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Technology Stocks : Qualcomm Moderated Thread - please read rules before posting -- Ignore unavailable to you. Want to Upgrade?

To: foundation who wrote (25671)	8/16/2002 8:40:26 AM
From: foundation	Respond to of 197246

A Week In Wireless No. 65 16-AUG-2002 WorldCom may have encountered another gaping hole in its threadbare accounts last week, but President Bush's faith in the resilience of the US economy wavered not one bit. "We're America," he observed, deeming no further assurance necessary. It was unclear quite what consolation this offered to all the other world markets suffering as a result of US boardroom malpractice, but what with the Asian haze and half of Europe being under water Mr Bush probably assumed that the rest of us were doomed anyway. However, the stage-managed economic forum that Mr Bush conducted with CEOs and 'real' people in Waco on Wednesday failed to instil much confidence at home or abroad, given the noticeable absence of constructive debate. Most bizarre was the request of one participant that Mr Bush not come down too hard on the country's much-maligned CEOs. They earn every penny of their large salaries, she insisted -- in fact, we should be giving them more money. Which particular company she runs remains undisclosed. On the wireless front, the United States has good reason to see more promising times ahead. European players have long since revelled in the comparative underdevelopment of the US market but, according to Morgan Stanley, the joke could soon be very much on them. By the end of 2004, 115 million Americans will be subscribing to next-generation services, a report from the investment bank has suggested, as opposed to under 36 million in Europe. Current headlines made the figures seem entirely plausible. While European operators pore nervously over the small print of their 3G licences, Sprint PCS was outlining the details of its nationwide 1X service, dubbed the Sprint Vision Network. As well as unveiling Handspring's new colour-screen Treo, billed as a rival to T-Mobile's PDA phone, Sprint was reported to have teamed up with Research In Motion to develop new Microsoft-based solutions for the enterprise market. The purposeful spread of 1X in North America stood in marked contrast to the increasingly grim signs coming from the Canadian GSM outpost, Microcell. With a customer base of around 1.2 million subs and a market share of 18%, Microcell has been forced to admit that its future as a going concern is far from assured. Merger activity would offer a welcome solution to the Canadian operator but the degree of isolation from which Microcell suffers does not make for a long list of potential buyers. Back in Europe, operators were worrying about the prospects for their own margins following the news that Hutchison Whampoa is planning to bulldoze its way into the market by undercutting rivals with cheap voice tariffs. The wisdom of such a strategy was immediately questioned, however. Not only would it raise the possibility of a price war on voice calls, but it would force Hutchison to rely solely on the popularity of data services in order to turn any sort of profit. And with most other operators still only expecting modest revenues to come from data for the foreseeable future, over-aggressive voice tariffing would prove a decided gamble. The report certainly did nothing to halt the downward trend in Hutchison's share value. How much data services are actually worth remains the burning issue, of course. Orange pinned its colours to the mast this week by launching its UK MMS service at the price of 40p a message. This left T-Mobile, the only other UK operator to have gone live with MMS so far, looking rather pricey in comparison with its monthly subscription fee of £20 -- that's 50 picture messages a month before the T-Mobile model becomes more affordable. Arguably of greater concern than pricing, though, was the discovery that multimedia messages cannot yet be sent between the two networks. With T-Mobile using Ericsson equipment and Orange having opted for Nokia's solution, there were obvious suspicions that interoperability between the two systems looking most likely to lead the market might not be achieved as effortlessly as the vendors have made out. Reports from Japan that half of all J-Phone subscribers are now active users of the Sha-mail picture messaging service should give both vendors and operators all the incentive they need to focus their minds on getting this one right. MMS interoperability is perhaps the least of Ericsson's problems, though. Ericsson is hoping to offset a 15% fall in demand in 2002 by raising around $3.2bn through a rights issue, but the admission that around $500m of that money may have to be channelled directly into the fledgling Sony Ericsson venture underlined the fact that for Ericsson the figures are just not quite adding up. The news that Sony Ericsson has now received government clearance to begin operating in China was therefore timely for all parties. The flip side of any downturn, of course, is that it becomes a buyer's market. Admittedly, almost no-one has the money to buy anything but for those that do it's a good time to invest on the cheap. That was the view taken by analysts this week as they applauded Vodafone's decision to take advantage of depressed share prices and spend E88m on upping stakes in its Portuguese and Swedish businesses by 3.2% and 2% respectively. It now owns 54.1% of Telecel and 73.1% of Europolitan. Even Vodafone's pockets are only so deep, though, as demonstrated by a request to defer payment on its 3G licence in Ireland -- a move that contrasted with O2's announcement that it was accepting its Irish licence as expected. The licence's coverage requirements are hardly stringent - only 53% of the population must have 3G service by mid-2008 - and such modest expectations on the part of the regulator are no doubt a sign of the times. Bargain hunters will be keeping a close watch on a number of ailing operators looking badly placed to make it through the telecoms drought. German licensee Quam is still technically in business and planning an eventual 3G operation, but the vultures are already beginning to circle. O2 this week said it would not be interested in buying any of Quam's spectrum but hoped that other existing licensees would be. Italian operator Blu has also found itself at the carrion end of the wireless food chain. It was reported this week that Telecom Italia Mobile is to buy all of Blu's assets, with TIM expected to sell on certain parts of Blu to other Italian operators. Finally, there was clear proof that employees should keep their minds strictly on the job this week, as Alcatel won a legal battle to own the rights to one of its employees' ideas - even though he claimed to have been working on his invention for years before he joined the company. So it appears as if everything that an employee does - or even thinks - on company time is the company's property by legal entitlement. It's a pity, then, that holiday planning, internet surfing and gossiping in the tea room aren't saleable commodities. This downturn would be over in a jiffy. telecoms.com