobile
phones used for WAP by market in W.
Europe, end of year 2000
Go on to next slide, or read this:
The estimated no. of mobile phones used for WAP (to access WAP-sites or e-mail via
WAP) is not quite the same as the number of different (unique) persons in W. Europe, who
where WAP users by year-end 2000, since about one in ten WAP users actually actively
uses more than one WAP-enabled phone to visit WAP sites. So, to get the no. of unique
persons, who were WAP-users by year-end 2000, one would have to multiply the no. of M
phones used to access WAP-sites or e-mail via WAP by a factor of about 0.9.
With this in mind, you can now go to the next slide, were the number of WAP-phones used
to access WAP-sites or e-mail via WAP, is estimated (not the number of unique persons
using WAP). - There are many other uncertainties in measuring the number of WAP users,
though. – A WAP user should probably be defined as someone who have accessed a
WAP-site at least once during the last 30 days, but whether all those who make statements
about no. of active WAP users, also use this definition or a somewhat different one is rarely
clear. It should preferably be explicitly stated in each instance by those who make such
statements, how an active WAP user is defined.
PS: Active mobile phone users in general are typically defined a little wider by mobile network operators,
namely as those who have either made or received a call or sent an SMS during the last three months.
But as far as WAP-usage is concerned, the writer will hold that either a person has accessed a WAP-site
at least once during the last 30 days or that person is not a WAP-user of any significance at all.
Estimated no. of mobile phones used for
WAP by market in W. Europe, end of year
2000: Max. 8 million
Germany
UK
Italy
France
Spain
ROE (13)
0,0 0,5 1,0 1,5 2,0 2,5

Million of mobile phones actively used for WAP, end of year 2000.
Sources – for the max. 8 million M phones actively
used for WAP, end of year 2000 in W. Europe
Germany: 2.5 million according to regTP.de - of which 1 million accounted for by T-Mobile
according to presentation of the annual accounts of Deutsche Telekom. – How precise the
regTP.de estimate is is hard to know, but they have confirmed that they are not merely talking
about no. of WAP-enabled phones in the installed base of mobile phone users (since many
do not use the WAP function). – Another estimate comes from Cahners In-Stat Group (April
2001), who mention the number 1.25 million WAP users in Germany by year-end 2000 (and
just under 6 million for W. Europe in total). -- However, here the regTP.de estimate has been
applied.
UK: 1.53 million, by adding up statements or estimates for individual operators:

BT Cellnet 1 million, according to presentation of the annual accounts of BT.
Orange, 181k (www.orange.com). - One2One, 135k (source as under Germany).
Vodafone might be at the same level as Orange and One2One, relatively, i.e. some 2% of
registered users by year-end 2000. - All in all, for the UK, end of year 2000: ~1.53 million.
Italy: 850k, based on a published survey result, combined with own assumptions. -
In a survey it was found that 5% of the M phone users had a WAP-enabled phone late in the
year 2000. Some 40% of them may actually be using the WAP function. This gives an
estimate for Italy of 850k.
France: Orange 496k, 3.5% of base (www.orange.com); Others ~2% of base. Total, ~760k.
Spain: Telefonica Moviles, 300k, 2.2% of base; Others ~1.8% of base. Total, ~0.5 million.
Adding up the estimates for
individual W. European countries
… shown in the previous slide gives about 8 million phones used to access WAP-
sites or e-mail via WAP, which is almost – but not precisely – the same as ”number
of persons in W. Europe using WAP – by year-end 2000 (as earlier explained).
Using an entirely different method, an estimate of 7 million WAP phones used for
WAP (for accessing WAP-sites or e-mail via WAP) in W. Europe by year-end 2000
was arrived at (www.crt.dk/uk/staff/chm/wap.htm).
The difference between the 8 and 7 million is so little (in light of all the uncertainties
involved) that either estimate will do.
However, for the record, in the following calculations the lower of the two estimates
(8 and 7.0 million) is used, to be a little conservative, and since some of the
individual country estimates may be on the high side. So, by picking the lower
estimate, there is a little room left to allow for that.
The 7 million M phones used to access WAP sites in December 2000, represent
about 6.3 million unique persons, since some persons actually use more than one
mobile phone.
For direct comparison with the 6.3 million unique WAP users by the end of 2000,
there were 104 million unique fixed line Internet users in W. Europe, cf. again the
explanation provided in www.crt.dk/uk/staff/chm/wap.htm
Status for WAP
in Western Europe,
end of year 2000
About 7 million WAP enabled phones
used for WAP (to access WAP-sites
or e-mail via WAP) by about 6.3
million unique (different) persons, i.e.
1.6% of the entire population of about
391 million.
About 7 million WAP enabled phones used for WAP by the
end of year 2000 – by about 6.3 million unique (different)
persons, i.e. 1.6% of the population.
ROE (13)
23% Germany
31%
Spain
6%
France
10%
UK
Italy
19%
11%
Estimated percentage of activated M phones
by year-end 2000, used for WAP (A)
Finland
Norway
Germany
Austria
Iceland
UK
Ireland
% population
W.EUROPE % of base
Sweden
Denmark
0% 2% 4% 6% 8%
Estimated percentage of activated M phones
by year-end 2000, used for WAP (B)
W.EUROPE
Switzerland
France
Belgium
Italy
Portugal
Spain
Netherlands
% population
Luxembourg
% of base
Greece
0% 1% 2% 3%
WAP phones actually used for WAP (middle of year
and end of year), and number of unique persons
using WAP by the end of year, 2000-2003
(Population: ~400 million by 2003)
40
35 Phones used for
WAP-services,
30 middle of year
25
Phones used for
20 WAP-services,
16 end of year
10 Unique WAP-
6,3 service users, end
of year
0
2000 2001 2002 2003
PS: The middle of year numbers (the white coloumns - to the left) are those which enter the following calculations.
Approximate spending per WAP user –
airtime / data transmission
2000: Just 10 minutes per user per month (using T-

Motion of Deutsche Telekom as indicator, cf. Analyst
Meeting presentation, 24 April 2001, slide 61 of 119).
10 minutes of airtime translates to about 2.66 Euros per

WAP phone per month used for WAP in the year 2000.
For the following years, 2001-2003, the spending on data

transmission per M phone actually used to access WAP-
sites or e-via via WAP is assumed to increase as shown
in the following diagram.
Assumed spending in Euros per month on data
transmission for WAP content and Internet
access from WAP-phones, including m-@
7
6
5
4
3
2
1
-
2000 2001 2002 2003
Mobile Internet content and access: WAP.
Data transmission revenue for WAP (and similar) for
the mobile network operators – W. Europe to 2003
3
WAP, post-pay
Billion Euros p.a.
2 WAP, pre-pay
0
2000 2001 2002 2003
Split of data transmission revenue for WAP:
Total for pre-pay users and for post-pay users.
100%
80% WAP, post-pay

WAP, pre-pay
60%
40%
20%
0%
2000 2001 2002 2003
m-commerce – a definition
Proposed wide definition of mobile commerce:
m-commerce is the interchange of purchase inspiring

data (including text) involving mobile phones.
A good alternative definition of m-commerce is this, which may be appropriate in
North America, where PDAs are more commonly used that in Europe:
”Mobile commerce is the buying and selling of goods and services through wireless
handheld devices such as cellular telephones [mobile phones] and personal digital
assistants” [PDAs]. Source: glossary in the annual report 2000 of Telus, Canada.
However, the difference between the first definition and the alternative definition
goes beyond access devices. E.g., advertising via SMS would be included in the
first wide definition, but it is debatable whether mobile advertising would be
included in the alternative definition, with its ”buying and selling” emphasis.
m-commerce seen from a mobile
network operator’s perspective
Seen from the network operators’ revenue perspective –
which is the perspective taken here – the definition and
delimitation of m-commerce is given by the revenue accruing
to the network operators. The difficulty – analytically - can
then be a distinguish between (a) SMS revenue, (b) WAP
revenue and (c) m-commerce revenue.
However, the network operators would probably not care too
much about which of the three categories (a, b, c) their non-
voice revenue falls, just as long as it falls into their pockets!
Even the players heavily involved in WAP, are looking to SMS
as their main revenue generator during the next few years,
whereas WAP is only seen as a marginal contributor now and
in the near future. And WAP push involves SMS.
m-commerce
.. includes revenue from orders places by non-voice means from a mobile phone (e.g. via
SMS) – as well as advertising revenue, among other things. - But m-commerce should not be
defined in such a narrow way that it should necessarily include wireless payment.
Seen from an operator’s perspective m-commerce revenue includes the cut-off from wireless
transactions, for which payment is handled via the operators’ billing system.
In the area of payments for orders placed by non-voice means (e.g. via SMS), payment is
largely foreseen to be undertaken off-line, i.e. by traditional channels including one of the
world’s best payment systems – which is simply the billing system of the mobile operators,
including both post-pay monthly billing and the handling of payments by subtracting the
relevant amount from the pre-paid phone cards. This is, by the way, also the way payments for
m-commerce transactions are being run in Japan. However, since pre-pay phones play a very
significant role in Europe (unlike in Japan), obviously in Europe micro payments should be
deductable from the pre-pay cards (cf. also the US example ”Prepaid Mobile Commerce?”,
Mobile Commerce Strategies by Adam Zawel www.yankeegroup.com/ygrn3-27-
2001.html#anchor57405).
Secure payments by non-voice means – including transmission of credit-card details – is not

something which will become advisable or commonly used in the next few years – in the
writer’s opinion. It also took years for people to become even relatively comfortable with
sending the personal details over the fixed line Internet. It should not be forgotten that (unlike
in computers) there is a voice function in a mobile phone, and most people would be quite
happy to transmit their credit card details that way, e.g. in response to an SMS advertisement.
A killer m-commerce application
.. which is explicitly not included in the projections for m-commerce
revenue streams accruing to the mobile network operators made here
(although it falls under the definition of m-commerce, since a purchase order
– here for airtime – is placed from the handset) ... could be
REFILL OF PRE-PAY CARDS BY SMS (OR WAP)

cf. ”Handy-Prepaid-Karten bald per SMS oder WAP aufladen”
(Handset prepaid cards can soon be re-charged by SMS or WAP),
Handelsblatt.com, 8 June 2001. Will be implemented in Germany in July
2001. Has already been successfully tested in the Czech Republic.
There should be a significant cost saving to be gained by the operators.
However, any significant success of this cost effective way of doing business
must be largely dependent of the willingness of the network operators to
share the cost-saving with the consumers. If the physical network operators
are not going to use this as a competitive tool, the virtual mobile network
operators most likely will. (comments continue overleaf)
Comments to the potential ”on-air” e-commerce
(m-commerce) application – a parallel
The inference that an ”on-air” discount is required to make the ”on-air”
business take off is drawn from the fixed line Internet. Traditional players
have generally been relying on ”convenience” to make the customers buy
online. But of course the consumers want a piece of the cake, i.e. they will
want part of the cost savings in the form of discounts. Example: No-frills
airlines selling tickets online. They have been tremendously successful in
doing so, partly because they offer the consumers a discount for making
bookings online. The traditional airlines have relied on convenience only,
but this has not given them much online sales. – So, back to the ”on-air”
selling of air-time refilling on pre-pay cards: Give the customers a real
incentive to make on-air purchases, and sales (and thus cost savings) are
going to come – from the pre-pay customers who belongs to the same
price-sensitive segment of the market as those who buy no-frills airtickets.
In order to be able to make an ”on-air” re-fill of the pre-pay card – and

thereby get the proposed on-air discount - the user of course have to have
a formal relation with the network operator, since payment may be via the
customer’s bank account – following the re-fill order sent by SMS. This
would be a very welcome opportunity for the network operators to build and
maintain (manage) customer relationships with their pre-pay customers.
Another potential killer
application for m-commerce..
Another killer app for SMS in the area of m-commerce
could be discounted (profile dependent, ideally at least)
product and service offerings, including last minute
offers, cf. again Handelsblatt.com, 15 June 2001,
”Mobile savings by SMS”, which will be implemented in
the autumn of 2001 (immediately following a change of
the German discount law). – This m-commerce
application will only contribute SMS transmission
revenue to the mobile network operators, no cut-off, so
this is not an m-commerce killer application seen from
the network operators’ perspective.
Assumed contribution of m-commerce to ARPU
for the W. European mobile network operators –
2001-2003, post-pay, pre-pay and overall
1,0
Contribution of m-commerce to
Post-pay
ARPU, in Euros per month
0,8 Overall
Pre-pay
0,5
0,3
0,0
2001 2002 2003
Putting numbers on the average
m-commerce revenue per user –
accruing to the network operators
One organisation, Amstgeld Reseach from the Netherlands, have
published what the writer believe is a credible m-commerce forecast for
three specific mobile network operators, namely for the Dutch incumbent
mobile network operator itself as well as for its subsidiaries in Belgium
and Germany (www.thefloor.nl/news/pdf/KPN060201.pdf). The
prediction made by Amstgeld Research for the year 2002 is 0.50 Euros
per user, and 1 Euro per user in the year 2003, increasing to and
stabilizing at 3.50 Euros per user by 2005.
The writer has chosen to use the above as a starting point for making a
general W. European projection for m-commerce revenue till 2003 seen
from an operator’s perspective.
(Continues)
The contribution of m-commerce to
ARPU for the W. European mobile
network operators – 2002 and 2003
The player(s) mentioned by Amstgeld Research have taken an early interest in m-commerce,
and therefore the writer believes that they will be ahead of the European average.
Specifically, as a weighted average for pre-pay and post-pay, it is assumed that the m-
commerce will contribute 0.20 and 0.40 Euros per user in 2002 and 2003, respectively, for the
European network operators overall (i.e. 40% of the level projected for the players focused
upon by Amstgeld Research).
This translates into 0.8% of overall ARPU for both pre-pay and post-pay in the year 2002, and
then increasing to 1.6% of ARPU in 2003, again about the same percentage for pre-pay as for
post-pay.
In absolute term, for the year 2003, the mentioned contribution of m-commerce translates to
1.6 billion Euros, compared to 3.7 billion Euros from data transmission for mobile Internet
content/access (WAP and similar), and 9.0 billion Euros for SMS (more advanced form of
messaging such as unified messaging, if any, will have to be put into the WAP category). –
For non-voice the projected revenue for the year 2003 is thus 14 billion Euros, which is 14% of
the total projected mobile network services revenue (including m-commerce) of 99 billion
Euros, up from 80 billion in the year 2000.
The projected ARPU contribution of m-
commerce, 2002 and 2003 (continued)
The projected contribution of m-commerce to ARPU (already) in 2002 and
2003 (0.20 and 0.40 Euros, respectively) as presented here may seem
conservative. Quite possible, but those are the writer’s projections anyway,
since (a) the Amstgeld projection (which the writer takes as starting point)
appear to be credible, and (b) the writer believes that the European average
is bound to be lower.
PS: It should perhaps be noted that projections which are many times higher than those made above by the
writer are available. They go as high as to 3.50 Euros per user already by 2002 (cf. www.tarifica.com/, press
release, 29 May 2001). Remember, Amstgeld projects 3.50 Euros per user in 2005 (and just 0.50 Euro in
2002). The projection made by the writer (for all European network operators under one) is lower that the
projection made by Amstgeld (since the latter are for specific forerunners)! - There may of course be
definitional differences which make direct comparisons of different projections of m-commerce’s contribution to
ARPU difficult. So, in these very early days of m-commerce, it is especially important for the researcher to
properly define and delimit what is included in any estimate and forecast and for the reader to be alert to
possible definitional differences. Also, the boundaries of the field m-commerce are still quite fluent. During the
next few years innovative ideas and new business models are going to lead to a relentless shifting to and fro
between on one hand increasing consensus about how to define the field and on the other hand redefinition
and new ways to understand and to utilize m-commerce.
W. European mobile network operators’ non-voice
revenue – in billion Euros 1999 to 2003
14
Non-voice revenue, billion Euros
12 SMS
10
WAP + m-@
8
6
M-commerce:
4 Cut-off + adds
2
0
1999 2000 2001 2002 2003
W. European mobile network operators’ non-
voice revenue – in billion Euros 1999 to 2003
20
Non-voice revenue, billion Euros M-commerce: Cut-off + adds
WAP + m-@
15 SMS
10
0
1999 2000 2001 2002 2003
Split of the W. European mobile network operators’
non-voice revenue in percent – 1999 to 2003
100%
80%
% of non-voice service revenue
60%
40% M-commerce: Cut-off + adds

WAP + m-@
20% SMS
0%
1999 2000 2001 2002 2003
VOICE, non-voice
and TOTAL
… mobile network
service revenue
… i.e. voice and mobile data
transmission revenue and operators’
share of m-commerce (the ’cut-off’ as
well as advertisement revenue – other
than that relating to SMS)
ARPU – pre-pay, post-pay, and overall
ARPU, post-
60 pay, Euros
per month
50
Overall
40 ARPU, Euros
per month
30 ARPU, pre-
pay, Euros
20 per month
10
0
1999 2000 2001 2002 2003
ARPU 1999-2003 – comments:
• ARPU for post-pay M phone users decreased 4% from 1999 to 2000,

but increased 3% in the year 2001. ARPU for post-pay is projected to
increase 2% from 2001-2 and by another 2% from 2002-3 (constant voice
spend per user, increasing non-voice).
• ARPU for pre-pay M phone users decreased 12% from 1999 to 2000,
and decreased further 20% in the year 2001. ARPU for pre-pay is
projected to drop another 5% during 2002, but then increase 1% during
2003 (slightly decreasing voice spend per user, increasing non-voice).
• The number of registered users increases. And the overall ARPU
remains largely constant from 2001 to 2003. Therefore the total mobile
network service revenue will continue increasing throughout the
forecasting period until and including 2003.
96 billion Euros in mobile network service
revenue in W. Europe in the year 2000!
The 96 billion Euros in mobile network service revenue for the year 2001,
up from 80 billion Euros in 2000, comprise about 60 mobile network
operators in the 18 Eurostat countries, i.e. 15 EU countries plus
Switzerland, Norway and Iceland. - Any revenue accruing to the real
mobile network operators for network access granted to virtual mobile
network operators should be included in the 96 billion Euros (otherwise
this revenue would not be counted).
What is excluded from the 96 billion Euros revenue figure for the year
2001 is hardware sales, notably handset sales. (PS: The revenue from
handset sales does not cover all the cost of sales of these, since sales of
handsets is subsidised by the network operators). Also, all other services
that mobile network services are excluded, e.g. any fixed line or Internet
revenue.
Total VOICE revenue
.. will continue to increase – albeit
slowly - thoughout the forecast period
2001 to 2003
.. and in the year 2003 non-voice

revenue is forecast to have doubled
from the year 2001, in absolute terms
(and there was also a doubling from
2000 to 2001).
W. European mobile network operators’ service
revenue – in billion Euros p.a. 1999 to 2003
120
17
100 13
Billion Euros p.a.
8,8
4,7
80
1,6
60
40 Non-voice
20 Voice
0
1999 2000 2001 2002 2003
W. European mobile network operators’
service revenue – in percent 1999 to 2003
100% 2,7% 5,8%
9,2% 12,3% 15,1%
% of service revenue
80%
60%
40%
Non-voice
20% Voice
0%
1999 2000 2001 2002 2003
Re. percentage of non-voice
by ~2003: Comments - quotes
Some major operators have provided statements about their future expected
contribution from non-voice to total network services revenue, indicating
ambitions well above the projected W. European average of 15% for the year
2003 – up from 5.8% in year 2000, 9.2% in 2001 and 12% in 2002:
(1) Already in their Annual Report for 1999 p. 11 TIM, Italy, stated: ”.. it is
expected that by 2002, Value Added Services will account for 16% of total
revenues ..” By 14 Feb. 2002, the 16% VAS target was postponed to 2004 (as
base case - with 20% as best case scenario).
For FY2001 TIM reached a level of 7.1% non-voice service revenue.
(2) ”Our target is for between 20% and 25% of revenues to come from data by
March by 2004.” Source: Vodafone Group Plc, Annual Review & Summary
Financial Statement For the year ended 31 March 2001 p. 8.
For the calander year 2001 a level of almost 8% had been reached on a
proportionate basis, and just over 10% in the controled group.
(3) In a presentation of their financial results for the year 2000 (slide 64 of 75),
Orange state that they ”target 25% data revenues by 2005.” (orange.com)
Discussion and global
view – Part 1 to 3
Part 1. A global view of SMS and WAP
(plus other modes of limited Internet access): Short text messaging -
the universal number one non-voice mobile telecom application
Part 2. North American approaches to

wireless Internet
Part 3. High-speed Internet access in
Europe: Fixed-line, wireless and Wi-Fi
Discussion and global view
PART 1:
SMS and WAP - worldwide
Short text messaging – the universal number
one non-voice application, and WAP (plus other
modes of limited Internet access)
• Asia Pacific
• ROW (North America dealt with in PART 2)
• Global summary
Short text messaging (SMS and similar1 )
.. was the dominating – and beyond Japan (and possibly S.
Korea) – largely the only non-voice handset-based mobile
network service revenue generator in the year 2000.2
In North-America other approaches to mobile data usage –
than those which are handset-based are rather important, i.e.
paging (still, although this market is declining), PDAs and
handheld computers, and fixed-wireless access mostly from
within buildings to the Internet from portable computers.
Text messaging will most likely continue to be the dominating
handset-based non-voice mobile network services generator
during the next few years, cf. explicit predictions made for W.
Europe in the following parts of this document.
Note 1: Mobile e-mail in Japan is also mainly short text messages.
Note 2: See e.g. Vodafone press release, 25 April 2001 (year to 31 March 2001,
though), and see also the following sections and slides of this document.
Short text messaging (continued)
So, mobile text messaging being dominating in the area

of non-voice applications of mobile handsets (and some
supplementary devices), let us try to supplement the
mostly European perspective taken in this study with a
global perspective of the status of mobile short mobile
text messaging in the year 2000.
No such thing as free SMS
(read: A high volume of SMS traffic can generate revenue for the operators, even if many of the SMS’ are free)
Pre-pay mobile phones and ALMOST free SMS’ in obviously a obviously a killer combination, certainly in the less
affluent countries in general, and possibly for the teenager segment of any market.
Free SMS offers gets the ball rolling, .. and then there is a marginal revenue per SMS to be gained by the operators,
say 0.01 Euros or 0.01 $ per SMS in average, although many of them are free.
With massive SMS volume even a small average revenue per SMS makes a significant contribution to the overall
(digital) network service revenue figure: 28.3% in ”wireless data revenue” as % of GSM wireless revenues in
Q1.2001 for Smart, Philippines, world record! – Text messaging alone accounted for more than 96% of Smart’s
data (or Value-added services) revenue. Source: Smart Communications Inc., Financial Results for the Three
Months Ended 31 March 2001.
Some of Smart’s customers (about 0.47m) were not digital GSM users, but analogue TACS users (who cannot utilize
the digital SMS service). The analogue users contributed only little to Smart’s total wireless revenue. Even if measuring
the wireless data revenue against Smarts total wireless revenue figure (which would give 26.8% ”data”), Smart would
still be holding an impressive world record.
Globe, Philippines, achieved 18% of its wireless revenues from data services in Q1.2001 (up from about 15% in the
year 2000). In absolute volume, Globe conveys more SMS’ than Smart (cf. next slide). - By the end of year 2000, Globe
had 2.563 million customers vs. 3.52 million for the PLDT’s Wireless Group, of which Smart 2.86m (incl. 0.65m
analogue) and Piltel 0.66m.
Europe: For comparison, D2 Vodafone (Mannesmann) of Germany reached an impressing 16.2% messaging and data
revenues out of total monthly service revenues in March 2001. This is most likely the highest percentage for any mobile
network in Europe .. and Japan .. and elsewhere with the exception of the Philippines. So, let us give third place to D2,
after Smart and Globe. For D2 the split was in fact 15.7% ”messaging data”, i.e. SMS, and 0.5% ”internet data”
(Vodafone plc, press release, 25 April, 2001).
Japan: J-Phone: 12.9% non-voice – as a percentage of service revenues (Vodafone press release, 25 April, 2001).
NTT Docomo, March 2001, iMode ARPU in % of voice+non-voice ARPU: 880Y/8650Y=10.2% (NTT DoCoMo,
presentation of FY2000 Financial Results, 9 May 2001. -- So, now we can turn to a tentative non-voice top 5 list. ..
A global top 5 list – Early 2001
- Non-voice revenue in percent of mobile network service revenue
1. Smart, Philippines 26.8% (Q1)

