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Viodi View Newsletter - November 9th, 2005

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Wireless ISP Highlights

by Alan J Weissberger, aweissberger@sbcglobal.net

1. Mobile Market Takeaways:

2B people worldwide use cell phones with over 775M handsets sold each year
Global market size is huge: $500B total market revenues in 2005
657 wireless carriers worldwide
High speed data/video/audio downloads and streaming are the growth areas
EVDO from Verizon and SPRINT is being used in PDAs, notebook PCs, and cell phones
VoIP over WiFI, via dual mode phones, is a promising technology going forward

2. WiMAX:

Clearwire, SPRINT, and Tower Stream are planning WiMAX based fixed broadband wireless networks in the US starting in 2006. Mobile version of WiMAX (IEEE 82.16e) has promise as both a competitor to 3G data technologies, e.g. EDVO, and as a 3G overlay in areas where the 3G telco does not have coverage.

WiMAX equipment vendors will have difficulty making money, due to competition from many players and low costs due to standardized components. Margin compression will be especially severe on component manufacturers, who are led by Intel.

3. Municipal WiFi Networks are a reality- even if they are offered as loss leaders by the vendors.

At least 716 Municipal WiFi projects have been announced in the US. While Philadelphia is the most prominent, city of SF is attracting a lot of attention due to the Google bid.

4. Wireless carriers face uncertainties regarding integration of services and leveraging the spectrum that they own. They have been consolidating to realize economies of scale and reduce competition, e.g. Nextel-SPRINT, Cingular-AT&T Wireless, etc.

5. Wireless carrier market trends: carrier consolidation is just about completed and as a result profit margins are expected to increase along with a rise in ARPU (Average Revenue Per Unit). However, total new subscribers added are slowing.

6. SPRINT is currently the leader in wireless mobile data. They are collecting an average of $7 per month for data/video/audio services from each cell phone subscriber. SPRINT offers video streaming, video clips, and satellite radios on their cell phones. They are now also selling EDVO cards and a nationwide broadband data service (mostly for notebook PCs), thereby competing with Verizon.

7. Wireless carriers will partner with cable companies (now providing cable TV, Internet, and cable telephony/VoIP) to offer quadruple play services. Sprint, T Mobile and Motient are looking for MSOs to partner with. So wireless voice/data will be added to the existing triple play cable bundle. RBOCs like SBC, Bell South (Cingular), as well as Verizon, can already offer quadruple play services on their own.

8. VoIP could be a “leverage point” in 2006 with cable companies moving first, and telcos to follow. If VoIP does spread from a residential market to an enterprise market and critical mass is established, then dual mode phones (VoIP over WiFi for inside the enterprise + CDMA/GSM/other cell phone technology for outside the building) will become important.