A Week In Wireless No. 83
10-JAN-2003
Dear Readers,
A very happy new year to you all and may I bid you welcome back to the world of A Week in Wireless. Same format as usual, although there might be some slightly older news mentioned this once due to our absence over the holiday period. Also, a special Spotlight this week as we allow the chairman of a new industry organisation to voice his thoughts through the newsletter. We will be including such messages from time to time this year, so keep an eye out.
All the best,
Mike
So to 2003 and the now familiar new-year question: after 2001 (the annus horribilis) and 2002 (the annus encore horribilis) can we finally look forward to gentler times? Well the usual industry luminaries appeared more reticent than normal when it came to predicting rosier days ahead, presumably for fear of exposing for a third successive year that they have no idea what's going to happen. But, thankfully, the new-year marketing efforts of various operators demonstrated that, if nothing else, there should still be plenty to smile about. Honorary first mention of 2003 goes to Hutchison, which made thousands of Londoners wonder if there'd been something funny in their Christmas punch this week by subjecting them to a very peculiar sight indeed -- groups of young ladies walking around the city centre wearing white coats and dragging silver television sets behind them on leads. This apparently symbolised how the 3G age would spell an end to the days when you have to cart your TV around everywhere you go, or something. It was certainly a bold, if largely unfathomable, marketing ploy.
However, such abstractions were too high-brow for Deutsche Telekom, which opted instead for a far more prosaic new-year sales push by 'going Scottish' - that's to say cheap. Adverts featuring characters decked out in DT's ancestral pink tartan encouraged bargain-hunters to take advantage of the kind of deals that presumably even the most tight-fisted Scot could not fail to jump at. Disappointingly, an equivalent campaign inviting T-Mobile's Scottish customers to 'go German' failed to materialise, but then Germans are so much trickier to nationally stereotype. Best of all, though, was the Playboy-inspired 'Phonemates' campaign launched this week by Virgin Mobile - no gimmicks, just good old-fashioned smut. It may be a whole new year, but some things just never lose their appeal.
For Vodafone employees, though, 2003 will spell the beginning of the post-Gent era. Sir Chris will make way for the new man, former AirTouch chief Arun Sarin, in July, as was announced (conveniently) just as soon as the Informer had left for the Christmas break. And the big debate of the year within Vodafone, one which Gent may well leave for his successor to resolve, has also emerged -- what policy to adopt regarding Verizon Wireless. Vodafone appears restless over its 45% minority stake in the US operator and 2003 could prove the time to sell it back to Verizon and use the money to bid for one of Verizon's competitors. Alternatively, Vodafone could be gunning for full control of the JV.
Vodafone was also strengthening its position in Eastern Europe this week, sealing a partnership with Austrian operator Mobilkom, which also runs networks in Croatia and Slovenia. As a result of the deal, the Mobilkom networks will effectively become part of the Vodafone family when it comes to roaming and other international services. In Japan, meanwhile, Vodafone's J-Phone subsidiary launched the first handset (made by NEC) to run on the 'Vodafone Global Standard' - that's to say that it runs on J-Phone's WCDMA network and on GSM networks elsewhere. And the Gent legacy was left looking sounder than ever thanks to promising initial user figures for Vodafone Live!, which had attracted 380,000 subscribers across Europe by the end of 2002 having only launched in late November. This left the target of one million users by the end of March looking realistic.
DoCoMo's rival i-mode service in Europe has been growing slowly by comparison - understandably given the service's smaller footprint -- and DoCoMo does not expect to pass the one million subscriber mark until the end of 2003. Playing second fiddle to Vodafone Live! can hardly have been what DoCoMo had in mind for its flagship service. Nor will Foma's ongoing travails make for a comfortable year in the DoCoMo camp unless things pick up quickly. There was certainly little thought for auld acquaintance from Moody's this week as the ratings firm lowered its outlook on DoCoMo to negative, citing Foma's failure to attract customers. DoCoMo countered by announcing plans for a $420m bond issue to fund its 3G project, but reports that the delivery of new Foma handsets with improved battery life has been delayed yet again only served to back up Moody's downbeat appraisal.
DoCoMo's uncomfortable experiences with Foma may have served as a warning to other would-be 3G operators, but many still refuse to be put off. AT&T Wireless, for example, confirmed this week that it will have WCDMA networks up and running in at least four major US cities by the end of 2004. Some chose to regard it as a positive step, although others recalled how AT&T had originally promised shareholder DoCoMo that no fewer than 13 major US cities would enjoy WCDMA coverage by June 2004. And without the continuing behind-the-scenes pressure from its Japanese partner, AT&T would probably not have even gone that far.
What a festive period it turned out to be for Microsoft. There was no Christmas card from former handset partner Sendo this year, only notification that Sendo was taking Microsoft to court over, in keeping with messy divorces, pretty much everything. Fraud, theft of trade secrets, negligence, breach of contract - it's all in there. Basically, Sendo is accusing Microsoft of attempting to bleed it dry -- of conspiring to thwart its attempts to release its Z100 smartphone and of cynically taking advantage of Sendo's expertise to further its other mobile projects. So are we dealing here with a sinister, conniving Microsoft or a paranoid and desperate Sendo? Whatever the facts of the matter, it's a dreadful advertisement for Microsoft given its struggles to win trust within wireless circles.
There was positive news for Microsoft on other fronts, nonetheless. It had long been felt that Microsoft's best chance for wireless success lay in its domestic US market, and yet there had been no sign of Microsoft's mobile software becoming available for CDMA devices. That all changed this week, with both Hitachi and Samsung debuting new CDMA phones that use the Microsoft software. Moreover, Sprint PCS revealed that it would be the first customer for the new devices. Separately, Sprint was putting the finishing touches to a deal with Warner for music content and with Sony for film-related tie-ups.
Motorola was also unveiling new products, with the wraps being taken off six phones due for release over the coming year. The portfolio included UMTS and EDGE models, both set to appear in the second half. But perhaps the most innovative new product came from Samsung, which unveiled its first camcorder phone complete with 300,000 pixel camera and zoom lens and able to record 20 minute clips. Up to 15% of Korean mobile users will own camcorder phones by the end of the year, Samsung reckoned.
It was the Dutch market, though, which has arguably generated the most interest over the past few weeks. Rumours that mmO2 is poised to offload its Dutch unit gathered pace, with both Vodafone and T-Mobile-owned Ben being named as potential buyers. The asking price is believed to be in the region of E200m. And all five Dutch operators received a slap on the wrist from the national regulator for conspiring to cut handset subsidies. A collective fine of E88m was imposed, with KPN receiving the heaviest punishment. For the Dutch operators, a new year's resolution was perhaps in order: not to get up to any more funny business. Or not to get caught anyway.
The Informer
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