2. Globe, Philippines 17.8% (Q1)
3. D2, Germany 16.2% (March)
4. J-Phone, Japan 12.9% (March)
5. NTT DoCoMo, Japan 10.2% (March)
Sources: Based on company releases.
Smart: Financial Results for the Three Months Ended 31 March 2001.
Globe: SEC Form 17-Q, Quarter ending 31 March 2001.
D2 and J-Phone: Vodafone plc, press release, 25 April, 2001.
NTT DoCoMo: Presentation of FY2000 Financial Results, 9 May 2001.
PS 1: For the full year to March 2001 the top 5 ranking would be the same,
approximately as follows: 1. 16.9%; 2. 15.9%; 3. 13.4%; 4. 9.6%; 5. 5.8%.
PS 2: Paging services not included, cf. the last slides in this document.
SMS volume development in the
Philippines, Q1.2000 to Q1.2001
6
5 Smart+Piltel
Globe
4
3
2
1
-
Q1 '00 Q2 '00 Q3 '00 Q4 '00 Q1 '01
Sources: (a) Globe investor’s briefing and (b) PLDT Annual Report
2000 p. 24 (for Smart and Piltel) and PLDT release 8 May 2001.
In Japan mobile text messaging is very cheep
(which is also the case in the Philippines)
In Japan – one of the most affluent economies in the world –
cheap text messaging is also a massive success among users.
This is combined with post-pay phone usage, since in Japan
pre-pay is a largely unknown phenomenon (and paying the
monthly bill is no problem (certainly not for the youngsters
themselves, and probably not for their parents). -
A parallel to the textbook example of the shirt and the tie
(or: how to take different price elasticities of demand into
account when determining the optimum pricing structure): Text
messaging is a way to get the customers in the (mobile
network operator’s) shop – in Japan – and once they are there
the interesting margins are made on other types of non-voice
services (such as ring tones, games etc.). – Even so,
Japanese operators get half of their non-voice revenue from
text messaging.
The winning combination
So, in very affluent economies the (or: one) winning
combination could be (a) post-pay mobile phone
usage, (b) cheap text messaging, and (c) expensive
add-on non-voice services (ring-tones, games, etc. for
private users as well as ’serious’ and relatively high
priced non-voice services for business people).
What will be the winning combination with respect to

generating non-voice revenue for the mobile network
operators in the US?
I’ll let others work in out, but now that the question has
been raised, why not discuss it a bit (see ”Discussion
and global view PART 2).
Text messaging is almost universally the
mobile data (non-voice) killer application, both
seen from the point of view of the mobile
network operators and the customers
Text messaging appear to be killer non-voice application anywhere, a universal key to
non-voice revenue. BUT in the US interoperability (sending SMS between mobile
networks) has been a problem in the US. AND in the US fixed line Internet usage,
including ordinary e-mail usage is extremely important. AND fixed line telephony is good
and cheep. BUT the interoperability issue is being tackled. AND in the there are many
rich people, BUT also many poor people. …
Traditionally text messaging has been very cheep in the US.

But, interoperability problems have prevented mobile two-way text messaging from
gaining any significance at all in the past. But the problem is being solved, apparently.
I’ll let others work in out, but here is a hint:

For private users: The US economy is characterised by both many rich people … but also
many less well-off people. .. In Europe we have seen that the appeal of the pre-pay
concept goes way beyond the very young and other relatively poor persons. - So pre-pay
+ cheep SMS should work for the private users. The teenagers will have to be the early
adopters, if SMS is going to get anywhere in the US.
For professional users: Instant messaging (cf. ”Instant Messaging receives IBM
endorsement”, www.totaltele.com, 19 June 2001)
How many mobile text messages were
sent in Japan in the year 2000?
This is no easy question to answer, since not a lot has been written about this. Only the mobile
network operators knows the answer (for their own network, at least). So, let us see what
operators have stated concerning text message volume.
”The average i-mode user is accessing ten homepages per day and is sending and receiving an
average of five e-mails per day”. Mr. Natsuno of NTT DoCoMo, ”Who is making money out of
mobile data?”, www.telecoms-mag.com/issues/200007/tci/who.html
Combined with the numbers on the previous slide, we get the following result: End of year 2000
messaging users in Japan: 31.2 million (i.e. 16% more than the 26.8 million mobile Internet
subscribers). As a weighted average, across the 12 months of 2000, there were about 13.8
million mobile subscriber in Japan. So, let us say that there were 13.8 * 1.16 = 16 million text
message usage. If the average user sent and received five messages per day, that corresponds
to 5 * 16 * 365 = 29.2 billion mobile text messages.
Let us round it off, and say: 30 billion mobile text messages sent in Japan in the year 2000. –
Although this is a crude estimate, based on few pieces of information available about this issue,
this estimate is the best the writer can come up with at the moment.
For comparison, in W. Europe about 40.7 billion SMS were sent during the year 2000.
30 billion text messages – in Japan - correspond to 47 text messages per day per mobile phone
subscriber per month during the year 2000. – The corresponding average for W. Europe was
just under 17. So, in relative terms, mobile text messaging was 2.77 times as widely used
among Japanese mobile phone users than among European mobile phone users.
Rounding off the tentative global mobile
text messaging picture for the year 2000
In the Philippines, the average was world record high, about 194 per
month per registered mobile phone in use (of which where were just 6.2
by year-end 2000, up from 2.85 million by the beginning of the year). I.e.
10.5 billion text messages in the year 2000 in the Philippines, the worlds
third ranking area for the year 2000 in absolute terms, after W. Europe
and Japan. Of the 10.5 billion, Globe accounted for ~6.5 billion
(according to investor’s briefing), and Smart+Piltel (according to annual
accounts of PLDT) 4.05 billion. So, in the Philippines an average of 29
million messages were sent per day for the full year 2000 in average.
For individual quarters the averages were: Q1.2000: 12; Q2: 23; Q3: 35;
Q4.2000: 45; Q1.2001: 65.
PS: The 29 million messages per day is a most impressing volume with such a relatively small user base
in year 2000. However, perhaps is should be noted that this is only about half as many as the ”55 million
messages” per day in 2000 as has been stated elsewhere: www.nokia.com/3g/pdf/existing_services.pdf.
Obviously, since the Philippines carried such a great weight in the global short text message picture for
the year 2000, it makes quite a difference in one applies one or the other estimate. However, the in the
Nokia document referred to, ”Existing Services for 3G”, which is dated 10 April 2001, it is mentioned that
”today the daily average is 70 million messages”. Interpreting ”today” as the month of March 2001, the
70 million messages per day as stated by Nokia, fits very well with the average of 65 per day in the full
Q1.2001calculated by this writer based on statements from the major operators in the Philippines.
Japan – mobile Internet
- status by the end of year 2000
Mobile Internet subscribers Total subscribers
i-mode 17.2 million 34.2 m NTT DoCoMo
EZWeb 5.2 do. 14.3 m KDDI
J-sky 4.5 do. 9.5 m J-Phone
Total 26.8 million 58.0 m
Please, note that that the 26.8 are SUBSCRIBERS to mobile Internet services, but only part of these
were active mobile internet USERS.
To get the number of active mobile Web users (i.e. those who use more than just text messaging), we
would probably have to divide the 27 million by 2, which would give, roughly, 13-14 million mobile Web
users in Japan by the end of the year 2000 (13.4 m).
KDDI is in fact using a ”WAP compatible gateway protocol” for its mobile Internet services, whereas i-
mode uses proprietary ones (ref.: ”Mobile Commerce – Winning in Japan” p. 10,
www.technologyrating.com, NL, which in turn makes reference to the Japanese Telecommunications
Carriers Association, Mobilemediajapan.
PS: i-mode counted 25.028 million users as of 1 July 2001 (nttdocomo.com).

EZWeb counted about 7.7 million (Nikkei Business Publications) by mid-year 2001.
Mobile text messaging in Japan
About J-Sky we know that 66% of ALL (?) its subscribers were active text
message (SMS) users (vs. 47% for Vodafone in W. Europe), according to
Vodafone presentation, ”Delivering and adding value”, 7-8 March 2001. So, J-
Phone had some 6.3 million text message users in December 2000.
If the same were true for KDDI, that would correspond to 14.3 * 0.66 = 9.4 billion
text message users, for the runner up.
For DoCoMo we can assume that largely all of the i-mode users are text
messaging (e-mail) users. Certainly, this is the most used facility of i-mode. So,
let say that 90% of i-mode subscribers are using the mail function, which would
correspond to 17.2 * 0.9 = 15.5 million text message users.
So, for all three operators: 15.5+9.4+6.3=31.2 million text message users in
Japan by the end of year 2000, i.e. 54% of the 58 million mobile phone
subscribers.
For comparison, in W. Europe about 40% of the 244 million registered mobile
phones were user for text messaging.
Almost 100 billion ”two-way” mobile
text messages in the year 2000 *
Billion mobile SMS etc. per Start – mid – end
text messages user/month of year users (mill.)
W. Europe 40.7 17 154 199 244
Japan 30.0 47 48 53 58
Philippines 10.5 194 2.9 4.5 6.2
USA 1.5 1.3 86 98 109
China 0.8 0.4 43 64 85
ROW 14.1 6 144 182 219
World 97.6 14 479 600 721
* Note: Not including all the following ”non-handset based” approaches to mobile
text messaging (all of which happens to be North American approaches): paging,
real e-mail to/from PDA / handheld computers like BlackBerry, portable PCs (with
mobile phone as modem or with built-in wireless modem), and fixed-wireless
(broad-band wireless Internet access in buildings and other constrained areas).
Short text messaging: 98 billion in
the entire world during the year 2000
ROW
Philippines
Japan
W. Europe
0 10 20 30 40
Source: Own estimate based based on pieces of published date.

Estimated short text messaging by country or
region of the world, year 2000: 98 billion in total,
83% of which for just three regions/countries
ROW
17%
W. Europe
Philippines
41%
11%
Japan
31%
China – SMS – year 2000 (and 2001)
The volume of SMS sent in China during the year 2000 was relatively moderate,
whereas the ambitions for 2001 are not. China Mobile * is China’s leading mobile
network operator, with 45.1 million registered users out of the total in China by
the end of year 2000 of about 85 million. This made China Mobile the second
largest mobile network operator group in the world by the end of year 2000,
second only to the Vodafone Group plc! It is the objective of For China Mobile
alone the objective is to reach a volume of 10 billion SMS’ already in 2001
(www.chinamobile.com), up from 440 million in the year 2000 (Annual Report,
www.chinamobilehk.com/). – With a volume of 192m in Q4.2000, up from 122m
in Q3.2000 (i.e. an increase of 57% in one quarter).
It is the objective of China Mobile to add 30m users during 2001. By the middle
of 2001 43% of the objective had been fulfilled with the addition of 13 million
registered users, 95% of which were pre-paid card users. In this respect the
growth pattern for China Mobile is beginning to look like the growth pattern for
mobile users in W. Europe, where most of the growth in recent years has been in
pre-paid card users. Since pre-pay users tend to be heavy SMS users, this
supports the growth opportunities of SMS in China during 2001 and beyond.
* Note: China Mobile is the publicly traded subsidiary of China Mobile Communications
Corporation, which in turn is controlled by China's Ministry of Information Industry, cf.
http://www.thestandard.com.
Note: End of 2001 split between post-pay and pre-pay is the writer’s estimate
only. However, the total for end of 2001 is based on the objective by China
Mobile. China Mobile accounted for 53% (45.1 million) of the approx.imately
85 million registered M phones in China by the end of year 2000.
Million registered M phones
0
10
20
30
40
50
60
70
80
End
1999
Prepaid
Postpaid
Mid.
2000
End
2000
Mid.
2001
China Mobile (HK) Ltd. –
post-pay and pre-pay users
End
2001
China – SMS – year 2000 (and 2001)
(Continued)
In June 2001 it was stated in that ”SMS is currently growing at 200m messages
every month” with China Mobile (View from the Top, CSFB, 28 June, 2001). –
Obviously, with this level of growth, the 2001 objective of 10 billion SMS quickly
comes within reach. However take-off probably did not take place until the
middle of May 2001 or beginning of June 2001: On 17 May 2001 China Mobile
introduced SMS for all its prepaid mobile phone card users (Beijing Evening
News 18 May 2001, cf. www.mfcinsight.com). The price is RMB 0.15 per SMS
sent by pre-pay users and RMB 0.10 per SMS for post-pay. With 1 RMB = 0.14
Euro, and up to 85% of SMS’ sent by pre-pay users, the weighted average price
works out to just 0.02 Euros per SMS. (Revenue per SMS may be a little higher
than price per SMS because of premium priced value added services delivered
by SMS). This is not quite as cheep as in the Philippines (revenue ~0.01 Euro
per SMS in 2000), but much cheaper than in W. Europe, where the average
revenue per SMS was 0.10 Euros in the year 2000. - So, two of the usual
conditions for SMS to take off is at place in China: Low price per SMS and a
high (and increasing) percentage of pre-pay users. One last condition is for
SMS to take off to a large scale is interoperability, which may not have been
established yet between the (two main) mobile network operators in China.
WAP in China – end of year 2000 (and 2001):
By the middle of year 2000 it was expected that there would be 0.8
million WAP users by the end of year 2000 in China, increasing to 4
million by the end of 2001. (http://english.peopledaily.com.cn/20000628/,
”Increasing mobile users surf net”)
The mobile Internet services initiative of China Mobile was introduced in
Q4.2000 under the brand name of Monternet. It is an objective to have 10
million subscribers to Monternet by the end of 2001. - End of year 2000
subscribers not mentioned, but there were more than 100 content and
service providers.
Also the No. two mobile network operator in China, China Unicom, is
involved in both WAP and SMS. ”China Unicom expands WAP and SMS
reach”, September 17, 2000, www.zdnetasia.com/
Hong Kong:
SMS was hardly used much in Hong Kong in the year 2000, since
interoperability was not established until the spring of 2001.
Status of SMS and WAP in S. Korea
20
15
I-SMS
10
WAP
5
0
Dec. 2000 March 2001
Sources: MIC, cf. also ”Korea's Wireless Internet Subscribers Hit 15.78 Million”, www.koreainc-news.com/, 231 May
2001; ”Korean users of wireless Internet total 18.52 million”, www.koreaherald.co.kr,18 April 2001. Also detailed and
up-to-date statistics are available at www.sktelecom.com (and for KT Freetel at www.ktf.com). - No. of registered m-
phones: End of Dec. 2000: 26.8 mill.; End of March 2001: 26.6; End of June 2001: 28.1 million, www.mic.go.kr.
Note: For a related study, see: www.cdg.org/events/Digevent/presentations/cdg_3G_in_Korea.pdf
Status of SMS and WAP in S. Korea –
Note to previous two graph
Although largely the same information services are available both on SMS and WAP, e.g. via SK Telecom’s
n.TOP service, the meaning of the term ”Wireless Internet” is being over stretched if including the SMS
users among the Wireless Internet users (cf. both of the headlines mentioned under sources in the previous
slide) since SMS is not IP-based. But almost 10 million WAP enabled handsets among the total number of
26.6 million activated handsets by the end of March 2001 (up from 8.8 million by the end of year 2000).
How many of these almost 10 million which were actually used for accessing WAP sites is not evident from
the published statistics. It was almost certainly not all 10 million, though, but more likely about half of
them, i.e. 5 million by end of March 2001, up from about 4.4 million by year-end 2000.
In W. Europe there were about 7.5 handsets which were actively used for WAP in December 2000 out of
about 15 million activated WAP enabled M phones. Since hardly all the 8.8 WAP enabled handsets
deployed in S. Korea were actually used for WAP, we cannot compare the 8.8 million for S. Korea with the
7.5 million for W. Europe, but it would probably be fair to compare the 8.8 million deployed WAP enabled
handsets for S. Korea with the installed base of 15 million WAP enabled phones for W. Europe (end 2000).
With S. Korea’s relatively small population base compared to that of the whole of W. Europe, the S. Korean
”wireless Internet” numbers are most impressing, and not far from those reported from Japan in relative
terms. cf. earlier slide: There were 26.8 million registered ”Internet enabled handsets” in Japan by year-end
2000 (out of a registered base of 58 million), i.e. 46.2%. – For S. Korea the 8.8 million Internet enabled
handsets correspond to 33% of the 26.8 million activated M phones by year-end 2000. And then it should
be remembered that there were also many deployed I-SMS enabled handsets in S. Korea by year-end
2000, namely almost 7 million, i.e. another 26% of the 26.8 million registered M phones. The reported
statics do not tell to what extent the WAP and/or I-SMS ability (the 33% plus 26%) was actually being used.
Deployed I-SMS and WAP handsets in S.
Korea by operator, end of March 2001
Deployed WAP and I-SMS handsets

6
5 I-SMS
4 WAP
3
2
1
0
om
l
e
m
te
el
co
co
ee
.c
iT
le
le
M
Fr
eg
Te
Te
KT
KT
gs
LG
SK
in
Sh
Sources: As previous graph. - Note: Total WAP, 9.9 million; Total I-SMS, 8.6 million.
PS: We do not know, how many of the deployed handsets were actively used for WAP (or I-SMS).
Taiwan - SMS
Taiwan had the highest reported mobile phone density of any country in the
world by the end of year 2000: 80.24% (www.dgt.gov.tw/). ARPU is relatively
low, though, 25 Euros per registered user per month (2000). 21% of the 17.9
million registered M phones by year-end 2000 were pre-pay.
There are four big and two smaller mobile network operators in Taiwan, all of
which are running GSM networks. However, by the middle of year 2000 SMS
interoperability was not yet established, although it was hoped that it would be
established before the end of 2000. There is not a single piece of data
available for the volume of SMS sent through the mobile networks in Taiwan in
the year 2000, and it must be taken for granted that the SMS volume was
minimal in Taiwan in year 2000.
It seems that there is every reason for national telecom regulators to step in
and demand that SMS interoperability be established ASAP in those countries
were this has not yet been implemented, since SMS is a useful service for
consumers and an interesting revenue source for operators. Without
interoperability, experiences from all across the world show that SMS is nearly
a complete no-go - unless one single operator accounts for at least 50% of the
market. This is the case even in countries where GSM is dominating or even
the only type of network (e.g. in Taiwan).
Taiwan - WAP
WAP on 2G was introduced by Taiwan Cellular Corp. (TCC, the largest local mobile
network operator) in Nov. 1999, but WAP on 2G got a slap by consumers in Taiwan
(just like in the rest of the world) according to a widely published survey by Tamkang
University in April 2000 (”WAP considered expensive and slow”). By around the middle
of year 2000 KG Telecom (who had about 20% market share by the end of year 2000)
stated that they had just 10,000 subscriber on their WAP service (”Converging in
Taiwan”, www.telecomasia.net/, Oct. 2000, Interview with the COO of KG Telecom, the
second largest mobile network operator in Taiwan, with 20% market share by the end
of year 2000). However, during the first half of year 2000 there was a shortage of WAP
enabled handsets, and those which were available were relatively expensive.
Now (in 2001) Taiwan (e.g. TCC) seems to be waiting for GPRS (2.5G) before too
many further wireless Internet activities are undertaken, … which ”everybody” might as
well have done in the first place, right? This upgrading is scheduled for completion in
2001 as far as the networks are concerned, after which GPRS handsets will also have
to start to gradually gain a significant share of the installed base of mobile phones (in
Taiwan – as elsewhere). How many (2G) WAP users there were in Taiwan by the end
of 2000 is hard to tell from published sources. However, if KG Telecom increased their
installed base from 10k to max. 100k during the second half of year 2000, and their
share was 20%, a crude estimate would be up to 500,000 by year-end 2000, or about
2.8% of the registered users. This is close to the W. European average of 3.1% M
phones used for WAP out of all the registered M phones by year-end 2000.
SMS usage in Singapore
The three main operators in Singapore (1. SingTel Mobile, 2. MobileOne,
3. StarHub) have all got GSM networks. M1 offers free SMS’ within certain
limits, even across networks. By early 2001, the three operators convey
seven million SMS per day, with three for M1, two for SingTel and two for
StarHub (www.cnet.com.sg/Handphones/smsfeature/ss06.html, ”SMS is
sizzling”).
M1’s reasoning behind the offer of largely free SMS: ”Getting users hooked
on to .. text services on cell phones .. sets the stage for future services
when newer networks are set up for faster Internet access.” (”M1 sees
greater profit gain in 2001 from data service”, Bloomberg according to
http://singapore.cnet.com/, 19 Feb. 2001).
This is very much in line with the earlier mentioned ”shirt and tie parallel”.
Cheep SMS to get customers onto the network (”into the shop”) so that
they are captive when more expensive 3G services become available.
WAP usage in Singapore –
compared with Europe
In Singapore, there were 2.64 million activated M phones in Feb. 2001 (IDA). At the same
time the number of mobile devices accessing the Internet was estimated to be 180,000, i.e.
about 7%. (http://business-times.asia1.com.sg/, ”Huge opportunities in mobile Internet” by
Andy Quak, 4 June 2001).
We must assume that the mentioned 180k are devices actively used for accessing the
Internet, not just the installed base of Internet enabled devices, since there may very well
be at least a factor two in difference between the ”no. of mobile devices accessing the
Internet” and ”no. of devices actively used for accessing the Internet”.
For comparison, this is about twice the W. European average, since in W. Europe about
3% of the installed base of mobile phones was actively used for WAP by December 2000:
15 million WAP enabled phones, of which 7.5 used for WAP, out of 244 million registered
mobile phones by year-end 2000 (7.5/244=3.1%).
On a second count, Singapore was on par with W. Europe in the year 2000: In Singapore,
data contributed 6% to the ARPU of the mobile network operators – projected to increase
to 25% by 2003 (Yankee Group according to presentation by the Chairman of IDA
Singapore, 22 May 2001). For comparison, this writer’s corresponding estimate for W.
Europe is a contribution of 5.4% data to ARPU for the year 2000 (with a projection for 2003
to 15%).
SMS and WAP usage in
Australia – year 2000 in review
1) For SMS interoperability – a condition for
significant uptake of the service – was agreed.
2) WAP services were put into commercial use.
3) GPRS trials were conducted:
• ”The short messaging system (SMS) became more useful during the year as the three major
mobile carriers agreed to interconnect their services so that messages could be sent from any
mobile handset to any other and not restricted to a single network”.
• ”Carriers commenced trials and then commercial services of a number of new technologies,
including Wireless Application Protocol (WAP) and the subscriber identity module (SIM)
application toolkit; and
• Telstra, C&W Optus and Vodafone conducted general packet radio service (GPRS) trials with
services to be available in late 2000 or early 2001.”
Source: ”Summary of the Telecommunications Performance Report 1999-00”,
www.aca.gov.au/publications/reports/s105_report_99-00/summary_s105_1999-00.htm
PS: In March 2001 the 3G Spectrum Auction ended. For results see: www.aca.gov.au/media/2001/01-20.htm
Status of WAP usage in
Australia – end of year 2000
• By year-end 2000 there were 10.3
million registered mobile phones.
• About 1% of these were actively
used for WAP services.*
Telstra accounted for 46% of the 10.3 million registered mobile phones in
Australia by Dec. 2000 and reported 65,000 registered WAP users by Dec. 2000,
after having introduced WAP services as early as Dec. 1999.
•Note: ”According to Gartner, Australians make up a mere 0.43 per cent of the Asia-
Pacific's 24.9 million mobile internet users [0.43%*24.9m=107k]. Roughly in line with this
estimate, IDC puts the total number of mobile internet subscribers in Australia at only
98,200.” Source: New message system still over the horizon, Dorothy Kennedy,
28/02/2001, afr.com/specialreports/report3/2001/02/28/FFXX8JSLLJC.html
SMS usage in Australia – year 2000
All the three major mobile network operators in Australia have published
statements about the No. of SMS sent during individual quarters of the year
2000. Therefore it can be said with a fair degree of certainty that about 850
million short text messages were sent across the mobile networks in
Australia during the year 2000. This translates to 8.6 messages month per
registered mobile phone. – This is exactly half as many in W. Europe, where
an average of 17 SMS per month were sent per registered mobile phone per
month in the year 2000. The global average was 14.
PS: For all countries there are two reasons why the writer keeps writing ”per registered
mobile phone”, and not ”per user” or ”per person”:
1) Not all registered mobile phones are actually being used. In particular, this pertains
to pre-paid schemes, where there may be differences between operators and between
countries as to when a pre-pay phone is no longer in use. As pre-pay phones gains a
larger and larger percentage of all mobile phones in use, this issue becomes more and
more important. For post-pay users it is more clear when a subscriber has been lost.
2) Some persons actually use more than one mobile phone.
SMS usage in New Zealand – year 2000
In NZ there are two mobile network operators:
Telecom Mobile (NZ) 1.2 million reg. users, Dec. 2000.
Vodafone NZ 753,000 registered users, do..
With Telecom Mobile (NZ) * text messages can only be sent from certain handsets, the Nokia 5120iA or
6120iA (among those stocked by Telecom NZ). This alone indicates that text messaging is not much
used by the mobile customers of Telecom Mobile (NZ).
Furthermore, interoperability between the two networks with respect to SMS was probably not in place in
the year 2000, and this appears still to be the case by the middle of 2001.**
This indicates limited SMS usage in the year 2000 in NZ in general.
Vodafone NZ, who is running a GSM network, stated in Feb. 2001 that ”texting is enormously popular”.
No specific numbers were stated, though. However, with 5.5% Vodafone Pacific under one matched
Vodafone UK with respect to revenue generated from mobile text messaging as percentage of service
revenues during the 12 months to end of March 2001(Vodafone plc press release dated 25 April 2001).
The same was not the case for Internet data (WAP).
Note: * Telecom Mobile is a wholly owned subsidiary of the incumbent, Telecom NZ. Telecom Mobile (NZ) is running an
AMPS/DAMPS mobile network. AMPS, Advanced Mobile Phone System, is an analogue network. DAMPS is an enhanced
digital variant to AMPS. Telecom Mobile (NZ) is gradually rolling out a digital CDMA network, which will support SMS (two
way messaging) and WAP, among other things.
** ”Text Messaging - A quick and easy way to send instant text messages between Telecom [NZ] digital mobiles.” FAQ.
WAP users in New Zealand – Dec. 2000
Telecom Mobile (NZ) started WAP trial in in June 2000. In May 2001 in was announced
that Telecom Mobile (NZ) will implement the WAP portal djuice™ (of Telenor). Service
will be marketed during the second half of 2001. – This also means that by the end of
year 2000, there were probably rather few WAP users among the customers of the
incumbent operator. WAP functions and topics will include: Email, bookmarks,
infotainment, organiser, home grown (various), and Go to (URL).
Vodafone NZ introduced the a WAP portal called My Vodafone in April. By Dec. 2000 in
counted 65,000 registered users. Assuming up to 50% of them (33k) were active WAP
users, this means that 4.3% of Vodafone NZ customer base were active WAP users by
the end of year 2000 (not even including those added during the last two weeks of the
year). This relatively high percentage – above the average in W. European – was one of
the reasons why the Vodafone Group chose Vodafone NZ as the first to experience the
Group’s new mobile portal called Vizzavi.
Summary of WAP usage in NZ – end of year 2000:
Among all the almost 2 million registered mobile phones in NZ by the end of year
2000 about 35,000, corresponding to 1.7%*, were actively used for WAP. This
percentage is higher than the 1%* for Australia, but lower than the 3.1%* for W. Europe.
* Note: Estimated No. of WAP phones actively used for WAP in percent of all registered mobile phones.
Turkey: Heavy SMS usage.
The two main mobile network operators are Turkcell and Telsim, with about
two thirds and one third of the 13.7 million subscribers by the end of year
2000, up from 8 million by the end of 1999.
Turkcell had 10.1 million users by the end of year 2000, up from 5.5 million by
the end of 1999. Turkcell conveyed a total of 2.55 billion SMS’ during 2000,
corresponding to over 27 SMS’ per registered M phone per month. This is
62% higher than the W. European average of 17 SMS’ per registered user per
month in the year 2000! - Telsim offers all the typical value added WAP
information services on SMS as well: Weather forecast, dictionary, horoscope,
lotto, exchange rates, etc. (12 Jan. 2001). And so does Turkcell.
Telsim claims that over 70% of its subscribers have used SMS (”SMS more
popular than WAP mobile services”, biz.yahoo.com/ifc/tr/news/32901-1.html ),
which probably means that Telsim’s customers are just as heavy SMS users
as those of Turkcell.
This in turn means that the total estimated SMS volume in Turkey was quite
significant during the year 2000, namely about 3.5 billion.
Turkey: Little WAP usage by the end of year
2000 - on 2G – but 2.5G implemented in 2001
In Turkey the story was the same as everywhere else, and all the well known
early limiting factors of WAP on 2G were reported: High WAP handset prices,
design giving bulky feel, high prices for WAP services, complex set-up
process, connection delays (cf. again the reference mentioned under SMS).
Telsim had only 10,000 WAP users (around the end of year 2000), i.e. less
than 0.3% of its registered users by year-end 2000. The percentage was
probably no higher with Turkcell, since Telsim had eliminated its monthly fee
for WAP users, which Turkcell had not. So, in Turkey there were probably only
30,000 WAP users by the end of year 2000, corresponding to about 0.22% of
the registered users by year-end 2000 (compared to about 3% in W. Europe).
By the spring of year 2001, both Turkcell and Telsim had implement GPRS
networks (2.5G) with national coverage.
It is now possible to make the Telsim WAP settings by SMS (18 June 2001).
E. Europe – SMS (1)
There were 27.1 million registered M phones in E. Europe (including Russia, but not
including Turkey, cf. earlier slide), up from 14.3 million by the end of 1999.
In the Czech Rep. there were 4.3 million registered M phones by the end of year
2000, up from just under 2 million by the end of 1999. Revenue from SMS
exceeded 10% of total operator revenue (”M-commerce brief” by Dec. 2000, cf.
www.mac.doc.gov/eebic/countryr/czechr/market/czmcommerce.htm). This indicates
that SMS usage in the Czech Rep. was above the W. European average of 17 SMS
per user/month for the full year 2000. It is assumed that 25 SMS per user per month
were sent during year 2000 (and for Dec. 2000 the average was higher, cf.
summery of the earlier mentioned study,
www.mac.doc.gov/eebic/countryr/czechr/market/czmcommerce.htm). This
translates to almost 940 million SMS during the full year 2000 in the Czech Rep.
In Poland there were 7.1 million registered M phones by the end of 2000, up from 4
million by the end of 1999. The leading mobile network operator in Poland, PCT,
reports increasing SMS-usage: 11 SMS per subscriber/month in Q1.2001, up from
nine SMS per subscriber/month in Q4.2000, and 4.8 in Q1.2000 ((www.eragsm.pl) .
So, the average for the year 2000 was about 7 SMS per subscriber/month – or 464
million SMS during year 2000 for Poland as a whole, using PCT as indicator.
E. Europe – SMS (2)
(Continued)
In Hungary there were 3.1 million registered M phones by the end of 2000, up
from 1.6 million by the end of 1999. The leading mobile operator in Hungary,
Pannon, conveyed 200 million SMS in year 2000, and expects the volume to
reach 360 million in 2001. With about 1.3 registered users in by the middle of
2000, and about 2 million by the middle of 2001, the mentioned numbers
correspond to about 13 SMS per user/month in year 2000 (close to the W.
European average of 17 per user/month in year 2000) and about 15 SMS per
user/month in year 2001. Using Pannon as an indicator for Hungary in general,
the total volume of SMS in Hungary was around 360 million in year 2000.
In Romania SMS interoperability between the mobile network operators was
established relatively late, namely in April 2001, which indicates that SMS
usage was quite limited in Romania in the year 2000.
SMS in E. Europe and Turkey vs.
SMS in W. Europe – year 2000
In summary, it is estimated that the SMS volume in E.
Europe as a whole (not including Turkey) reached 9 SMS
per user per month in average in year 2000 and a total
volume of 2.3 billion during the full year 2000.
This is about two thirds the volume in Turkey, which was
3.5 billion. Eastern Europe and Turkey under one
mustered a volume of 5.8 billion SMS in year 2000 – or 15
SMS per user/month, which was almost on par with W.
Europe’s 17 SMS per user/month!
PS: However, in absolute terms, with its larger installed base of mobile
phones, the volume in W. Europe (40.7 billion in year 2000) was of course
considerably larger than the 6 billion in E.Europe+Turkey under one.
E. Europe - WAP
WAP usage was probably quite limited all across E. Europe by Dec. 2000,
although many operators had implemented WAP services.
The Czech Rep. was probably in the lead in the field of WAP usage by the end
of year 2000 in E. Europe, at least in relative terms. In the area of mobile
banking GE Capital Bank was leading by the end of 2000 with 69,000 clients (cf.
earlier ref.). Other popular services include travel information, cultural events
and sports information, and most likely also mobile access to e-mail accounts.
So, there were probably at least 150,000 WAP users in the Czech Rep. by the
end of year 2000, i.e. at least 0.15/4.3=3.5% of the registered mobile phones in
use, which exceeds the W. European average of 3.1%. – For E. Europe as a
whole, it is thought that there were about 1% WAP users among the E.
European mobile phone users by Dec. 2000.
In the middle of July 2001, EuroTel, the leading mobile network operator in the
Czech Rep., launched location sensitive services (location based services, LBS)
in a mobile guide on its WAP portal called Juice: ”The Mobile Guide offers a
unique possibility of finding bank ATMs, hospitals, hotels or public transport
connections by a mobile phone”.
Israel – SMS (1)
During the year 2000 an average of 16 million SMS messages were being sent every
month in Israel, according to ”Overview of the Telecommunications sector of Israel”, Office
of Telecommunications Technologies. In other words, 16*12 = 192 million during 2000, or
just under 5 SMS per user/month during year 2000.
However, the only GSM operator in the market, Partner (Orange), accounted for the
majority of the total SMS volume during year 2000 in Israel, although it ranks only third in
the market in terms of share of mobile phones in use, after having commenced operations
in the beginning of 1999. Partner reached 38 SMS per month in March 2001 (press
release 3 April 2001). Data accounted for 3% of Partner’s total revenues in Q1.2001.
Assuming a steady increase since early 1999, the average No. of SMS sent per month
per registered user in the Partner network may have been as high as 27 SMS per
user/month for the year 2000, i.e. much higher than the overall average of 5 SMS per
user/month in year 2000 (cf. above).
The two other major mobile network operators in Israel, CellCom and Pelephone, uses the
TDMA and CDMA network standards, respectively.
(http://cellphones.about.com/cs/technologies/.) - For TDMA networks in general, two-way
SMS was not implemented commercially until the beginning of year 2000, and for CDMA
networks late in the year 2000. CellCom of Israel, who is running a TDMA network, was
among the first operators in the world to commercially launch two-way SMS (along with
AT&T in the USA).
Israel – SMS (2)
During March 2001, 82.5 million SMS were sent by two out of three mobile
network operators in Israel (www.wireless.co.il/icd.asp): Partner (Orange): 45
million, cf. also the earlier mentioned press release; CellCom: 37.5 million.
So, by Q1.2001, SMS is certainly up and running on CellCom’s TDMA
network (as well as on Partner’s GSM network). No numbers available yet for
Pelephone’s CDMA network (www.wireless.co.il/icd.asp). - By the end of the
same month (either January or March 2001) there were 4.5 million registered
users in Israel, i.e. 18 SMS per user in March 2001. Obviously there is a
steep increase in the monthly volume of SMS’ sent across the mobile
networks (i.e. GSM and TDMA for the time being) in Israel.
The price per SMS in Israel is relatively modest: About 0.06 Euros (0.22
NIS), a little lower for new player in the messaging field, CellCom, and a little
higher for Partner (Orange) cf. www.wireless.co.il/icd.asp. For comparison,
average revenue per SMS in W. Europe was 0.10 Euros in the year 2000
(including some value-added and higher priced SMS’, though).
SMS interoperability between GSM, TDMA and CDMA
networks is no longer a technical problem
Comverse offers a SMS Gateway which enables short messaging among GSM, CDMA and TDMA
networks and among all SMS application protocols (www.comverse.com). And by the way: ”A
substantial portion of the Comverse' research and development and manufacturing operations are
located in Israel.” (Comverse’s Form K10 filing at Nasdaq for the year 2000). So, with that particular
or similar SMS gateways, there should be no interoperability problems for SMS, neither in Israel,
nor in the USA (or anywhere else), were all the same tree types of networks are used.
Several other suppliers of Short Message Service Centers (SMSCs) offer – or will be offering -
gateways which enable the transfer of SMS’ between different types of digital wireless networks.
Logica and CMG are the two largest SMSC suppliers worldwide.
Logica: ”As the carriers continue to look for other wireless data opportunities, the platforms will
migrate to offer features such as interworking SMS between carrier networks and SMS to interface
with email,” Dallas, TX, 30 Oct. 2000, www.logica.com/news/press/pr603.html.
CMG, 12 July 2001: ”New Product Initiative Enables Interoperability of SMS Over Multiple
Wireless Technologies. - Called the Inter-SMSC Router (ISR), the new product initiative is based
on CMG's flagship SMSC product line. The ISR supports interconnection of Short Message Service
Centers (SMSCs) from GSM, TDMA, and CDMA networks.”
TCS, TeleCommunication Systems, Inc. of Annapolis, Md., USA, also offer a two-way Short
Message Service Center (SMCS), ”capable of supporting all three air interfaces (CDMA, TDMA and
GSM)”, cf. e.g. press releases 13 March 2001 and 28 June 2001. TCS is ”the largest provider of
messaging in CDMA networks”. TCS cooperates with Lucent.
Other SMSC suppliers include Sema, ADC and the major mobile network equipment
manufacturers, cf. e.g. SMSCs Uncovered, Lehman Bros., Nov. 2000,
www.airslide.com/pdf/Lehman.pdf - or later reports from www.morganstanley.com.
Israel – WAP
In May 2001 it was reported that GoNext, a wireless portal

service in Israel, had reached 100,000 subscribers for its mobile
Internet service 10 months after launch
(www.wireless.co.il/full.asp?248 ).
So, there were probably at least 100,000 WAP users in Israel by
the end of year 2000, corresponding to about 2.4% of the 4.2
million registered M phones in the country by the end of year
2000. This was slightly below the W. European average of
3.1%.
South Africa - SMS
The leading mobile network operator in South Africa, Vodacom,
reported a volume of 20 million SMS per month in September 2000
(press release, 2 Oct. 2000). – This probably translates to at least
240 million for the year 2000, since in the month of July the volume
was as high as 25 million.
”Vodacom (Pty) Ltd is the leading cellular network operator in

South Africa and has a market share of 60%,” according to
themselves. So, the estimated total SMS volume in S. Africa was
about 240 / 0.6 ~ 400 million in the year 2000. – There were 7.1
registered M phones in South Africa by the end of year 2000, up
from 4.4 million by the beginning of the year. – The number of
SMS sent per user per month in S. Africa in the year 2000 was
thus about 6.
South Africa - WAP
”Almost 600,000 users have registered with

Exactmobile, of which only 20,000 are occasional Wap
users. Only 5,000 use it five times a week or more.”
(”Mobile Commerce - A pedestrian business?”
www.futurecompany.co.za/2001/03/16/covstory.htm).
With Exactmobile.co.za ”Vodacom and MTN users
equally welcome.”
A global end of year 2000 status for WAP
and similar modes of microbrowser based
limited Internet access
A B C
Active users Internet enabled All M
1. Japan ~13.4* 26.8 58
2. W. Europe 7.5 15.0 244
3. S. Korea ~4.4 8.8 ** 27
4. USA 3.7, max ~20 *** 109
5. China 0.8, max 1.6 85
6. ROW 2.0 4.0 199
Total 31.8 million Not really relevant 722
(*) Japan: Active users does not include those who only use e-mail (short mobile text messaging). Crude estimate only.
(**) Korea: WAP enabled only. Does not include those who are capable of accessing information services via SMS only.
(***) In the USA only about than 1 out of 6 ’Internet enabled’ phones were used for partial Web access. – Some of the
mentioned active wireless Internet users in the USA use other mobile devices than handsets for accessing the
Internet (e.g. PDAs in combination with mobile phones).
Mobile Internet content and mobile
Internet access, including m-@ :
WAP ... and more:

wml … xHTML*,
maybe simply HTML, eventually!
Nothing would have a broader appeal.
* The Extensible Hyper Text Markup Language is a step towards WAP/Web
convergence, and received wide industry support from handset manufacturers
as well as mobile network operators in an announcement from March 2001,
cf. www.irml.org/html/articles/xhtml.html; www.w3.org/TR/xhtml1/
An accountant’s view of M-services
SMS WAP M-commerce
Estimated mobile network services revenue by
country or region of the world, year 2000: 289
billion Euros in total, of which W. Europe 80 bn.
ROW
22% W. Europe
28%
China
8%
Japan USA
19% 23%
Source: Own estimates based on review of annual accounts of major operators.

Note: The following approximate ARPU figures – which exclude revenue from handset sales - per month apply, in combination
with the earlier shown middle of year 2000 user numbers. W. Europe: 33.50 Euros; USA: 56 Euros (1$~1.0854 Euro, year 2000)
– including some paging revenue; Japan: 87 Euros; China: 31 Euros; ROW: 29 Euros; World: 40 Euros.
Cross-checking the global mobile
network services revenue estimate
ITU, the International Telecommunications Union, estimate that
mobile revenues were USD 273 billion in the year 2000 (ITU
Telecommunications Indicators Update, April-May-June 2001 p. 3).
With 1$ = 1.0854 Euros in year 2000, the ITU estimate corresponds to
296.3 billion Euros. - This writer’s estimate is ”just” 289 billion Euros.
It is not possible to pin-point the exact reason for the discrepancy.

However, there is an element of judgement involved in the process of
boiling the network operators total reported revenue down to mobile
network services revenue (i.e. excluding non-mobile services and
excluding revenue from handset and other hardware sales).
PS: Let us make a second comparison. EMC, at a MorganStanley.com presentation 29 March 2001, showed a graph
indicating an ARPU of around $41.50 in the first half of year 2000, and around $40.00 in the second half. I.e. an
ARPU of around $40.75 per month for the year 2000, according to the EMC graph, which is based on a sample of 62
markets. With around 600 million registered mobile phone users as a weighted average throughout year 2000 (cf.
earlier slide), this translates to $40.75 * 12 * 600 = $293.4 billion (or: 318.5 billion Euros). – We would have to
assume that the EMC ARPU is based on ”top-level” reported operator revenue figures (which include revenue from
handset - and other hardware - sales and possibly some non-mobile service revenue).
Discussion and global view
PART 2:
North American approaches
to wireless Internet
Can it be worked out what the
winning combination for mobile text
messaging in the US will be? (1)
USA Japan Philippines Europe

Price per SMS Low Low Low High
Interoperability Problem OK OK OK
Quality of fixed
line telephony Good Good Poor Good
Price of fixed
line telephony Low Medium High (?) Medium
Pre-pay usage Not yet No Yes Yes
Many rich? Yes Yes No Medium
Many poor? Yes No Yes Medium
(Continues)
Can it be worked out what the winning combination
for mobile text messaging in the US will be? (2)
No, it cannot be worked out from the table in the previous slide .. but:
1) For professional users ”unified messaging” or ”mobile instant messaging” which facilitates
communication between all types of devices looks promising. However, at least during the
next couple of years and probably permanently, very simple things which already exist today
like text message alerts along the lines of ”there is an e-mail - or voice mail - for you” with
simple action choices are bound to account for the vast majority of business or work-related
text messaging.
2) For a large part of private users, pre-pay schemes plus low cost SMS: It’s appealing
elsewhere, so why not in the US?
For example in Norway, Finland and the UK, 9 out 10 youngsters in certain age groups have got mobile
phones, and you can be sure that pre-paid is the preferred scheme, and you can be equally sure that
almost all use SMS. In the USA only 2 out of 10 teenagers have got mobile phones (”9 out of 10 young
people have their own mobile phone”, www.ssb.no/english/subjects/07/02/30/medie_en/; www. Nordic
WirelessWatch, wireless.talentum.com/, 18 July: ”Survey finds almost all Finnish teens own mobile
phones; 7 July: ”UK kids are heavy cellular users; 29 May: ”US operators discover clues for teen market.”
– This is more than a clue for a winning combination, isn’t it?. The teenagers – as well as many others
apart from the self-employed and those who get their phone bill paid by their employer - will want pre-pay
schemes. And they will be heavy SMS users if the phones and the mobile networks support it. Definitely.
Only caveat is that SMS interoperability is not in place, and some network types have just barely
introduced short text messaging, technically, so only half of the winning combination is available. Alas. To
see how pre-paid schemes work see e.g. nationalprepaid.com (who also claims to offer handset prices
under $20, although that product/price combination is not in their online catalogue). (continues)
3) To move just a fraction of fixed-line instant messaging (IM) – or e-mail
communication in general - to wireless would be very interesting.
So, watch the big IM players such as AOL and MSN going mobile, e.g.: ”MSN
Mobile continues to enable new opportunities for two-way wireless
communications”, press release from Microsoft Corp., 24 July 2001: ”New
version of MSN Mobile makes MSN Hotmail and MSN Messenger service
available to wireless carriers”. AOL Mobile also to be watched. And Yahoo!
Mobile. However, the ’real-time’ feature of IM is not a feature in SMS. But SMS’
are transmitted very swiftly, and if there are nobody to read and respond to the
SMS immediately it is just stored until it is retrieved. So, will people want to be
simultaneously online, like in IM, or will they just communicate swiftly in writing
like in SMS and in fixed-line e-mail. Probably the latter. That is, SMS or similar
is thought to be better suited for wireless communication than instant
messaging in the fixed-line sense.
Anyway, www.followap.com been there, done that. Was commercially installed
installed with Eircell (now part of Vodafone) in Dec. 2000. Followap Stroke deal
with the entire Vodafone Group recently (16 July 2001).
PS: The one-to-many text messaging service introduced by Eircell on 25 June 2001 is an
interesting facility seen from an m-commerce (m-advertising) point of view.
4) For all: Free choice of text communication device, be it fixed-line or

wireless, anywhere, probably with IP-based e-mail as the dominant non-voice
application, given the strong position of fixed-line Internet usage in the USA. In
the US the role of wireless text messaging may be and remain a supplement
to fixed-line e-mail and WWW usage. To try to make non-IP based text
messaging fly in the USA may be unfruitful.
5) For handsets, which will remain the dominant wireless device: Access to a
fair number of important WAP-sites with location based services (info.), games
/ jokes / horoscopes, news, financial info. services and weather / traffic / travel
related info. etc. from WAP-enabled GPRS (2.5G) handsets.
6) In due course, this will be interesting - for a minority : Fast wireless access
to full html web-pages – i.e. the entire World Wide Web - from laptops,
handhelds/PDAs and smart-phones, although not necessarily via 3G.
(For a discussion of this theme, see ”Discussion and global view PART 3”).
The US paging market vs. the
W. European SMS market (1)
(1) An early report from TIA, www.tiaonline.org/pubpol.pdf (p.6 of 7) indicates
that paging was a significant contributor to US wireless communications
revenue in 1999 (namely as much as $5.5 billion).
(2) A second source, www.allnetdevices.com/news/9912/991202paging.htm,
based on a study from Dec. 1999 by The Strategic Group, pegs US paging
revenue at about $4.4 billion in both 1999 and year 2000, mostly one-
way paging, but with quickly increasing revenue from ”advanced
messaging” (including simple two-way text messaging) and falling revenue
from one-way paging till 2004.
(3) Finally, the FCC (www.fcc.gov, Trends in Telephone Service, 21 Dec
2000) state that ”paging and messaging service” revenue reported to them
(by 427 operators) was $3.23 billion back in 1999.
The US paging market vs. the
W. European SMS market (2)
There are different estimates (or actual reporting) of the value of the
US messaging market. However, the middle one of the three estimates
on the previous slide, the $4.40 billion for the year 2000 (of which one-
way paging alone accounted for $4.14 billion). This was the Strategic
forecast as referenced, which corresponds to 4.8 billion Euros (most
of which paging).
So, the US wireless messaging services market, which used to be a
paging market only, is significant, and has been so for years.
In absolute terms, its value not only matched, but most likely exceeded
the W. European SMS market, which was estimated by this writer to
4.15 billion Euros in the year 2000 (not including WAP and m-
commerce revenues, which were limited, though).
Two-way text messaging in the USA (1)
While the value of the US one-way paging market is comparable to the European SMS
market, obviously the user groups of these services are entirely different. Paging is mostly
used by professionals, while SMS is mostly used by private users (for leisure and social
purposes). This indicates that there is a large untapped short mobile text messaging
market waiting for the mobile operators in the USA, provided the interoperability issue gets
solved. The growth in the US (two-way) text messaging market will most likely go hand in
hand with an increased use of pre-paid schemes.
It remains to be seen if future American mobile (two-way) text messaging users are going
to be keying-in a mobile phone number (like European SMS users) or an e-mail address
(like some other mobile text message users) when they will send mobile text messages. -
Also, it remains to be seen if two-way SMS will ever ”Yell S.O.S. in the U.S.” (cf.
www.mcommercetimes.com/Services/104, 2 April 2001; and ”Walls Between Wireless
Instant Messengers Collapsing”, 18 July 2001, www.mcommercetimes.com/Services/150).
However, in Israel there is certainly already a lot of ”yelling on SMS”, not only on GSM but
also on TDMA and in due course on CDMA (cf. separate slides on SMS usage in Israel).
The interoperability problem may by less of an issue if an IP based approach to mobile
text messaging will become dominating and this could also make it easier to implement
advanced types of messaging. Furthermore, Americans are no doubt already the most
heavy users of fixed-line e-mail in the world. ’Everybody’ has already got an e-mail
address, which is known by their peers, so it may be a natural thing for Americans to use
an e-mail address also for mobile text messaging.
1) Verizon: According to Vodafone press release, 25 April 2001, in

March 2001 the percentage of messaging data (’text messaging’, SMS
or similar) was zero, whereas Internet data was 0.8%, up from 0.6% for
the 12 months ending 31 March 2001. On 29 January 2001 Verizon
announced the introduction of its ”Mobile Messenger” service in many
major US cities. Verizon waived all messaging fees for the first two
months after the introduction. - Obviously, no SMS-like two-way text
messages were sent during the year 2000.
2) Cingular Wireless (SBC, BellSouth): ”Cingular will be offering

wireless Internet service and Short Messaging Service (SMS) in all
major existing markets during year 2001.” (CSFB, Global
Telecommunications CEO conference, 5-7 March 2001,
www.senteco.com/telecom/bellsouthfull.htm. - In other words, no
significant SMS volume during year 2000, i.e. largely zero.
3. AT&T Wireless: ”AT&T Wireless, which launched its SMS offering in late
October 2000, counted 700,000 SMS subscribers in the first 10 weeks that the
service was available. Currently, about 1 million mobile-originated SMS messages
are sent per day on just the AT&T Wireless network.” Source: ”SMS Meets the
United States. Can SMS achieve the same popularity in the United States as it has
overseas?” By: Betsy Harter, www.mbizcentral.com/m-business/new/05_smsus.
The same one million per day number was mentioned by J. Bamrun, ”Text
messaging comes to the United States”, 26 April 2001, www.thefeature.com. - For
the first two months, Nov. and Dec. 2000, the SMS volume of AT&T Wireless was
probably no more than 40 million in total.
4. Sprint PCS is running a CDMA network. The possibility to send SMS from a
mobile phone (Mobile Originating) on CDMA in general was only introduced
commercially by the end of year 2000, thereby enabling two-way text messaging
on the third of the three main types of digital networks: Telstra, Australia, press
release dated 20 Nov. 2000. Mobile Terminated SMS, the sending of SMS’ to
mobile devices, was already possible before, but ’down under’ that appeared not
to contribute anything to the total SMS volume of Telstra before the
implementation of two-way SMS on CDMA (since all the SMS volume reported by
Telstra in Oct. 2000, 4*40 million, was accounted for by their GSM network). So,
this indicates that there were hardly any SMS volume in the CDMA network of
Sprint PCS during the year 2000.
5. Nextel, who accounted for about 6% of the the US cellular/PCS base by
year-end 2000, transmitted the following volumes of so-called Internet text
messages:
• Q1.2000: 11.0 million; Q2.2000: 14.7 million.
• Q1.2001: 26.4 million; Q2.2001: 30.2 million. (Quarterly financial
releases).
For the year 2000, the volume was probably in the 65 to 70 million range.
6. Alltel: Since March 1999 Alltel has offered a service called Digital
Advisor, which is a short messaging service that allows a subscriber to
receive voice mail notification, numeric pages, and pre-programmed text
messages (such as "call home" or "check e-mail") on their wireless phone.
This service do not appear to include two-way text messaging. However,
following a gradual roll out from September to Dec. 2000, it became
possible for Alltel’s customers to send and receive e-mails to/from Internet-
enabled (WAP) digital wireless phones, and access various information
services (cf. press release, 26 June 2001). – It must be assumed that the
volume of SMS’ or similar sent through the CDMA network of Altel was
small during the year 2000.
7. VoiceStream is the largest GSM network operator in the US. 100% of its customer
base has two-way messaging capable phones. By the spring of year 2000 VoiceStream
processed over one million text messages a day on its networks (press release, 10 May
2001). – So, for the full year 2000, allowing for some increase as in the rest of the (GSM)
world to almost 1.4 million messages/day in average for the year 2000, VoiceStream was
clearly in the lead both in relative and absolute terms with about 500 million two-way text
messages (SMS) during the full year 2000, corresponding to about 14 SMS per
user/month, which is not far from the W. European average of 17 SMS per user/month for
the year 2000.
In May 2001 VoiceStream introduced a new two-way mobile text messaging service called
Ping Pong. – As hardware the Motorola V100 is offered, which ”features a full keyboard
and oversize display for fast and easy text messaging, plus a full-featured wireless
phone.” The Ping Pong service allows users to ”send, receive and reply to text messages,
receive information alerts from the Web and have access to AOL Instant Messenger
service (AIM).” * Messages are limited to 140 characters in length (not including the e-mail
address).
8. US Cellular: ”2-Way Mobile Messaging allows U.S. Cellular digital customers to use
their handsets to send, receive and reply to text messages from other U.S. Cellular 2-
Way Mobile Messaging subscribers.” Up to 150 characters. – In other words,
interoperability is not established, which is the typical case between US mobile
network operators.
Summary of the review of the major operators’

volume of short text messages during year 2000:
1. Verizon: None. 2. Cingular: None. 3. AT&T Wireless: ~40 million. 4. Sprint PCS:
None. 5. Nextel: ~70 million. 6. Alltel: Few. 7. VoiceStream: ~500 million. Other US
(mostly GSM) network operators: ~140 million. Total, directly by mobile voice network
operators: 750 million.
To this should be added two-way text messages (SMS or short e-mails to/from mobile
communication devices) which were conveyed by players in the paging-field or others.
- The wireless e-mails (other than SMS’) sent via WAP to/from handsets .. and PDAs
.. or e-mail via laptops are not included.
Two-way text messaging in the USA – Other players
(1): Paging player, with dedicated wireless data
networks, supplementing one-way with two-way
SkyTel
SkyTel (acquired by WorldCom in Oct. 2000), is a leading provider of wireless messaging services in the USA. By the end of year 2000, SkyTel
had 1.3 million units in service, of which 0.7m domestic one-way units and 574k ”advanced messaging units. Total revenues for both types were
$549m in year 2000. – SkyTel introduced a ”two-way wireless messaging service for everyone” called eChat in Dec. 2000, along with the Motorola
Talkabout T900 two-way messaging unit.
By the middle of 2001 Motorola announced that shipment of the one millionth Talkabout T900 2-Way text messaging device, less than a year after
its introduction. In an earlier announcement, from August, it was stated that 1 million ReFLEX protocol based devices had been shipped (mainly in
the US), including the T900 and a handful of other divices (such as the Timeport P935, which has also got a full QWERTY keyboard like the T900),
and that customers included Skytel, Arch, and Verizon Wireless, among others.
The BlackBerry series of two-way text communication devices from RIM in Canada also include a full QWERTY keyboard. For comparison, by the
end of February 2001, the BlackBerry user base had reached 165,000 in North America. BlackBerry is also being launched in Europe, initially by
BT Cellnet in the UK, who is committed to order 175k BlackBerry Wireless Handhelds to be operated over BT Cellnet’s net GPRS network (Annual
Report). The BlackBerry is targeted at professional users (the corporate market).
Arch Wireless
Arch Wireless is a provider of traditional pagin services and two-way messaging services throughout North America. By the end of year 2000 Arch
had a customer base of 11.9 million messaging units in service, after a major acquisition (PageNet). – Of the mentioned No. of units in service,
158k, or 1.3% were two-way messaging devices. The two-way messaging service – ”incorporating send and receive data messaging with wireless
e-mail and instant messaging applications, and other interactive features” - was introduced in August 2000, according to the annual report. Two-
way messaging services revenue was $9.4m, in 2000, most of which was generated in Q4.2000. For the full year 2000, two-way messaging
contributed 1.1% to total revenues (of $851m), and in Q4.2000 under 4.7%. In Q1.2001, two-way messaging service revenue was $17.2m, or 5.3%
of total reported revenues.
”Arch believes the demand for traditional messaging services declined in 2000, and will continue to decline in the following years and that future
growth in the wireless messaging industry will be attributable to two-way messaging and information services.” (SEQ filing)
Two-way text messaging in the USA – Other players (2): Satellite
network operators offering wireless two-way text messaging.
”Motient owns and operates an integrated terrestrial and satellite network that
stretches across North America. Each month, millions of messages travel the
Motient network. The Motient network combines the nation's first and largest
two-way wireless data network with satellite communication.”
www.motient.com/
Motient’s reported Wireless Email (eLink) subscribers:

6/30/00: 15k 9/30/00: 31k 12/31/00: 45k 3/31/01: 63k 6/30/01: 88k
As of Dec. 2000, average revenue per Email subscriber per month was $11.
RESTON, Va., Jul 19, 2001 /PRNewswire/ --

Total Subscribers Surpass Quarter-Million, Fuelled by More Than 24,000 Wireless Email Additions
Motient Corporation (Nasdaq: MTNT) today reported total gross subscriber additions of approximately
31,500 new devices driven primarily by 35 percent sequential growth in its wireless email segment, which
includes the industry leading eLink(SM) and BlackBerry by Motient(TM) wireless email offerings.
The Motient network now supports more than 250,000 users, which represents quarterly growth in net
subscribers of over 24,200. Motient's wireless email segment contributed 24,534 additions for the
quarter, in line with estimates and the result of strong partner relationships and a focused direct sales
effort.
Two-way text messaging in the USA – Other players (3): Satellite
network operators offering wireless two-way text messaging.
Globalstar
Globalstar is a consortium of leading international telecommunications companies originally established
in 1991 to deliver satellite telephony services through a network of exclusive service providers.
Globalstar's constellation of 48 Low Earth Orbiting (LEO) satellites transmits calls from your Globalstar
wireless phone or fixed phone station to a terrestrial gateway, where they are passed on to existing fixed
and cellular telephone networks in more than 100 countries on 6 continents.
By extending their reach, Globalstar complements terrestrial networks, rather than competing with them,
opening up markets and bringing telephony to entirely new areas of the world. Source:
www.globalstar.com/
Globalstar USA Announces Free Trial Of Its New Short Messaging Service (SMS)
Satellite Communications Customers Can Now Send 19-Character Text Messages to Globalstar USA
GSP-1600 Phones During Introductory Period With No Charge
San Francisco, CA, June 18, 2001 - Globalstar USA/Caribbean, a leading provider of satellite-based
mobile communications, today announced an expansion of its data communications product family to
include Short Messaging Service (SMS). For a limited time during an introductory trial period, all
Globalstar USA and Caribbean users can receive 19-character text messages using a GPS-1600
handset anywhere in their home areas free of charge.
Source: Press release.
”Globalstar, a Bermuda-based mobile phone company that transmits calls worldwide using a collection
of satellites, said on Monday that it would reduce its staff by 50 per cent, or 175 employees, to help
ensure it has enough funding to finish out the year. ” (ft.com, 13 Aug. 2001). Results of Q2.2001:
Revenue: $2.3m; Net loss: $145m (similar to Q1.2001); $98m left in cash after Q2.2001.
Two-way text messaging in the USA –
Other players (4): SMS intermediaries
i3 Mobile
•”i3 Mobile's services today reach more than 400,000 paying subscribers on mobile phones,
pagers, PDAs and other wireless devices.” – Revenue was $4.5m in year 2000, .. but
expenses higher.
• ”i3 Mobile's services are available to more than 60% of the North American mobile phone
market through relationships with more than 25 leading wireless network operators … ”
including 5 of the top 8 operators in the US (i.e. No. 1, 2, 3, 7 and 8, cf. earlier slides) - and
the top 3 operators in Canada.
• i3 Mobile ”continue to leverage our position as a leader in SMS (Short Message Service).
We delivered more than 350 million messages in 2000, and we expect voice activated
instant messages will be an important product of ours when it launches this fall.”
(www.irconnect.com/iiim/pages/president.html)
If the 350 million were 60% of the total, then 100% would be just under 600 million. This is
probably both one and 2-way. …
Numbers about the volume of two-way text messages in the USA during the year
2000 are very hard to come by. But here are a few – in addition to the tentative sum
of the top 7 operators, cf. previous slide.
”While text messaging using SMS is almost ubiquitous in Europe, it is rare in the U.S.
-- an estimated 20 million short text messages per month are sent in North America,
compared to over 1 billion a month in Germany alone.” Wireless's missing link, By
Zimran Ahmed and Mark Hurst, 2 Jan. 2001, www.zdnet.com/eweek/ - The mentioned
20 million SMS per month would translate to 240 million for the year 2000.
”According to Mobile Lifestreams, a research company in the United Kingdom, 750
million text messages were sent last year in North America and a projected 10.5
billion by 2004 in the United States alone.” Source: Cell Phone Text Messaging
Grows in Popularity, 28 June 2001, The Miami Herald, Florida via NewsEdge. – So,
the above probably translates to 700 million text messages in the USA in year 2000.
The latter figure is almost the same volume as this writer estimated (750 million).
Status for wireless Internet usage (WAP)
in the USA, end of year 2000 (1)
Surprisingly, there appear to have been 3 million active wireless Internet users in the US
by the end of year 2000:
”Sprint PCS has a strong head start in the wireless data market. We achieved a major
milestone in the fourth quarter, when 1 million or our customers accessed the Wireless
Web – and we believe Sprint OCS can nearly double its penetration of Wireless Web
users in 2001”. Annual Report, 2000.
Furthermore, since Sprint PCS counted 9.85 million customers by the end of the year
2000, the 1 million Wireless Web users translates into 10% of the customer base. This
matches the very highest percentages found among W. European mobile network
operators by the end of the year 2000, namely 10% - like for BT Cellnet in the UK and for
max.mobil of Austria.
”Within five years we anticipate that nearly all of our business customers will be using
wireless data services and roughly 60 percent of consumer customers will be using
Wireless Web services.” Sprint, Annual Report, 2000.
Comment: The US mustered
3.4% Wireless Web users out
Sprint 1 million (1) of 109 million registered M
Verizon 750,000 (2) phone users by the end of
year 2000. – This percentage
Nextel 670,000 (3) fully matches the
Cingular Wireless 570,000 (4) corresponding percentage for
W. Europe, were 3.3% of the
AT&T Wireless 496,000 (5) 244 million registered M
VoiceStream, Alltel 200,000 (3) phones by the end of year
2000 were actively used for
Total 3.7 million. WAP! This finding is most
surprising.
Sources: (1) Sprint Annual accounts 2000. (2) Verizon Communications Annual Report
2000. (3) Peter C. Friedland of WRHambrecht+Co, ”Monitizing the Wireless Internet”, 5
March 2001. – By the middle of 2001, Nextel reported 1.5 million data subscribers, 19%
of Nextel's domestic subscribers. (4) Dan McDonough, Jr., ”Cingular Wireless Plans
$50M Expansion” www.wirelessnewsfactor.com/perl/story/7240.html, 5 Feb. 2001 –
Increased to 689k by the middle of 2001. The number refers to the total ”customer base”
of Cingular Wireless. (5) Dave Mock, ”The U.S. Wireless Web - A Year in Review”,
www.wirelessdevnet.com/channels/wireless/features/wirelesswebrev/, 5 Feb. 2001
Comments to previous slide:
A discussion and background of the numbers can be found here: www.mbizcentral.com/m-
business/archive/march-2001/04_sprint.
There seems to be no reason to challenge the numbers, though.
In its annual report for year 2000 Nextel makes the following impressing statement: ”Last
year [2000], we deployed our wireless web services in all Nextel markets nationwide within
six months. Today we have more than 4.4 million Internet-capable phones in service,
representing more than 66% of our domestic subscriber base.”
In combination with the WRHambrecht number for Nextel is interpreted as active wireless
Internet users, this means that 0.67 / 4.4 = 15% of customers, who can use the service
actually do so. This is a relatively low percentage. The mentioned 66% of domestic
subscriber base tells that Nextel is indeed talking about end of Dec. 2000, when they write
”today”.
Update, USA: By the middle of 2002 there were 9.9 million adults in the USA surfing the
internet via a PDA or a mobile phone. Of 19.1 million PDA owners, 5.0 million access the
Internet via that device. Of 67.2 million fixed-line Internet users owning a mobile phone, 5.8
million access the Internet via their mobile phone. Thus, 0.9 million access the Internet via
both a PDA and phone (and PC). Source of update: comScore, 27 August, 2002.
What was the total mobile network service
revenue in the USA in the year 2000? (1)
The total mobile network service revenue in Western
Europe in the year 2000 was about 80 billion Euros.
But what was the corresponding figure for the USA?
1) According to CTIA, the Cellular Telecommunications & Internet
Association, Washington, DC, USA, ”Total Annual Service Revenues” were
$ 52.47 billion (57 billion Euros). Source: www.ctia.org, semi-annual wireless
industry survey, cf. www.wow-com.com/industry/stats/articles.cfm?ID=251.
Comment: The CTIA number for ”Total Annual Service Revenues” includes
cellular/PCS and ESMR (Enhanced Specialized Mobile Radio). Also it
includes ”Roamer Services Revenue” of $3.9 billion, but NOT Toll (i.e. long
distance call charges).
(continues)
2) TIA, the Telecommunications Industry Association,

Arlington, VA, USA, mentions the figure $ 57.6 billion (62.5
billion Euros), www.tiaonline.org, press release, 23 May
2001.
Comment: This TIA estimate includes not only cellular/PCS but also paging, among other
services, cf. an earlier TIA study at www.tiaonline.org/pubpol.pdf. The difference between
the CTIA figure and the TIA figure can probably largely be explained by the fact that
paging is included in the TIA figure, but not in the CTIA figure.
PS: When hardware (equipment sales) is added to the network services revenue figure,
TIA report an overall US wireless market figure of $77.5 billion for the year 2000 (TIA
press release dated 23 May, 2001).
3) Finally, WitSoundView (O’Neil and Pate), reported an ARPU of $59 in
Q3.2000 for major operators, up from $56 in Q1.2000, in an Industry Report on
the Wireless Market dated 21 November 2000 (www.witsoundview.com).
Comment: There may be hardware (handset) sales included in the above ARPU figures. For the US operators under
one, the average ARPU is probably marginally lower than for the very largest operators only. In other words, the above
source indicates an average ARPU in the US of about $57 for the year 2000. With a mean of about 98 million users in
the US in the year 2000, an ARPU of $57 per month translates for total revenue of $67 billion (72.8 billion Euros) for
year 2000, probably including revenue from handset sales. PS: Revenue from handset sales does not cover the
operators’ costs of acquiring these, cf. e.g. Nextel accounts for the year 2000 indicating less than 40% coverage of
handset costs ($426m handset sales revenue vs. $1136 million costs = 38%). During the first half of 2000, and the first
half of 2001, revenue from equipment sales only covered 443/836m$=53% and 534/968m$=55%, respectively, for
AT&T Wireless Mobility. For Voicestream equipment sales revenue covered 283/514m = 55%. US Cellular: 63/140m =
45%. So, in the US there is also a practice of subsidizing handsets.
In summary: The writer have chosen to apply his own estimate of $60.4 billion
(65.6 billion Euros) - excluding handset sales revenue - in the previously shown
pie chart. This number is based on the financial statements for the full year
2000 from seven major US operators representing 81% of the registered user
base (Verizon, Cingular, AT&T, Sprint, Nextel, Alltel, VoiceStream) and
estimates for the rest, from which have been subtracted reported or estimated
revenue from handset sales. No attempt has been made to exclude paging
services revenue, which is regarded part of data services.
Two-way text messaging in Canada
Mobile text messaging in Canada in the form of SMS’ was most likely very limited
in the year 2000. GSM (2G) was little used in Canada: The No. four player in the
market, Microcell, was the only GSM network in Canada last year. Like in the US,
SMS interoperability was not established in year 2000 in Canada. By April 2001,
Microcell finished rolling out a 2.5G GSM/GPRS and a second player (Rogers) is
not also rolling out a 2.5G GSM/GPRS network
(http://micro.newswire.ca/releases/July2001/09/c0801.html/5804-0).
Assuming each of Microcell’s users sent the same no. of messages as those of
VoiceStream in the US in year 2000 - which was about 15 – and the other
Canadian operators nil, then the estimate would be that 136 million SMS were
sent by the Canadian operators in year 2000.
There was some short text messaging via WAP, though, cf. ”Who cares about
WAP? Teens do”, Andy Walker, spring 2001, www.cyberwalker.nt/techtogo/wap-
kids.shtml.
Wireless Internet usage in Canada,
end of year 2000 (1)
In North America Nextel is not the only mobile network operator with a very high percentage of ”Internet
enabled devices” among its customers:
During 2000, Telus Mobility of Canada ”successfully introduced wireless Internet services embracing a wide
range of content providers – approximately 56% of TELUS Mobility digital subscribers now have dot-com-
ready phones” (Source: Telus annual report 2000).
The only caveat is the word ”digital”: 56% of TELUS Mobility 2.2 million customers by year-end 2000 were on
a digital network. So, TELUS had an installed base of 2.2*0.56*0.56=0.69m Internet ready phones among its
customers. It is not stated how many or what percentage of these actually utilize the Internet capability. But
there was a lot of traffic on Telus’ wireless portal, cf. below.
By year-end 2000 about 53% of all Canadian registered cellular/PCS users were on digital nets
(www.cwta.ca). - If just 40% (and not 56% as for Telus) of all digital Canadian cellular/PCS customers had
Internet ready phones by year-end 2000, that would translate to 8.7*0.53*0.4= 2.3m Internet ready phones in
Canada. If just 13% of these (and not 15% as for Nextel in the US) were actually used for accessing the
Internet, that would translate to 300,000 mobile phones actively used to access the Internet by year-end
2000, i.e. 3.4% of the registered mobile phone users. If these assumptions held true, this percentage for
Canada would be the same as for the US and in W. Europe by year-end 2000. (The 3.4% for the US also
includes some users of other access devices than handsets, i.e. M phones.)
As a cross-check, it can be mentioned that in an article from around April 2001 (by A. Walker, cf. pervious
slide), Bell Mobility had 385,000 users on its site (the largest operator). However, Telus (no. 3 in the market),
actually had 33% more ’hits’ per week than Bell Mobility was getting per month. More that one third of the
’hits’ on Telus’ portal was for two-way e-mail usage. – So, although SMS are not sent, there may be a great
deal of short text messaging via e-mail on WAP enabled handset.
Wireless Internet usage in Canada,
end of year 2000 (2)
On top of the roughly 300k active Internet enabled mobile phone users come some Canadian
users of BlackBerry and similar devices, possibly about 30k: Rogers AT&T Wireless, who
reported 15k BackBerry users by year-end 2000, had a share of 29% of the registered
cellular/PCS users in Canada. But since Rogers was the ”exclusive Canadian carrier until
September for these devices”, cf. ”Canada's mobile big four battle for corporates” by Andrew
Tausz, www.totaltele.com, 27 Nov. 2000, Rogers probably accounted for a relatively high
percentage of the Canadian installed base of these devices by year-end 2000, possibly 50%.
With 30k users of Internet enabled PDAs on top of the 300k active users of Internet enabled
mobile phones, Canada would marginally beat both the US and W. Europe in relative terms.
Break-down of the 8.7 million registered mobile users in Canada: Bell Wireless Alliance: 3.1m;
Rogers AT&T Wireless: 2.5m; Telus Mobility: 2.2m; Microcell: 0.9m. Source: www.cwta.ca/.
Bell Mobility (www.bellmobility.ca) also offers various non-voice mobile services, including
messaging via BlackBerry and one-way pagers in addition to Wireless Data / Internet services
based on Internet enabled mobile phones (handsets) and portable computers. No statements
about user numbers are provided, though.
By year-end 2000 Rogers Wireless had nearly 15,000 BlackBerry handhelds in service (out of
444,000 messaging and data subscribers, the balance being one-way paging subscribers). The
messaging and data subscribers and the associated revenue figures are reported separately from
mobile phone usage.
Microcell, the no. four player in the Canadian market, will be offering ”Internet-based, high-speed
data services and applications”, according to announcement of Q1.2001 financial results (11 May,
2001). In other words, Microcell had probably not implemented mobile internet solutions by year-
end 2000.
Mobile phones vs. handhelds (I)
North America is the main market for handheld computers. The USA alone accounted for about 60%
of the world market in 1999 and 2000 (IDC, according to Wiscofund, Jan. 2001, uwasap.org,
”Handheld Computers” – focusing on Palm Inc). Relatively few of the handheld computers currently in
use are capable of communicating wirelessly, independently of a mobile phone. Palm has shipped the
greatest accumulated volume of handheld computers (PDAs, personal digital assistants or personal
companions). The company introduced the Palm VII series, with built-in Internet access, in 1999. Of
the handhelds shipped by Palm from the middle of year 2000 to the middle of year 2001 (i.e. Palm’s
FY 2001), only about 3.3% belonged to the Palm VII series (according to estimate by Wiscofund 2001
p. 15). So, at least for the time being and the near future, PDAs should be regarded a supplement to
mobile phones rather than a substitute.
”Palm shipped 6.4 million Palm handhelds during fiscal year 2001 [ended June 1], bringing the total number of Palm-
branded handhelds shipped to-date to approximately 13.7 million. Over 16 million Palm Powered handhelds, including
those sold by Palm licensees”. These licensees, which uses the Palm operating system include Handspring Visors.*
Unit shipments were 3.7 million in the fiscal year to beginning of June 2000, since Palm reported a 47 percent increase
in year-over-year revenue and a 75 percent increase in unit shipments (Palm press release, 26 June 2001). However,
Palm had a very difficult quarter to 1 June 2000: Revenues were down to $165 million (vs. $350 million in the quarter
to 2 June 1999).
In the calendar year 2000 Palm shipped about 5.8 million units, and held a share of about 66% of the
global market for personal companion devices (Wiscofund 2001 p. 8), i.e. the global market was about
5.8/0.66= 8.8 million units in year 2000. – In Nov. 2000 WitSoundView projected the global PDA
(handheld computing) market to 8.2 million for the year, up from 3.2 million units in 1999. – In year
2000 the global mobile phone market was about 414 million units. -
and the number of mobile phones in use was 720 million.
* And models from Sony, Samsung, Kyocera, Acer (of China), and more.
Mobile phones vs. handhelds (II)
Is wireless text messaging via handheld computers (PDAs) a
substitute of mobile phones?
No, not really, not even in the USA. And certainly not in Europe.*
The mobile phone is and will remain the main devise for mobile text
messaging.
For business people (travellers) the PDA is a supplement to a mobile

phone rather than a substitute.**
Ordinary consumers will have a mobile phone only.
* In Western Europe there were max. 4 million PDAs in use by the end of
year 2000, vs. 244 million mobile phones, all of them SMS capable.
** Few of the PDAs in use were capable of communicating wirelessly
without the use of a mobile phone as modem. A mobile phone remains a
must have, also for the select group of people who have got a PDA.
Palm vs. Compaq vs. ..
A strong contester to Palm is Compaq’s IPAQ.
1) Compaq was expected to report sales for its iPAQ product of more than $200 million in
the quarter ending June 30.
2) Palm reported $165milion sales during about the same period. Therefore Compaq clearly
overtook Palm’s previously unchallenged No. one position, in value terms. Palm very
clearly kept their lead in volume sales, though, both globally and in the USA. However,
Palm was only marginally ahead of Compaq in volume terms in Europe during the quarter
ending June 30, according to both Dataquest and Canalys.com.
3) RIM, Research in Motion (of Canada), with the BlackBerry series of products, reported
revenue for the three months ending 2 June 2001 of US $77 million.
4) Handspring (of the USA) posted revenue for the quarter ending 30 June 2001 of $61
million.
5) Psion (of the UK) announced in July 2001 that they will keep on selling their current PDAs,
but they will not develop the next generation and thereby, in effect, they will be exiting the
PDA market.
6) Other PDA manufacturers include Hewlett-Packard, Casio, and IBM.
The dividing lines between computers, PDAs and mobile phones are getting blurred. Thus the major mobile phone players
manufacture smart phones, but probably define them as phones rather than PDAs (for text communication and other
mobile data applications). Both computers and PDAs will have wireless modems built in or at least as add on’s (for PDAs
mostly the latter). And most new mobile phones, which come on the market, come with wml (or html) browsers.
Compaq’s iPAQ, HP’s Jornada and Casio’s Cassiopeia are Pocket PCs, which use the Microsoft developed operating
system Windows CE. Given the recent advent of iPAQ in particular, the Windows CE operating system is also challenging
the top position of the Palm OS. – None of the products in these two camps have got real keyboards: A bit of a drawback,
not least in the case of mobile text messaging. The BlackBerry series and some devices from the mobile phone
manufacturers do have keyboards, though, e.g. the Nokia 9200 Series of Communicators, which use a third operating
system, the Symbian OS, now colour screen, still with wml and html (WAP and WWW) browser, e-mail and more. Nokia’s
devise(s) ranked as number three after Palm and Compaq in W. Europe in quarter to 30 June 2001, according to
Canalys.com. - But laptops, which many business travellers bring along, also have keyboards. - The battles continue.
WLANs in the USA (1)
Fast wireless access to full html web-pages – i.e. the entire World Wide Web -
from laptops, handhelds/PDAs and smart-phones does not necessarily mean or
require 3G. GPRS (2.5G), which is an important step towards 3G though, will
do for voice and text messaging applications (but then again: so will 2G, for
text, or even 1G for voice).
In the area of broadband Internet access there appear to be alternatives

(unless it is merely a supplement?): A Wireless Local Area Network, cf.
802.11b, fixed wireless. Wi-Fi is sometimes used as a synonym for 802.11b,
fixed wireless. Wi-Fi™ is actually a certain trade mark, which can be put on
products which have been Wi-Fi™ certified by WECA (The Wireless Ethernet
Compatibility Alliance). WECA has over 100 members, including – it seems –
each and every significant hardware manufacturer in the fields of computers,
networks and mobile telephony, as well as Wi-Fi network operators. By 1
August 2001, when Microsoft joined the seven other members of the board of
WECA (including e.g. Cisco and Nokia) over 140 products from 47 (55%) of the
WECA members had been certified since March 2000 (www.wi-fi.net).
Universities and hi-tech companies in the USA have installed WLANs.
These Wireless Local Area Network are based on the open standard
called IEEE 802.11b from the US based Institute of Electrical and
Electronics Engineers, which supports data rates up to 11 Mbit/s. WLANs
typically operate in the 2.4 GHz license-free frequency band. 3G
frequencies is thus not applied if the case of 802.11b. American
universities which have installed WLANs include the Carnegie Mellon
University in Pittsburgh (www.cmu.edu/computing/wireless/), Stanford,
MIT, and many others.
One well-known large computer software firm have got its headquarters in
Redmond, WA, covered by WLAN.
In particular in the US – and Sweden cf. next part - hotspots (broadband
wireless Internet access points based on 802.11b) are spreading to public
areas such as coffee shops, hotels, and airports (”Wireless LANs Go
Public”, Eric S. Brown, 18 June 2001, www.techreview.com/).
A deal involving the Starbucks chain of coffee shops, MobileStar and Microsoft was announced on 3 Jan.
2001, which should enable Starbucks’ customers to get broadband wireless Internet access. Deployment
of the network infrastructure were to begin in late spring. Furthermore, on 1 May 2001 the formation of a
strategic relationship between Starbucks and Compaq was announced. Customers will be able to rent for
example an iPAQ Pocket PC for use during their visit to one of Starbucks’ coffee shops.
By the end of July 2001, MobileStar had implemented the installation of 550 broadband wireless Internet
access points in the United States based on the IEEE 802.11b wireless standard (Wi-Fi, ”direct
sequence”). Of these, 480 (88%) are in Starbucks coffee shops; airport locations: 45 (8%) [of which
American Airlines Admirals Club 29 and 8 other AA; 8 misc. airport locations]; 22 hotels and 1 convention
centre; 2 restaurants. (own counting from website).
The price for usage of the MobileStar network is $2.50 for the first 15 minutes (and $0.10 per additional
minute). A monthly subscription is also available at $60 per month for unlimited use.
Starbucks – as well as airlines/airports and hotels chains - obviously plays a central role for the chances
for ”802.11b” of reaching the critical mass with respect to number of access points, in the USA. Starbucks
had 3620 coffee shops (’stores’) in North America as of 1 July 2001, of which approximately 3330 in the
USA alone. So, by July 2001 about 14% (480) of the Starbucks coffee shops in the USA were equipped
with IEEE 802.11b access points. However, the number 480 locations had been reached in about three
months (’since late spring’), so build-out speed is quick, and there are plenty of more Starbucks coffee
shops, even with their current number. And more coffee shops are being added every year: Starbucks is
on target to add over 800 ’stores’ in North America (most of them in the USA), during the 12 months to 1
Oct. 2001.
PS: MobileStar seems to be in a slight bit of trouble: ”The Fallout from MobileStar” By Bob Liu,
www.80211-planet.com/, October 15, 2001. ”MobileStar Lays Off 88 Employees”, By InternetNews.com
Staff, 10 Oct. 2001. However: ”MobileStar Down But Starbucks Still Committed”, By InternetNews.com
Staff, 10 Oct. 2001. - Update: ”U.S. wireless operator VoiceStream has reportedly acquired the wireless
LAN network of bankrupt MobileStar.” Totaltele.com, 14 November 2001.
In addition to the 23 hotels with MobileStar Wi-Fi access points by July 2001,
MobileStar had installed wireless networks in another 90 hotels in the USA, based on
a different wireless standard (”frequency hoping”). Notably, the additional hotels
include 60 Hilton hotels (i.e. 26% of 228 Hilton hotels in the USA) and 12 Sheraton
hotels (i.e. 6% of 201 Sheraton properties in the USA). It is easy to imagine that
these major hotel operators could decide to switch to the IEEE 802.11b standard as
well as add 802.11b access points in the remaining hotels, although that is
speculation only.
One other player is very strong in the field of Internet access for hotel guests, namely
Wayport, who have installed wired Internet access for guests at 400 hotels in the
USA. And at an increasing number of these hotels Wayport is now also providing
wireless Internet access. A series of press releases from Oct. 2000 to June 2001
explains the steps which Wayport has been taking. By the end of Oct. 2000, 17
hotels in Silicon Valley had been equipped with wired and wireless high-speed
Internet access, with 7 more to be added. By the end of July status was the following:
Wayport had active wired or wireless Internet access points at 362 US hotels. At
80% of these, or 290, there were Wi-Fi (wireless) installations. – Furthermore,
Wayport has ”unwired” four US airports.
Status for public IEEE 802.11b
wireless broadband Internet access
points in the USA, 30 June 2001
MobileStar Wayport 2 other* Total
Airport 45 4 0 49
Cafes 482 0 84 566
Hotels 23 362 0 385
Total 550 366 84 1000
Source: Own counting from websites.
Note: ’Airport’ is mainly AA. Cafes include 2 restaurants. Hotels include
one convention centre.
MobileStar’s cafes are: 480 Starbucks and 2 restaurants.
The ”two others”: Surf and Sip: 54 (San Fransisco, 38); Airwave: 30.
Both of these offer free high-speed wireless Internet access.
Discussion of broadband
wireless Internet access (1)
Broad-band wireless Internet access at any time from anywhere will probably be
appreciated by some people in some situations, although not for voice, and not
for simple mobile text messaging for which 2.5G or less suffices (cf. ”3G
Squeezed ..” wirelessnewsfactor.com/perl/story/?id=9935).
Let’s discuss four groups of users: (a) Students, (b) business travellers, (c)
those in offices, (d) those at home.
(a) Students – University campuses: One group of potential users of
broadband Internet access, college and university students, may want wireless
access within the campus (if it is offered free of charge). This means a WLAN.
(b) Business travellers: Another group is the travelling business people. When
they are driving, they cannot type, but they can use voice (for which 1G will do).
They will want fast Internet access from their hotel, though, or from the airport
business lounge, wired or wireless. In the latter case, 802.11b is again an option
for offering an all-wireless solution for ”Wi-Fi-enabled” notebook computers and
handheld devices (e.g. Palm). For in-hotel access to high-speed internet access
a good combination will be ADSL for the guest rooms, and Wi-Fi for meeting
rooms, cf. the approach of MagiNet in the Asia Pacific region.
A group of six - bright - students of the subject Communication Systems Design,
partly from an institute in Sweden, partly from Stanford, wrote a report during
the first five months of 2001 – in fact co-sponsored by Telia and Ericsson -
about 3G alternatives*, and pointed towards 802.11b. They found in an end-
user survey in Sweden and the USA that these five places were the most
preferred Internet access locations: (1) office, (2) airports, (3) in-flight, (4) school
and (5) hotels. Then (6) in-train, (7) library and (8) conference centres, (9) car,
(10) cafe, (11) train station, (12) tourist locations, (13) restaurants, (14) ATM,
(15) shopping mall, (16) sports stadiums, and (17) gas station.
(http://2g1319.ssvl.kth.se/2001/group1/) Clearly, travel-related hotspots ranks
highly.
Ref.s: ”Unwiring The Nation's Hotels”, www.isp-
planet.com/fixed_wireless/business/wlan/20010705.html; Some further links can be found
at www.wirefree-solutions.com/80211/WLAN_Projects/Commercial/.
* Note: The theme and timing of the project leading to the report seems to be no
coincidence: ”Telia faces life without a 3G license in Sweden” (Nordic WirelessWatch,
wireless.talentum.com, 19 Dec. 2000). – On 15 March 2001 it was announced that Telia
and Tele2 (one of the 3G beauty contest winners) had formed a joint venture for UMTS
deployment in Sweden.
(c) Office workers: And why not wireless broadband Intranet an Internet access from within
offices, which is the most common place to use a computer. Again 802.11b could be
applied.
Obviously security considerations have to be taken into account. In fact some security flaws
of the 802.11 standard have been detected. IBM, e.g., have built wireless 802.11b
capabilities as well as appropriate security into their new ThinkPad T23 notebook (”New
ThinkPads expand on security, wireless capabilities”,
www.ibm.com/news/2001/07/301.phtml). Similar security measures must be assumed to be
built into the 802.11b capable laptops from other vendors in future. - Options for the IBM
T23 include a Bluetooth PC Card.
(d) Those off-duty, @home: In some homes a so-called Personal Area Network, based on
Bluetooth, may be installed. Bluetooth is a short-range wireless technology which uses
license-exempt bands, indeed the same 2.4 GHz range spectrum as 802.11b, i.e. not 3G
either. But Bluetooth is a technology which supports 3G, though.
There should be no surprise in the above (a-b-c-d) to those concerned, but the scenarios
may be slightly unsettling for some, after all. On the other hand, they may illustrate
convenient and cost effective solutions for others. – However, there is every reason to
distinguish between public WLANs in the US and public WLANs in the rest of the world. –
Public assess WLANs based on 802.11b will fare much better in the USA - and in Sweden -
than in the rest of the world.
Users groups, user needs and applications, user devices, costs/benefits,
alternatives: 1G, 2G, 2.5G, 3G .. and 802.11b
Thus, business travellers – of the kind who (a) carry a mobile phone and a PDA or/and a laptop, and (b) go by air and/or stay overnight in a hotel ..
belonging to a major hotel chain – will (expect to) get their 11 Mbit/s wireless Internet access in the lounge at the airport or in their hotel room
(either hardwired or unwired via 802.11b), which will cover some of the need which goes beyond voice and simple text messaging.
But not to worry (…?), this will only cover a small bit of the (small or big) demand for broadband Internet access that 3G will offer, since most of
those working outside of their office travel by car/truck, and they don’t stay away overnight (at hotels). In Europe many also travel by train, where
people talk on their mobile phone and send short text messages constantly. Those with a lab-top can work for a while on the battery, off-line, for a
while, and in some trains there is even a power plug. 3G is some time off, so there is still time to work out who will really need much more than 2G
.. and 2.5G .. in addition to wired internet access and/or 802.11b .. and for what and how much.
Estimates have been made, of course. But if it is not those in offices, and not those at home, and not the students, and not the business travellers,
who need 3G, who is it then? And if 3G it is not needed for voice (for which 1G in enough), not for simple text messaging (for which 2G in enough)
and not for WAP or similar modes of limited Internet access (for which 2.5G is enough, cf. Japan), what kind of applications is it then which need
3G? And what devices will benefit from 3G, if it is not the mobile phones as we know them today (since they can only display specially designed
content and text anyway), and not the lab-top or the PDA which either only needs to be online occasionally, and these occasions can normally (?)
be planned to fit in with wired internet access (and/or 802.11b)? Java-enabled phones require high-bandwidth (data rates). If used they can fill the
3G pipe. And they can be put into use because 3G (or at least 2.5G) is available. So the logic is somewhat circular. Java-enabled phones are
already becoming popular in Japan. By 2003 one player, albeit not an impartial one, believe ”60% of handsets will be Java-enabled by 2003” (Sun
at morganstanley.com, 5 July 2001). It is not clear from this statement if it is 60% of handset shipments or 60% of the installed base, so we must
chose to believe it will be 60% of shipments (sales). Nokia alone will produce and sell 50 million Java-ready mobile devices in 2002 and 100 million
in 2003, and ”Motorola is making all its phones Java capable. NTT DoCoMo in Japan, the leading Java phone adopter thus far, had already
shipped 3 million by the beginning of June 2001” (http://news.cnet.com/news/0-1003-200-6229681.html?tag=tp_pr). ”A phone with Java lets
someone download software that turns the phone into an MP3 player, minitelevision for watching films, or a portable device capable of accessing
e-mails. - 3G cell phone networks that would enable data and Java programs to be downloaded more quickly.”
(www.zdnet.com/zdnn/stories/news/0,4586,5092203,00.html).
Everybody agrees GPRS (2.5G) is highly desirable, since it benefits mobile data usage. But GPRS (2.5G) takes up more space in the mobile
pipeline than 2G,.. (http://wireless.talentum.com/wireless/technology/61815.html). This will in turn make a move towards 3G increasingly
necessary! What are the costs, what are the benefits, for the users and for the providers, and what are the alternative? As always, the costs are
rather well known. Costs are up to 80 times higher for 3G than for 2.5G, but are the benefits also 80 times greater? * The additional
benefits/revenues and the costs/benefits of alternatives do not appear to have not been clearly enough described and considered. 3G is coming in
any case, certainly in many countries including all of Western Europe, and once we have got 3G we may wonder how we could ever live without it.
* Note: From review of a Merrill Lynch report: ”The report said 3G faces big challenges from two technologies: 2.5G and 802.11b (also known as
Wi-Fi). - According to Merrill Lynch, 2.5G offers users "good" voice service and short message service (SMS). The problem for 3G is, 2.5G
provides the benefit of being "always on" to the user, and is much cheaper to employ. - The study puts the cost of a European 2.5G system at
approximately $3 billion, compared to $250 billion to provide the spectrum and the infrastructure for the debatably faster 3G.” Michael Martlett, ”3G
’ 3G 'Squeezed' By Other Wireless Systems - Merrill Lynch”, Michael Bartlett, Newsbytes, U.S.A., 21 May 2001.
Discussion of broadband wireless Internet access:
Why 802.11b is cathing on in the USA –
and how it might be spreading to Europe
In a nutshell, according to the writer’s understanding: Bluetooth requires only little power, which makes it suitable for small devices such as
mobile phones and headsets. 802.11b allows for wireless data rates up to 11Mbit/s (theoretically) vs. up to 2 Mbit/s for 3G (equally
theoretically). Usage of 802.11b involves relatively high power consumption, and is therefore only suited for larger devices such as laptops and
PDAs. So, getting onto the WWW via Wi-Fi requires (1) a laptop or a PDA with a WLAN card added or built in (2) a 802.11b access point (3)
and ideally a power-plug nearby. In an early Bluetooth White Paper from Jan. 2000, EIII 802.11 implementations were seen as the the main
competitors in the market segment for wireless LAN (www.emsys.net/bluetooth_whitepaper.pdf, p. 22 of 25). However, Toshiba believes they
are complementary technologies (”Wireless Technology”, www.isd.toshiba.com.au/site/open/products/wireless/MEDIA/wireless_manual.PDF, p.
17).
By the end of 2002 the installed base of mobile phones will exceed 1 billion, globally (1.1 bn., own est.). According to one manufacturer of
wireless PC cards (among other things), the installed base of laptops will be 80 million plus 40 million PDA. Of these 120 million devices, 75%
may have built-in wireless connectivity. The remaining 25% is the ”addressable market” of wireless PC card manufacturers (such as Novatel
Wireless, cf. theinternetanalyst.com, 21 June 2001). – A similar forecast has been made by Nokia Networks, who talk about 100 million laptops
in use by the end of 2003. – In Europe 2.2 million handhelds were shipped in the year 2000, largely all of them without integrated wireless
capability. By 2003, 6.4 million with and 0.65 million without integrated wireless capability will be shipped, according to canalys.com (23 July
2001). The installed base of mobile phones in W. Europe by the end of year 2003 will be about 390 million, of which 225 million will be WAP-
enabled, but only 74 million of these will be used for WAP services (own forecast). The installed base of handhelds will be about 15 million in W.
Europe by the end of 2003, of which 1 million with integrated wireless capability (based on canalys shipment forecasts, assuming a lifetime of
three years for these devices). In the USA a higher percentage of handhelds in use may be with integrated wireless capability than in Europe.
Since the installed base of PDAs – and possibly also laptops – is and will remain larger in the USA than in Europe that is one reason why
802.11b has a relatively greater appeal in the USA than in Europe. Mobile phone penetration, on the other hand, is relatively higher in Europe
than in the USA, which makes mobile phone based ways of accessing the Web more interesting in Europe than in the USA. The usage of
802.11b requires access points (with beamers). Swift roll-out of these is easy at large university campuses, in large office buildings, and in
branded chains. Universities are bigger in the USA, companies are larger, and branded chains are more common in the USA than in Europe.
Example of US branded chains are abundent. But a few of particular relevance are: The Starbucks coffee shops, and hotel chains. Hotels are
larger in the USA, and more of them are branded, than in Europe. A decision to roll-out for example a new technology throughout a chain can be
implemented swiftly. And business travellers will soon know that there is a certain facility available in any branch of brand X, for example
802.11b. Therefore it is no surprise that 802.11b catches on quickly in the USA. 802.11b may become a standard feature in future wireless
hardware, and can be purchased as an add-on in the form of a simple card for less than $150 in any case. US hotel chains are all across the
world. If customers of a particular hotel chain get used to the possibility to wirelessly locking on to the web at any branch of a that chain in the
USA, then they will expect to find the same facility at branches of the that hotel chain anywhere in the world they go.
High-speed Internet access at
hotels in the Asia Pacific region (1)
”MagiNet is by far the largest Internet and Pay-Movie system provider for hotels in the Asia-Pacific
region. MagiNet's market and product penetration encompass over 400 properties in 64 cities in 15
countries, representing top names in the luxury hotel classification. - MagiNet is headquartered in Hong
Kong. - Currently, MagiNet-equipped guestrooms use DSL technology and meeting rooms, the Wireless
standard 802.11. This combination provides both the ease of use and flexibility modern corporate guests
demand. DSL's key benefit is that it utilizes the existing telephone wiring to provide high-speed
connectivity while keeping the in-room phone available for telephone calls. The Wireless solution allows
meeting organizers the flexibility to set up data points for hotel delegates/guests anywhere in the meeting
space.” Source: www.maginet.net/about/index.asp?article=MLC-Broadband
The wireless solution based on 802.11b was introduced in the middle of year 2000, and was up-and-
running for the G8 Summit at Hotel Okura in Tokyo. It is not clear how many of the mentioned 400
’MagiNet equipped’ hotels in the region have currently implemented WLANs in their meeting rooms now
one year later. In the current online description of the Hotel Okura, ”wireless broadband internet access
via 802.11” is not mentioned, except on the maginet.net site.
The difficult market conditions for a wireless technology such as 802.11b was foreseen already by the
middle of year 2000 by Ari Klinger, co-founder and general manager of Mobile Stop in Australia: "There's
going to be lots of competition in the coming years with the use of traditional wireless products (like
mobile phones) and their ability to connect to the internet with increasing ease.” (”Road Warriors
Unleashed on CyberSpace”, by Louise Weihart,
www.thestandard.com.au/articles/article_print/0,1454,9600,00.html), June 15, 2000.). – The Sheraton on
the Park was one of the first hotels in the region to get a WLAN. On the Sheraton website there is
currently no mentioning of this particular meeting room amenity.
hotels – and more - in the Asia
Pacific region (2)
In March 2001, Cisco (who is the hardware supplier of the WLANs of MobileStar, Wayport
as well as the Microsoft HQ campus in the USA) announced the ”Cisco Internet Mobile
Office” (CIMO) initiative in the Asia Pacific. (Service providers within the CIMO initiative
have to build the network 100% on Cisco products). - By August 2001 the status was 41
CIMO (Cisco) hotspots, according to www.cisco.com/asiapac/mobileoffice/hotspots.html:
• Singapore: 22 ’Cisco’ hot-spots (mostly cafes and restaurants; Bluengine main service
provider). Plus: The airport.
• Hong Kong: 2 ’Cisco’ hot-spots
• Taiwan: 17 ’Cisco’ hot-spots (from mid-August, mostly at ”Gourmet Coffee Shops”,
provided by Infoserve). Furthermore: ”China Airlines the first air carrier in Asia to introduce
wireless broadband access to Internet in its VIP lounge” in Taipei, Taiwan, www.m-
travel.com/10903.htm, 3 Sept. 2001.
hotels in the Asia Pacific region (3)
In the beginning of May 2001 it was announced that SkyNetGlobal had completed Australia's largest 802.11b
wireless network, connecting to 30 airport lounges and 16 airports throughout Australia/New Zealand, as well as
selected major hotels (May 02, 2001, ”GRIC Intros Wireless Broadband Roaming Service”, Newsbytes News
Network).
• Australia and NZ: 30 lounges in 16 airports (SkyNetGlobal), already in May 2001. –
It is not easy to find out exactly which lounges are up and running, but Qantas is one of the shareholders in
SkyNetGlobal. And true enough: Qantas Club lounge(s) has got a WLAN up and running
(it.mycareer.com.au/news/2001/06/01/FFXZ7JWJANC.html).
A corresponding wired service has been available in Qantas Club lounges since the end of 1999 (and the one in Sydney was
operational already in July 1998. (thestandard.com.au/, 20 December 1999, ”Netport joins Qantas club”). NetPort Hospitality Systems
have now change name to inter-touch. – Not surprisingly, on 24 July 2001 it was announced (from Singapore) that inter-touch Pty Ltd
had become a participant in the Cisco Internet Mobile Office initiative. – inter-touch has signed a Memorandum Of Understanding
(MOU) with Hilton International about the development of a customised integrated hotel guest information platform. (www.inter-
touch.com, 31 July 2001).
11 Rydges Hotels being added to SkyNetGlobal network, of which 8 in Australia, 1 in NZ, 1 in Dubai, and 1 in
the UK, namely Rydges Kensington Plaza (ASX announcement from SkyNetGlobal, www.asx.com.au/, 9 Jul
2001, http://www.asx.com.au/scripts/nd_isapi_50.dll/asx/research/AnnDetail.jsp?id=408639&issuerid=4506). –
The new WLAN facility is not mentioned at the www.rydges.com.au/ site though.
During July 2001 Toshiba offered a free Wireless Lan card, stated to be worth A$313.
----
In spite of the above announcements, it appears that 802.11b will hardly be a significant threat for 3G network
operators (plus fixed-line DSL) in the Asia Pacific region, where 3G is soon a reality both in Japan, Australia and
elsewhere. .. However, some suspect it might .. (www.bwcs.com/).
PS: On 8 August 2002 it was announced that Telstra had agreed to purchase SkyNetGlobal’s wireless network
infrastructure – with about 50 hotspots across Australia, NZ, Singapore, mainly at Quantas Airways lounges at
major airports - for A$3.3 million. http://www.telstra.com.au/newsroom/release.cfm?ReleaseID=21801
Discussion: PART 3
Broadband Internet access
in Europe
- wireless
- Wi-Fi
- Cable
- Satellite
Broadband wireless Internet
access in Europe (1)
GPRS (2.5G) will do for voice and text messaging applications, and in the area of
broadband Internet access there are alternatives, both fixed line and ’semi-wireless’.
The by far most important alternative to wireless Internet access (via 2G, 2.5G or
3G) is fixed line internet access. It is pretty fast .., and it is available almost
’everywhere’ except in transport. For trains and planes work is in progress to
provide Internet access there as well. At least there are already frequently ordinary
power plugs in inter city trains, e.g. for laptops where people can work off-line as
long as they like, and then dial-up wirelessly to send e-mails etc. if necessary.
In the area of broadband (semi-) wireless Internet access there is at least one
alternative (to general mobile telephony), namely Wireless Local Area Networks.
One group of potential users of broadband wireless Internet access, college and
university students, may be content with wireless access within the campus (if it is
offered free of charge). This can be provided via a Wireless Local Area Network, cf.
EIII 802.11b, fixed wireless, Wi-Fi. And this is a reality, at many universities in the
USA, and increasingly in Europe as well, even at sixth-form schools (for example at
so-called technical gymnasiums in Denmark – typically for the 18 to 20 year olds).
(continues)
Public access WLANs based on EIII
802.11b in Europe (2) - Sweden
Telia HomeRun is an Wireless Access Provider, who has got hotspots at airports in Scandinavia, SAS lounges, and hotels
and convention centres in Sweden. Telia launched HomeRun already in the summer of 1999. By the end of year 2000,
HomeRun had been installed in some 80 hotels in Sweden (Telia, Annual Report 2000). By the end of March 2001 the
number of WLAN locations had reached 108, mostly hotels (list of sites in pdf).
In August 2000 in was announced that First Hotels had signed an agreement with Telia according to which First Hotels
should be the first hotel chain in Sweden – and in the world – to install HomeRun. By the time, HomeRun had already been
installed in 12 hotels and during the autumn the plan was to install HomeRun at further 33 hotels, i.e. 45 in total.
In February 2001 it was announced that Sweden Hotels, the largest Swedish hotel chain, had signed an agreement with
Telia according to which HomeRun are going to be installed at all the chain’s 93 hotels.
(www.bit.se/bitonline/2001/02/20/20010220BIT01500/02200150.htm).
By early August 2001 Telia’s HomeRun listed 171 Wi-Fi hotspots in Sweden on their website. In the spring of year 2001,
it was Telia’s expectation that they would have 400 Wi-Fi access locations in 40 cities in Sweden by the end of year 2001
(telecom.no, 1 March 2001). That target may still be reachable, although a straight-line projection of the about 90 new
hotspots in 7 months (~13 per month) would suggest a year-end number of about 235.
Currently over 70 towns/cities are covered with at least one hotspot each, typically at hotels, which means that it is
currently possible to find a hotel with a Wi-Fi in most towns, even relatively small ones. The 171 HomeRun hotspots are
very much focused on travel related locations: 156 hotels (or conventions centres), 5 airports, 3 railway stations, 3 Telia
sites, 4 other sites (Hitec Building, engineering academy, house of industry, sports arena). The chains with the greatest
number of hotels equipped with HomeRun surf areas are Sweden Hotels (42 – out of 93), First (40 – of 43), Elite (14 – of
16), Scandic (9 - out of 59), Rica (6 – of 8) and Quality (5 - of 24). In total 48% (116 - of 243) of the properties in Sweden
which are members of the six chains, had got HomeRun Wi-Fi installed by early August 2001. – Since Rica has got about
73 properties in Norway, it will be interesting to see which Wi-Fi operator gets the deal there, if any.
Telia HomeRun has got a transparent way of charging for the access, for example on a daily based (pre-paid card costing
120 SEK incl. VAT = $11.32 or 13 Euros valid for 24 hours from first lock-in). There is also a monthly scheme. - The Telia
HomeRun service will be installed in all of SAS' 19 international lounges during 2001. (release 24 Jan. 2001).
802.11b in Europe (3) – Sweden (cont’d)
Although Sweden Hotels is the largest Swedish hotel chain, Scandic Hotels is the largest hotel chain in the
entire Nordic Region (Scandinavia and Finland). Well, ... a bid by Hilton Group plc for taking over Scandic
Hotels AB was declared unconditional on 11 June 2001. Scandic has 155 hotels in 11 countries, of which 59
in Sweden alone according to the online hotel guide, and at least an equal number in the other Nordic
countries (Finland, Denmark, Norway).
A separate Swedish WLAN operator, Wirelessbolaget, announced already in March 2000 that they were
going to implement a broadband wireless Internet access solution for Scandic Hotels. The service is based
on Nokia's wireless LAN technology (Nokia press release 23 March 2000). In April 2001 it was announced
that the first installations had been finished at some of Scandic’s largest hotels, after which the intention is to
roll-out the solution to all the hotels in the chain.
www.wirelessbolaget.com/ do not yet mention any specific up-an-running on their own website, but state
that the WLAN service is expected to be launched (commercially) by the end of September 2001. However,
on another site, www.elektrosmog.nu/wirelessbolaget/, it is mentioned that wirelessbolaget has got two
WLAN installations at hotels in the Stockholm area (not Scandic Hotels). And two additional hotels, Kung
Carl in Stockholm and Noble House i Malmö, cf. www.hkchotels.se/, mention that they have got ”Internet-
access via wireless broadband in the whole hotel” as an IT-service (20 March 2001). The hotel guest pay
SEK 195 per day ($18.50) for the WLAN access, including the lending of a WLAN card
(http://www.crmnytt.com/nyheter.htm, 28 June 2001). Without the card the price for the hotel guest is SEK
95 per day ($9). In the case of Wirelessbolaget, the guest does not need to be a subscriber with any
particular operator, which was one reason why HKC Hotels chose Wirelessbolaget in stead of the alternative
Swedish WLAN service. – So, from Wirelessbolaget we can add at least another four hotels to the 156
using Telia HomeRun in Sweden.
802.11b in Europe (4) - Sweden
A third wireless Internet access provider is Powernet. Powernet initially built a network for wireless
Internet access in central Stockholm, the idea being that Powernet’s subscribers should be able to
get online everywhere in the city they moved about. Powernet is thus more oriented towards the
residential market than towards travellers. Powernet cooperates with Sweden’s largest fixed-line
fibre-optic network operator, Skanova, an independent firm within the Telia group. From Skanova’s
3000 nodes a wireless link to companies or residential areas can be established. Furthermore, in the
middle of June 2001, Powernet extended its reach by signing an agreement with a satellite TV
programme agency, i.e. a combination of wireless Internet access and local cable TV. Powernet is
thus able to offer fast wireless Internet access in many places across the country where fast Internet
access via cables is not offered. Powernet offers a data rate of 0.5 to 2Mbit/s, which is at least as
fast as fixed-line Internet via the cable TV network, at least as fast as ASDL in Sweden, currently
0.5Mbits/s, and in practice as fast as 3G will be. Powertel currently serves 20 towns or cities in
Sweden. The radius of the surf-zone around each of the 23 up-and-running central aerials in 8
towns (according to the website, early August 2001) is 400 meters. The counties and towns are: In
Skåne: 9 (Höganäs 3; Vingslöv 4; Ängelholm 2), In Örebro 6 (all Lindesberg); In Östergötland 2
(Borensberg); In Stockholm 6 (Ängby 4, Bromma-Kyrka 1, Haninge 1). - Given Powernet’s
residential focus, it seems relatively unlikely that travellers will be using Powertel’s hot-spots. But
Powertel’s 23 hot-spots are there. - The increasing availability of high-speed ASDL fixed-line Internet
access via fibre optic cables in Sweden (like cable TV), offered by several major players, seems to
leave only niches for Powertel’s offering in the Swedish market.
In summary, status for public WLANs in Sweden by early August 2000: 86% of 198 public hot-spots
are Telia HomeRun locations. Telia HomeRun has been installed at 171 locations, i.e. 156 hotels, 5
airports, 3 railway stations and 7 other places. A few other players have installed public WLANs.
802.11b in Europe (5) - Finland
Sonera in Finland announced their similar wGate service in December 2000, also based on 802.11b
(http://www.sonera.fi/english/pressinfo/releases/EngSonera2000/2000/159.ht ml). - The Sonera wGate
service, which is targeted at business travellers, is available in the Finnair lounge in Arlanda
(Stockholm, Sweden) and in Helsinki-Vantaa Airport, Holiday Inn Helsinki and several other places.
Status as of middle of year 2001 is that Sonera has launched wGate in more than 20 public places in
Finland, and plans to roll-out WLANs in all of Finland’s 25 airports before the end of 2002. However,
there are currently less than 1000 subscribers to the service. (”Sonera Plans International WLAN
Roaming”, Network Briefing Daily, 20 June 2001, www.softwareuncovered.com/news/nbd-
20010620.html). - Sonera will be implementing the Nokia Operator WLAN solution which includes SIM
card based authentication in public places such as airports and hotels.
While Sonera is more well-known, there is another WLAN provider in Finland who appear to have more
WLAN access points (or areas), namely Wireless Network Services Oy (WNS), www.wnsonline.net, a
wholly owned subsidiary of Jippii. WNS had rolled out 80 base stations by May 2001, of which 30 were
commercial. At the same time WNS had 700 customers. By the middle of 2001 WNS listed 64 outdoor
base stations in 22 cities or towns in Finland at their website. Hope to have 400 by end of 2001, and
900 by end of 2003. WNS charges a flat rate of 48 Euros per month. The two places with the greatest
number of base stations are Espoo, the city of the HQ of a well-known Finnish mobile phone
manufacturer, and then a campus of a polytechnic institute of higher learning (Seinäjoki). WNS has
reached agreements with at least one hotel within each of the chains Sokos and Restel (presentation at
morganstanley.com), which are the two largest hotel groups in Finland with about 35 hotels each.
A third Finnish based WLAN provider is Wificom, who have a product called WifiNET. It is targeted at
hotels, airports, etc. – like the two main US players (MobileStar and Wayport), Telia HomeRun of
Sweden, and MagiNet in Asia Pacific. ”Wificom was founded in Helsinki in July 2000 and it has
currently sales offices in Finland, France, Monaco and UK.” Wificom has not got any up-and-running
public WLANs in Finland for the time being (but they have got some in France).
802.11b in Europe (6) - Norway
Norway
There are four players in the Norwegian market for public access WLANs: (1) HomeRun (offered by
the Telia subsidiary Netcom). (2) Telenor Mobile. (3) Netpower. (4) WAN A/S, cf. ”The Internet
Zone Guide”, in Norwegian, www.telecom.no.
(1) Netcom (now owned by Telia), has launched the same service in Norway as Telia HomeRun is
offering in Sweden (www.telecom.no, 22 Feb. 2001). By the middle of 2001. Five hotels in Norway
were equipped with HomeRun, of which four Norlandia and one Quality hotel. There are a total of
61 owner operated Norlandia hotels in Norway. WLAN coverage is in common areas as well as in
eight or ten individual rooms in each (homerun.netcom.no/).
Netcom has signed a letter of intent with Narvesen catering about the roll-out of HomeRun. This
means wireless broadband Internet access from Peppe’s Pizza, Burger King and Caroline Café.
Narvesen currently has about 200 outlets all around the country, about half of which will be
equipped with WLANs, according to the IT manager of Narvesen (telecom.no/, 10 May 2001). - The
price is about the same as for HomeRun in Sweden: NOK 120 (15 Euros or $13) for 24 hours or
150 Euros for one month of unlimited use (i.e. three times as much as WNS in Finland). The user
can buy 24 hour pre-pay cards in Narvesen’s shops and be online wirelessly in the course of a
minute. The user will get a 2 Mbit/s line. Initially, access points were installed in each of Narvesen’s
seven cafes/restaurants at the Central Station in Oslo. Narvesen is somewhat comparable with
Starbucks of the USA as far as the nature of business is concerned, although the scale of the
operations are different. - The HomeRun locations in Norway then adds up to about 12 by middle of
2001.
802.11b in Europe (7) - Norway
Norway (continued)
(2) Telenor Mobile launched their public WLAN service offer a little later than the service
mentioned on the previous slide. The Telenor WLAN service is in a test phase. It is being
offered free of charge in a test period until 1 Sept. 2001. The service is only available to the
subscribers of the Normade® service, who of course needs to have a WLAN card for their
laptop or handheld computer, or a computer with a built-in WLAN card. Telenor mentions
Toshiba and Dell as examples of the latter. (IBM is a third example). The WLAN service is
targeting mobile workers, including business travellers, and therefore hotels and exhibition
centres, airports and similar will be selected by Telenor and its external partners as hot-spots. -
By the beginning of August 2001, Telenor Mobile listed seven active hot-spots, i.e. five hotels,
the Herbern Marina in front of Aker Brygge in central Oslo, and then Ullevål Stadium. – Another
ten hotels (including the Holmenkollen Park Hotel Rica, next to the Ski Jump) and an IT firm is
mentioned as the next hot-spots to be established (telenormobile.no). The target is 50 hotel-
and conference-centres by the end of year 2001 (telecom.no, 21 June). - Telenor Mobile is also
involved in the development of a wireless technology which promises even higher data rates
than 802.11b, namely HiperLAN.
For hoteliers the establishment of a WLAN is certainly not the first step to take towards giving
guests Internet access. Fixed-line Internet access is the first thing to provide - for the laptop
which many business travellers bring along. The traveller can also choose to go online via
his/her mobile phone, in combination with the laptop, it which case the hotel is not involved.
Also in the WLAN market: (3) Netpower. (4) WAN A/S.
802.11b in Europe (8) – Denmark
There is a WLAN in SAS Lounge in Kastrup airport (Telia, according to netcom.no), but the Telia
HomeRun service does not appear to have been introduced commercially in Denmark.
Cisco Danmark offers WLAN’s based on IEEE 802.11b for enterprises. Cisco has explained the
technicalities of WLAN in some detail in a white paper "Wireless LANs and the 802.11 Standard"
(www.cisco.com). On 21 June 2001 it was announced that Cisco enters into cooperation with a Danish
firm called NetPoint A/S ”to give business travellers high-speed Internet access.” At the website of
NetPoint.com ten of the finest hotels in Copenhagen are listed, i.e. four Radisson SAS, three Accor, two
First, and the new Hilton at the airport.
"Analyses show that 60 to 80 percent of all the mobile professional business people travel with their PC
and perceive fast and easy access to the Internet as an essential and necessary tool” says Chris
Dedicoat, Group VP i Cisco EMEA.
However, surprisingly, a closer reading of the press release shows that the Internet connection is based
on HARD WIRES. NetPoint’s idea is to base their solution on what business people have already got at
their office: a wired LAN and a laptop computer. They bring along the laptop to the hotel (normally not
equipped with a card to access a WLAN). They ’plug into’ the hotel’s fixed-line LAN, and from there they
have got fast Internet access. There is a test installation of a WLAN in the lobby at the Hilton, though.
So, in 2001 there appeared to be only one up-and-running WLAN access point in Denmark, namely the
one in the SAS Lounge at Kastrup airport. The word about WLANs had hardly spread beyond readers of
computer magazines.
By the middle of 2002, the situation is changing: ”Netpoint has already installed its WLANs in 20 selected
hotspots in Copenhagen. These include conference centres and hotels, e.g. D’Angleterre, Hilton and
Radisson SAS. .. Netpoint has overtaken TDC Mobile which is preparing installation of WLANs in about
100 selected hotspots, starting in second half of 2002.” (Computerworld.dk, 28 June, 2002). TDC will use
Ericsson technology (ibid., 9 July, 2002).
Status for public WLANs* by the middle
of year 2001 in the Nordic countries:
Sweden, Finland, and Norway
Sweden Finland Norway Total
Airports 5 3 0 8
Railway stations 3 0 5 8
Hotels 160 10 18 188
Cafes 0 5 10 15
Other indoor, public 7 0 7 14
Open air + residential 23 64 5 92
Total 198 82 45 325
* Note: IEEE 802.11b based wireless broadband Internet access points at airports, hotels
etc.. WLAN = Wireless Local Area Network. – The one and only up-and-running public Wi-
Fi surf-zone in Denmark is the SAS Lounge at Kastrup airport, which can largely be added
to the five airport with WLANs mentioned under Sweden.
PS: By middle of 2002, there may be 700 public WLANs in the Nordic countries (IDC.com, 18 Sept.).
Public access WLANs in the UK: None?
”The UK applies highly restrictive regulations governing public access WLANs in
the 2.4 GHz band. The very existence of this market is in doubt.” However: .. ”It
would appear legal for a hotel or restaurant chain of offer WLAN services to its
customers provided that wireless access is not charged for directly.” .. (www.re-
think.com, ”I Want My Wi-Fi – The Opportunity for Public Access WLANs in
Europe”, pdf, May 2001, p. 8).
Without charging there is no business model for neither the hotelier nor the
WLAN operator, though, except that provision of a certain (free) service can be a
differentiating attribute for the particular hotel vs. others.
Already in Nov. 2000, it was announced that Wayport opened their European HQ
in Heathrow. At the same time it was announced that installation of Wayport's
high-speed Internet is near completion at the Four Seasons Hotel Canary Wharf
in London." This hotel has in fact not installed the Wayport Wireless Service by
end of July 2001. But the Four Seasons hotels in Paris, Prague and Dublin
have, which are the only three Wayport WLAN locations outside of North
America by end of July 2001, according to the Wayport website. MobileStar, the
second one of the big WLAN operators in the USA, does not appear to have any
public access points outside of the USA at this time.
Status by August 2001 of public access WLANs in the UK, Germany and
France: At just one or two hotels in each of the three countries!?

UK
Rydges Kensington Plaza (part of an Australian hotel chain) is set to become the first hotel in the UK
with a WLAN.(www.asx.com.au/, 9 Jul 2001*). SkyNetGlobal has confirmed that installation of the
WLAN at the mentioned hotel is scheduled for completion during the week ending 24 August 2001.
See further comments later under the Asia Pacific review. SAS has previously announced the plans to
install WLANs in all its international lounges, which include one at Heathrow.
Note: (ASX announcement from SkyNetGlobal, www.asx.com.au/, 9 Jul 2001, http://www.asx.com.au/scripts/nd_isapi_50.dll/asx/research/AnnDetail.jsp?id=408639&issuerid=4506).
Germany
”WNS plans to start its European operations in Frankfurt” (www.wns.net), and ”has obtained authorisation to set up a
public access network” in Germany (the re-think report p. 6). From a recent presentation by WMS, at
www.morganstanley.com, it appears that each person in Germany could easily get its own WLAN access point (costing
FIM 5000 or Euros 841 or $736 a piece, in volume prices) for the combined price of the licences and the UMTS network
costs! (www.morganstanley.com/waprap/presentations/010531jippii.pdf, slide 22 of 25). – The University of Karlsruhe
has got a WLAN (www.uni-karlsruhe.de/~DUKATH/dukath-engl.html).
The Four Seasons hotel in Munich, has now got a WLAN (totaltele.com, 4 July 2001), thanks to iobox,
a Telefonica (Spain) subsidiary. (www.heise.de/newsticker/data/pmz-01.07.01-001/)
France
The regulatory environment is restrictive, due to military use of part of the 2.4 GHz band. There is only
a narrow frequency range available for WLAN, which may only be operated indoor (www.re-
think.com). – But as mentioned, there is a Four Seasons hotel with a WLAN (Wayport). - And on 2
August 2001, Wificom of Finland installed their WLAN product at the Grand Hotel Mercure in Sophia
Antipolis, a high-tech area in southern France. (In the same town the business centre World Trade
Center had already in stalled the Finnish WLAN, but this is not really in public access WLAN). – There
are probably no other hotels in France with WLANs than the mentioned two for the time being.
WLANs in Europe: It’s early days
– also for this technology.
In a recent UK survey undertaken by Rhetorik among information technology managers it was found that [only] 15 percent of
the companies represented by these advanced respondents were currently using wireless LAN technology. An equal
percentage were looking to install the technology in the (near) future. The general UK average is bound to be a great deal
lower, and so is the average in all or most other European countries. However, it is of course the percentage of ’mobile
workers’, not the percentage of firms, which counts. (Ref.: Wireless LAN Net Access Is Taking Off - Report 07/18/01 LONDON,
ENGLAND, 2001 JUL 18 (NB) -- By Steve Gold, Newsbytes. Wireless local area network (LAN) Internet access is starting to
take off, according to a new report. www.newsbytes.com/cgi-bin/udt/im.display.printable?client.id=newsbytes&story.id=168085)
So, NetPoint A/S (mentioned on the previous slide) may very well be making the right bet for the time being in Europe, namely
hard-wired Internet access at hotels. European hotels offering WLAN Internet access will no doubt have to offer hard-wired LAN
Internet access as well, which the up-and-running WLAN equipped hotels in Sweden actually also does at the moment.
Once 3G is up and running, most European hotels may not want to bother to install a WLAN. Most hotel guests in Europe may
just check their voice-mail and e-mail via their WAP-enabled phone, and if any of heading of the e-mails looks like they need to
be read in full and responded to, the business traveller may pull out his/her lap-top or PDA and connect wirelessly to the
Internet and from there to the e-mail box - via 2G, 2.5G or 3G - without even looking for a LAN plug, and without checking if
there is WLAN access. - The situation and the scenario for the nearest future may be entirely different in the USA, where 3G
spectrum allocation and the subsequent network deployment is on stand-by, WLANs more widespread, the installed base of
802.11b enabled devices greater, and WLAN PC cards simply more widely available for purchase or loan.
Any (relatively new) laptop computer – or PDA (Palm, iPAQ, etc.) - can be equipped with a card, which enables it to access a
WLAN. These cards cost up to $150. So, this is a practical and economic barrier, although not necessarily a strictly technical
barrier. However, top-end laptops are starting to come with built-in EIII 802.11b WLAN card, which in due course may become
a standard feature in most laptops and PDAs.
Wireless or wired Internet access networks
– for own laptops (or PDAs) – in hotel rooms
Next after the mobile phone, the laptop is the most common piece of technological hardware
business travellers bring along. How to connect the laptop to the Internet from the hotel room?
Mobile phone networks Fixed-line phone networks Cable or satellite

2G (very slow: 9.6 kbit/s) Dial-up modem (slow: 56kbit/s)
GPRS (faster: up to 115 kbit/s) ISDN (64kbps or 128kbit/s)
3G (very fast: up to 2 Mbit/s) ADSL (very fast: 512 kbit/s) Cable modem or set-top box
-- downstream: 0.5 to 2 Mbit/s (very fast: 512 kbit/s)
WLANs (up to 11 Mbit/s) upstream: 250 kbit/s
Types of technology available to provide in-room Internet access:

• Dial-up access (the hotel guest use own mobile phone as modem): Hotel gets no revenue.
• Dial-up access (using the hotel room’s telephone line)
• Ethernet (fixed-line via the hotel’s local area network).
• ISDN
• ADSL: Asymetric Digital Subscriber Line (with different download and upload speeds). A high speed
modem is used. An ADSL line is permanently connected to the Internet (’always on’). There are no
metered charges. (Good little intro. to ADSL: www.inweb.net.uk/adsl.html).
• Cable TV (with set-top box, using the Cable TV provider’s network, e.g. hybid network: fiber+coaxial).
• Wireless Local Area Network (WLAN)
Snap-shops of fast Internet acces via TV-oriented networks
In the UK broadband Internet access is available via (a) ASDL (the telephone lines, e.g. BT Openworld, which starts at £40
per month), and (b) TV-oriented network types, currently cable only, but will be offered via satellite as well.
UK: The government wants to switch all households to digital TV before 2010 (ft.com, 8 Aug. 2001). The UK digital TV
market is currently split as follows: Satellite (Sky Digital alone): 5.5 million; cable: 1.5 million; and terrestrial digital i.e. ground-
based aerials: 1.14 million (ITV Digital alone).
UK – cable: The two major players are NTL with 1 million subscribers and Telewest 564k (ft.com, 5 Aug. 2001). These two
players have 90,000 high-speed Internet customers in total. They have a site where they promote and provide information
about broadband cable (www.broadband-cable.co.uk/). Even a (joint?) price is mentioned, starting at £25 per month. NTL
and Telewest are exploring an operational merger (ft.com, 8 Aug. 2001).
UK - satellite. BSkyB is aiming for 7 million digital subscribers by the end of 2003 (up from 5.5). BSkyB ”have not seen any
evidence that people actually want the Internet on the TV” (Towards Analogue Switch-Off, 9 April 2001). – An early Oftel
survey supports the BSkyB statement:
In a UK survey undertaken by Oftel as early as in Q1.2000, it was found that although 1 in 5 homes had installed Digital TV,
fewer than 1 in 5 of these made use of interactive services other than the electronic program guide (EPG),
www.oftel.gov.uk/cmu/research/digi0800.htm. Therefore there is no reason to be overly enthusiastic about the use of the
Internet via digital TV at hotel rooms, should it be made available, i.e. unless the laptop is used as access device.
BSkyB has a ”walled garden” on-TV-screen portal called Open, which allows customers to look up information, shop and pay
bills. About 60 percent of Sky’s digital subscribers are estimated to use Open at least once a week (http://news.zdnet.co.uk,
”Interactive TV market heats up”, 30 April 2001). The Open service does not give access the World Wide Web. However,
Open had over 1.3 million registered e-mail accounts by early May 2001 (when dramatic job cuts among the 400 employees
by then were announced). E-mails can be handled on TV. The free e-mail account is offered in conjunction with BT’s Talk21.
- BSkyB does not offer high-speed Internet access.
Free fixed-line Internet access at hotels – Free
high-speed wireless Internet access at hotels?
The business traveller wants full and fast and Internet access (e-mail and WWW) from his/her hotel
room via the laptop. In the nearest future a wire is likely to be involved, with the exception of an
increasing number of hotels in Sweden and the USA. The guest would no doubt prefer if the access was
free of charge, whereas the hoteliers would like to charge. The market will decide which of them it will
be. If unlimited Internet access can be made available at all rooms at a given hotel at a rather small
monthly cost, and if charging procedures are rather costly to set up and to administer, the service could
be offered to hotel guests as an amenity. Free fixed-line Internet access is provided at many American
and at some European hotels. – Free high-speed wireless Internet access is offered at some airports
and hotels: www.hotel-publication.com/fhotel05.html; www.marinalodge.com/internet.htm. - Indeed, in
some countries, such as the UK, the only possibility of providing high-speed wireless Internet access in
the 2.4 GHz band for a 802.11b service, is to offer it free of charge, for the simple reason that it would be
illegal to charge for it (unlike in other EU countries). It would be OK for hotels and airlines to put up free
WLANs in their premises in the UK, e.g. in airport lounges, www.nomura.com/, 18 May 2001. – Only few
hoteliers would be interested on this basis. Furthermore, relatively few business travellers in Europe
have their laptop equipped with the necessary LAN card, and therefore could not make use of the
service, even if was offered to them free of charge. – That situation will gradually change, though.
Possible loss of revenue by offering free Internet access at hotels: By the middle of year 2000 one US
hotel offered wired high-speed Internet access at $10 for a 24-hour period. Usage was less than 3% of
occupied rooms on weekdays, and nonexistent on the weekend. – This is in accordance with a recent
survey, it which it was found that Internet access at hotels is of some importance in connection with a
business trip, but this attribute is not of any importance at all in connection with leisure travel
(www.hftp.org/Education/hotel_future_01/index.cfm). - 50% of respondents in Hotel Online survey
among business travellers stated that they prefer to surf the web in stead of watching TV ( ). – So, why
not let them, free of charge, if the hotel’s costs are fixed anyway. – If the surfing was free of charge
maybe 10 or 20% would utilize the service. This could be promoted and used as a differentiator.
Broadband Internet via satellite may become available in many
European countries by 2002! .. Technically interesting, and nice to
talk about while waiting for ADSL or cable Internet or 3G .. But for
most SMEs – including hotels - it is hardly a relevant option.
BTopenworld - currently offering broadband via ASDL - is going to launch a satellite broadband service in Scotland and
Northern Ireland in November 2001, targeted at small to medium enterprises and those who run businesses from home.
The service will be extended to other areas of the UK in the year 2002. SMEs certainly include all hotels (”BT to launch
satellite broadband service”, news.zdnet.co.uk, 31 May 2002). So, broadband Internet access can be ’pulled off the sky’ in
places where ADSL is not offered. This is already being done in Sweden, where Wi-Fi in the license exempt 2.4 GHz
band can be used for last quarter of a mile, and charged for, unlike in the UK. – Satellite Internet will also be offered by
others both in the UK and in the rest of Europe (”Speed from space ..”, The Guardian, 9 Aug. ’01).
From the mentioned source – the following split of the European broadband market in 2004 can be derived, according to
Arimiska, a future satellite player: Variants of DSL, £2.9 bn. (52%); Internet via satellite, £1.9 bn. (34%); Internet via cable
AND [a little] ’wireless’ (3G), £0.8 bn. (14%). Total, £5.6 billion (100%). – In the UK there is currently more Internet cable
subscribers than ADSL subscribers. However, although this is not disputed, the writer believes that one ADSL
subscription could quite possibly comprise more individuals - in average – than one Internet cable subscription.
Drawbacks of broadband Internet via satellite include: (1) Signals are delayed since they have to travel the 36,000 km to
the satellite and back. This makes satellite Internet unsuitable for highly interactive applications. And we all hit the return
key frequently when we surf the net, don’t we? (2) The investment in a (new) satellite disk and other necessary hardware
(£350), plus installation. (3) Monthly subscription fees (£100) are higher than for ADSL and cable Internet.
All in all it seems that all hotels – and most other SMEs – in remote areas will be better off with plain dial-up or ISDN
Internet access, if neither ADSL nor Internet cable is available. Exceptions could include those (distance workers, small-
offices home-offices, schools, SMEs) who need to up- or down-load large files, but with little need for interactivity. For
hotels, satellite Internet access is hardly a relevant service offer for their guests, whereas ADSL or cable Internet should
certainly be considered, if available.
Since there is a TV in every hotel room, and since it will be a digital one before too long, small hotels may choose to give
their guests Internet access in this way, via a set-top box etc., whereas larger hotels may opt for Internet via a fixed-line
LAN, or even a WLAN as well as an additional option.
Broadband Internet acces via TV-oriented networks:
Currently not offered by terrestial digital TV networks – in the
UK .. but limited speed Internet access is certainly offered.
UK - terrestrial digital TV: ITV Digital (formerly ONdigital) had 1.14 million subscribers by the middle of
year 2001. ITV has a service called ITV Active (formerly ONnet). ITV Active subscribers can surf,
shop, and send e-mails. Subscribers get a cordless keyboard and a set-top box (ITV Active box) free
on loan. Subscription is 8£ per month. The service is used in connection with a phone. Call charges
are incurred when using the service. – This would be a relevant l service for hoteliers to offer their
guests, since hoteliers have seen their revenue from guest usage of hotel telephones dropping during
the last couple of years. The reason is that an increasing number of hotel guest are using their mobile
phone during their stay at hotels (cf. ”With cell phone, who needs the hotel phone”, The Straits Times,
Singapore, 16 July 2001 p. 16). A few drawbacks, though: It is a narrow-band service. There is no
hard-disk or disk-drive for saving anything (could also be seen by hoteliers as an advantage).
Consumers may in general prefer to use a ’real’ computer for accessing the Internet, and hotel guest
cannot use their own laptop for this service. - In January 2001 ONnet (now ITV Active) had 70k
household subscribers (and 100k users), and at the same time 1 million household subscribers to its
general digital TV service. How many subscribers ITV Active have by the middle of 2001 has not been
published. – Many users stay on ITV Active’s portal, although it is possible to surf the entire web. – ITV
Digital does not offer high-speed Internet access.
Germany: Cable subscribers, end of 1999: 22 million, of which analogue: 21.3 million; digital: 0.7
million (”The great German cable TV sale”, Telecommunications Online, July 2000). – Europe's largest
cable network operator is Kabel Deutschland, who had almost 17.8 million subscribers (households)
by the end of 1999. By the end of year 2000, it had 12 million subscribers, after two regional networks
with a total of 6 million household subscribers had been sold off (and further regional networks were
sold off during the first half of 2001 - to Liberty Media). So, in effect, the overall the number of cable
subscribers in Germany appear to be almost constant. The customers of Kabel Deutschland are
offered 33 analogue and 80 digital TV programmes. Kabel Deutschland does not yet offer high-speed
Internet access via cable, but plan to do so in the near future (website).
High-speed Internet access via cable - Norway
As is the case in Sweden, although high speed Internet access is provided via the same cables as digital
TV, this does not mean that the TV in combination with some unfamiliar device would have to be used to
access the Internet. The Internet could still be access through the preferred mobile device, namely the
lap-top. So, the best bet – in the writer’s opinion - would be to offer high-speed Internet access in any
hotel room with digital TV, not for access via the TV, but for access via the lap-top (or PDA, or web-
enabled mobile phone, for that matter).
In Norway, Telenor was the number one cable TV supplier with 357,000 subscribers (households),
corresponding to a 42% market share by year-end 2000. In other words, 850k households subscribed to
cable TV, i.e. a very high penetration in a population of just 4.5 million persons. There are about 2.05
million households in Norway (of which 40% consist of only one person). I.e. cable TV penetration was
41% of households. – Internet penetration is sky high (48% of used the Internet in the course of an
average week, by the end of year 2000. Sixty-eight of the population have their own mobile phone
(www.ssb.no/english/subjects/07/02/30/medie_en/).
Already in the beginning of the year 2000 it was announced that Telenor Vision (part of the broadband
division of Telenor), had signed a frame agreement with the Norlandia hotel chain in Norway about the
delivery of hotel TV and interactive TV systems. In the course of the first half of 2001 over 1000
interactive TV sets are going to be installed at the hotels. It is seen as being increasingly important to
offer the hotel guests the latest within interactive solutions. The contract was the first frame contract
which Telenor Vision had got with a hotel chain in Norway.
In November 2000, Telenor agreed to sell-off its hotel TV activities to Otrum Electronics ASA, with
Telenor as the largest shareholder, though. – ”Otrum's technology has been installed and is being used in
more than 375,000 hotel rooms.” In April 2001 it was announced that Otrum ASA had signed an
agreement with Scandic Hotels AB about the delivery of Otrum’s interactive TV solution to 10 Scandic
hotels with a total of 2,200 rooms in Germany, Austria, England, Belgium and the Netherlands.
Broadband in Denmark
(a) Denmark - ADSL: ”Before June 2002 there will be access to ADSL almost all over Denmark.”
(www.tdcas.dk/tdc/english/menu/sm0287.htm). - ADSL reached the eastern most spot in the
Danish Kingdom ’today’, Nexoe on the island of Bornholm, in fact the writer’s institution. – And the
western most part of Denmark, the rural county Ringkøbing Amt will also be among the first places
where people get ADSL all the way to their front door. Flat-rates for ADSL with 2048/512 kbit/s in
Denmark are about the same as for a high-speed Internet cable subscription. Hoteliers may want to
opt for the more commonly used approach to high-speed fixed-line Internet access, i.e. ADSL.
(b) Denmark - cable: ”TDC is Denmark's biggest cable operator and a major player in the television
cable business, as well as being a European pioneer in digitalisation of its networks.”
www.advanced-television.com/, 11-18 June 2001. TDC Kabel TV had 801,000 subscribers by the
end of year 2000. Denmark has 2.43 million households (5.3 million inhabitants), i.e. 33% of all
households subscribe to cable TV. - The cable network is currently being restructured in order to
enable two-way communication in the net. There are already now customers enjoying high-speed
Internet access via their cable TV connection. Through a digital decoded box called Selector,
subscribers can get free e-mail, among other interactive service, and ’pay per view’ programmes.
(Source: TDC, annual report 2000). Two-way communication, which enables high-speed Internet
access, is currently available in many of the largest cities and will be extended to most counties and
before the end of year 2001. The service offered is called WebSpeed K2. Different speeds and flat-
rates for unlimited use are offered, ranging from just 64/64 kbit/s up to 2048/512 kbit/s (down-load
faster than up-load). Price per month is up to DKK 799 DKK ($96) per month plus installation and
cable modem. – Laptops can be used as access devise (with Ethernet card and ’RJ45 connection’).
(c) 3G is coming soon, and will be available everywhere, anytime.
Wi-Fi surf-areas are hardly present at all in any public places in Denmark (see separate slide).
Local Area Networks, for Internet access within hotels, are likely to be based on hard wires. –
Unless of course the hotel guest simply use GPRS and in due course 3G for full or limited web
access and e-mail communication.
Question: Are WLANs a threat to the
mobile network operators or not? (1)
Answer: Possibly with the exception of the USA, there is no reason for mobile network
operators to be worried about the potential negative impact of WLANs on their revenue
streams during the next few years.
But of course, if mobile network operators or hardware manufactures – for example in Europe
- fail to exploit the possibilities of existing technologies such as the ones behind WLANs, they
may find it relatively hard to progress. In other words, mobile network operators should not
ignore WLANs but must consider how they can best utilize (exploit, if you like) WLAN
technologies. WLAN players, on the other hand, must consider how they can find ways to
cooperate with (or let themselves be acquired by) general telephony network operators
(WANs). Within the given regulatory frameworks, WANs and WLANs will have to co-exist.
In the Nordic countries (specifically in Sweden, Finland and Norway where roll-out of public access WLANs
started quite a while ago) the WLAN field is already - or can be – dominated by mobile network operators
themselves anyway. For incumbent telecom operators with both fixed and mobile networks, the only small
luxury problem is to decide if WLANs should be placed in the fixed or the mobile business. For pure play
mobile network operators it is true that WLANs may be seen as a tool which could potentially be used by
fixed-line operators – or new entrants - to capture bits of the mobile network operators’ cake. But (outside
of the USA) this seems to be theoretical possibility without any practical significance.
In the rest of Europe and in the rest of the world public WLANs are literally nowhere, and to a great extent
(more than 90%) the same is true for in-company or on-campus use of WLANs. In the Asia-Pacific WLANs
may gain some momentum in Singapore, for example, but few other places. Outside of the USA WLANs
should be no match for the alternatives (which include both mobile and several different approaches to
fixed-line Internet access).
Are WLANs a threat to the mobile
network operators or not? (2)
WLANs cannot beat neither fixed-line nor general mobile network operator based
broadband Internet access, except where mobile telephone networks never were and
never will be anyway, namely within ”companies” (including public service entities) and
university campuses. Certainly outside of the USA it would be safe to say that WLANs
are no serious alternative to neither fixed-line Internet access nor mobile telephony. Free
WLAN access is a compelling amenity for airlines to offer at airport lounges, and for
hotels and congress centres centres to use as a positive differentiator (in their promotion
activities towards meeting planners and to some extent individual travellers). But if the
traveller has to pay for the service, he/she is likely to go for 3G, if and where it has been
launched, since if so this service is available absolute anywhere, and there will only be
one bill (which the company pays). The mobile network operator (general WAN), would
be able to charge for both ordinary mobile phone usage and WLAN usage on the same
bill (cf. ”Nokia Operator Wireless LAN”, pdf,
www.nokia.com/networks/wireless_lan/downloads.html). - WLANs may be a way for
mobile network operators to ’beef up’ data rates for wireless Internet/WWW access from
laptops and handheld computers (but not for ordinary handsets), at selected high-usage
locations, hotspots. – Fixed line telephony operators as well as fixed-line Internet Service
Providers can do the same though. Both fixed-line and mobile network operators can
provide all the roaming in the world which is needed, literally. In this perspective, WLAN
operation can be regarded as an additional way for phone network operators to service
their customer, ”ein Nebengeschäft”, as the Germans would say, i.e. a additional
potential source of income (cf. also nokia.com/networks/wireless_lan/hl_solution.html).
If WLANs are rather widely available (like in the USA), and neither 2.5G (GPRS)
nor 3G is available, the case for WLANs looks better. However, where paid-for
WLANs are currently installed, for example in cafes, they compete against all
other ways of getting Internet access, including existing Internet cafes and free
fixed-line Internet access points, equipped with computers or with the possiblility
to plug-in the laptops (or similar). I.e. again a market segment which was not
served by mobile telephony in the first place. Reports about the actual usage of
for-fee (not free) WLANs in those cafes etc., which have installed WLANs, have
yet to appear in the press which has extensively covered the roll-out plans for
and installation of these public WLAN. The interest of users in buying WLAN
access – when Internet access is free many other places - may turn out to be
much cooler than the coffee they zip. If it gradually becomes evident that people
are not prepared to pay for wireless Internet access at cafes and hotels etc., the
actual roll-out of WLANs - even in the USA - may be slower than projected in
current plans of high-profile players. – In Europe WLANs are not likely to gain
any significant momentum in the near future unless WLANs get on the WAN’s
side.
By early August 2001, the writer identified 1000 public hotspots in USA, and about 325
in Sweden/Finland/Norway. Very few in the rest of Europe and in the rest of the world.
There may be more public hotspots (in cafes and travel-related places) than these, but if
so they have certainly done a good job hiding themselves. – It has been forecast (by
BWCS) that there should be 6300 hotspots worldwide by the end of 2001, and as many
as 114k by 2006, of which 69k in the USA, 30k in Europe, and 15k in Asia Pasific
(BWCS according to totaltele.com, 30 July 2001, ”Wireless LANs to threaten 3G revenue
– report”). The writer is not prepared to believe these 2006 forecasts at all, sorry, and
also finds it unrealist to assume (or forecast) that there will be in excess of 6000 (public)
hotspots by the end of year 2001, worldwide. Since the end of year 2001 is quicly
approaching, time will soon tell if there will be 3k or 6k public hotspots, though, after
which the guessing game is over. – A second recent report deal with the same question:
”Public Wireless LAN Access: A Threat to Mobile Operatos” (by Analysys, cf.
totaltele.com, 9 August 2001). Unlike the first report, which seems to focus on the
threating aspects of WLANs, the second report emphasizes and focuses on the
oportunities which WLANs pose for mobilie operators.
Certainly from a European perspective, it will be more worthwhile for mobile network
operators to consider WLANs an opportunity rather than a threat. Like with any new
technological development, it is up to the actors to exploid the opportunities, since even
if a new technology is considered a threat, it will still exist anyway.
Certainly in Europe, the WLAN players might as well find a way to join them,
i.e. contribute to the future usage of broadband wireless Internet access
technologies. WLANs can get their Internet access from anywhere, from mobile
phone network, from fixed-line phone networks, from Internet Service Providers
or from TV oriented networks (cable, satellite, terrestrial), which puts them in a
strong bargaining position, pending on a larger installed based of portable
computers with necessary WLAN cards.
EIII 802.11b based mobile phones are not on the drawing-boards. Laptops, not
handsets, are the ideal devices for full and heavy wireless web usage. The
higher data rates (bandwidth) which mobile network operators offer, the better
they can serve the needs also of those out-of-office laptop users, who need
more than voice and simple text via handsets (or handhelds).
In the area of heavy out-of-office Web-usage via laptops the closest substitute
(and thereby largest competitor) for mobile network usage is not WLANs, but
fixed-line Internet access points, where usage is un-metered seen from the
point of view of the property owner (for example via ADSL or cable), and is in
some instances offered for free to the end-user as an amenity.
Mobile Internet usage (1)
In the case of wireless broadband Internet and Intranet access from computers there are
obviously alternatives to 3G. However, just because it is possible to establish wireless local
area networks does not mean that they will be established. In most instances they will of
course not be established, in Europe. In the USA the situation is different, though. WLANs
are a long way off in Europe, except in Sweden. Fixed-line broadband Internet access will
be available almost everywhere in Europe, .. and so will 3G.
Usage of broadband mobile Internet access via handsets: 1G is enough for voice. 2G is
enough for text messaging (at least in the GSM area). 2.5G is enough for WAP usage.
There are applications which could ”fill the pipe”, but will they be used? By 2005, how many
times out of 1000 will the user send a plain SMS, and how many times a ’wireless postcard’
at $2 a piece? The receiver may even have difficulties in opening such a enhanced
message, for example because they don’t have an advanced mobile device at all. And the
business traveller: Does he/she really need wireless access to the entire Intranet and WWW
– or will access to e-mail do for most?
Logging onto the web wirelessly, is a good 3G application, and the laptop is a brilliant 3G
access device. But this combination will have to compete with fixed-line high-speed Internet
access. 3G may win this particular battle though. Business travellers, for example, are not
going to spend much time looking for the telephone line plug when they are in a hotel room,
if they have got 3G mobile access, and they will hardly check if the should be a WLAN
installed. If they are in the car they may try to get by with voice. But if they are on the train
(or in the plane), mobile Internet access for the laptop will be interesting. 3G will be brilliant
for accessing the Internet with the laptop when riding full speed on the train.
Mobile Internet usage (2)
Games, entertainment, advertising: What is it which makes people willing to
pay to play a game on a mobile phone .. in stead of downloading some mega-
bites of games for free onto a PDA (or a lab-top, or onto the mobile phone
itself in due course) when being hard-wired, if they must play? Irrespective of
the answer, apparently they will. But is it simple number-games, which makes
people tick – or must it be colourful and moving etc.? In general, it probably
has to be with colours and with some movement to catch on. However, this is
possible with 2.5G (cf. Japan today). Some types of content in the
entertainment and advertising fields look best in colours and moving, so
perhaps these are the areas which will benefit the most from 3G, eventually.
In the meantime, the SMS’ will continue flowing and growing, which they
would in any case.
Mobile Internet content (1)
The need to redesign, even with 3G: Many web pages are packed with colours
and frames, albeit readers could very well do without many of the banners. Even
if full web pages could be down-loaded instantly to a mobile phone, this would
be no good anyway for the vast majority of the mobile phone users. Why? The
ordinary html pages designed for full-size computers will of course not fit the
relatively small screen at all, since most mobile phones in use in 2005 will still be
equipped with the same screen size we know today. Some will have marginally
larger screens - with colours, though. Internet (WWW) content intended for
mobile phones has to be designed for mobile phones, even when 3G networks
have been implemented. One important exception is content, which is already
(short pieces of) text, which is already – or can be translated automatically - into
a format suitable for mobile phone screens. Again, for text 2.5G (or even 2G)
would do.
Mobile Internet content (2)
Barriers against an explosion in content suitable of mobile phone access:
Barrier 1: The need to redesign for way content is presented on the Internet
in itself puts a limit on the number of websites which will be made suitable for
browser equipped mobile phones, which are the bad news. The good news
are that a relatively small number of web sites will cover most of the
information needs.
Barrier 2: It will be a further serious barrier if web-masters, who have been

familiar with html for years, need to learn any additional separate
programming language, whatever its 3-4-5 letter abbreviation might be.
Rather intelligent programs for automatic conversions of html-pages into a
programming language and presentation format suitable for mobile phones
should be developed, since most webmasters just cannot be bothered with
this task. Some exist already, though, such as wap.google.com, but it could
be a fruitful area for additional efforts. There could perhaps be a ”save as
wml – or save as whatever” and ”preview for mobile phone screens type A or
B or C” function on standard word processing or web page design programs.
Acknowledgement
This piece of research has been funded by the Danish Social Science Research Council
as part of a project called Internet Commerce for Hotels, and has been carried out by
Senior Researcher Carl H. Marcussen, PhD, Centre for Regional and Tourism Research,
www.crt.dk (earlier known as Research Centre of Bornholm, www.rcb.dk).
The results presented here are of a completely general nature, though.
The Internet Commerce for Hotels project in turn part of a three year Danish Tourism
Research Program called Tourism Research Centre of Denmark (a virtual centre).
The participants in the overall tourism research programme are University of Roskilde
(lead); Copenhagen Business School; and the Research Centre of Bornholm, all Denmark.
© Centre for Regional and Tourism Research (www.crt.dk) and Carl H. Marcussen
(marcussen@crt.dk). Short extracts, including figures, tables and text may be quoted if due credit to the
source is given, cf. slides one and two of this document.
Web-site of this study
Web-site of this study (full study in pdf):
Mobile data and m-commerce in Europe
- A mobile network operators’ revenue perspective, 1999-2003
http://www.crt.dk/uk/staff/chm/wap/sms.pdf
Denmark, 16 Aug. 2001, updated 31 May 2002.
If you would like to register an interest in purchasing an update (if any) of

this or related studies (cf. www.crt.dk/uk/staff/chm/wap.htm), simply drop
an e-mail to wap@crt.dk and write ”Please keep me informed” in the
subject field. No text, except your signature, please.

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Mobile data and

- A mobile network operators’

Non-voice = SMS + WAP + m-commerce

(see next two slides)

Pre-pay phone usage Post-pay phone usage

Voice usage SMS usage WAP usage M-commerce

For (a), (b), (c), p.a.: Pre-pay Post-pay Total

Rest of W. Europe: National telecom

40 SMS sent per

Billion SMS sent p.a., W. Europe

0,0 0,5 1,0 1,5 2,0 2,5

UK: 1.53 million, by adding up statements or estimates for individual operators:

2000: Just 10 minutes per user per month (using T-

10 minutes of airtime translates to about 2.66 Euros per

For the following years, 2001-2003, the spending on data

80% WAP, post-pay

m-commerce is the interchange of purchase inspiring

Secure payments by non-voice means – including transmission of credit-card details – is not

REFILL OF PRE-PAY CARDS BY SMS (OR WAP)

In order to be able to make an ”on-air” re-fill of the pre-pay card – and

40% M-commerce: Cut-off + adds

• ARPU for post-pay M phone users decreased 4% from 1999 to 2000,

.. and in the year 2003 non-voice

Part 2. North American approaches to

So, mobile text messaging being dominating in the area

1. Smart, Philippines 26.8% (Q1)

What will be the winning combination with respect to

Traditionally text messaging has been very cheep in the US.

I’ll let others work in out, but here is a hint:

PS: i-mode counted 25.028 million users as of 1 July 2001 (nttdocomo.com).

Source: Own estimate based based on pieces of published date.

Million registered M phones

Deployed WAP and I-SMS handsets

In May 2001 it was reported that GoNext, a wireless portal

”Vodacom (Pty) Ltd is the leading cellular network operator in

”Almost 600,000 users have registered with

WAP ... and more:

SMS WAP M-commerce

Source: Own estimates based on review of annual accounts of major operators.

It is not possible to pin-point the exact reason for the discrepancy.

USA Japan Philippines Europe

4) For all: Free choice of text communication device, be it fixed-line or

1) Verizon: According to Vodafone press release, 25 April 2001, in

2) Cingular Wireless (SBC, BellSouth): ”Cingular will be offering

Summary of the review of the major operators’

Motient’s reported Wireless Email (eLink) subscribers:

RESTON, Va., Jul 19, 2001 /PRNewswire/ --

2) TIA, the Telecommunications Industry Association,

For business people (travellers) the PDA is a supplement to a mobile

Ordinary consumers will have a mobile phone only.

In the area of broadband Internet access there appear to be alternatives

France: At just one or two hotels in each of the three countries!?

Mobile phone networks Fixed-line phone networks Cable or satellite

Types of technology available to provide in-room Internet access:

Barrier 2: It will be a further serious barrier if web-masters, who have been

Denmark, 16 Aug. 2001, updated 31 May 2002.

If you would like to register an interest in purchasing an update (if any) of

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