To: foundation who wrote (29831 ) 12/9/2002 7:17:43 AM From: foundation Read Replies (1) | Respond to of 197208 Bellsouth, Smartcom Cautious On 3G Applications - Chile Regional Business News Americas December 9, 2002 (BNamericas.com) - Latin Americans' greater cost-sensitivity to mobile services will require the region's CDMA2000 1xRTT operators to place extra focus on how to make third-generation wireless applications commercially viable, executives from mobile operators BellSouth Latin America and Chile's Smartcom PCS told participants at the 2002 CDMA Americas conference in San Diego, California. The executives emphasized that while operators should not ignore the opportunities afforded to them by their 3G CDMA networks, market restraints make it necessary for them to act with caution. Smartcom president Jorge Rosenblut said Latin American customers have shown themselves resistant to increasing the portion of their budgets devoted to communications services. "In Chile, at least, people spend their ARPU with us and that's it," he told BNamericas. The company's ARPU is about 11,000 pesos (US $ 16). Smartcom launched a CDMA2000-based wireless Internet offering called Wisp in June this year, but Rosenblut said results have been "disappointing" to date, perhaps because Chile only has 80,000 laptops in circulation. "We need to have more money, and have focus, before we jump into applications," he said. Ralph de la Vega, president of BellSouth Latin America, said the two most important concerns for CDMA2000 operators in the region are obtaining more handsets at better prices, and developing applications with local content. De la Vega said handset pricing trends are positive, with more cheap options surfacing on the market. "10,000 phones are being deployed in one country with a low-cost chip," he said. At the other end of the market, operators may be challenged to adequately serve Latin America's few, but deep-pocketed high-income customers. Hans Wichary, senior business development manager for San Diego-based handset maker Kyocera told BNamericas that a country needs to have a sizeable market for a manufacturer to sell its products there. "We won't go into a market if we are only going to ship 10,000 phones. That's not enough revenue to support the cost of serving that market." Outsourcing client service and attention was not a likely option for Kyocera, he added. Regarding the mass-market penetration of applications such as games and digital photos, already taking place in Asia and North America, de la Vega said, "I don't believe the same applications will do well in Latin America." Despite CDMA2000's technological advantages over GSM/GPRS, most Latin American customers continue to prefer low-cost applications that both technologies can support, he said. "We need new CDMA products to compete with GSM," he said, adding that caution was imperative: "We have to introduce the right products at the right time." Also affecting applications are Latin America's weak currencies, which make US-based applications much more costly to acquire. "Developers need to understand our business model: I get pesos, you get pesos!" he said. After recognizing the need for caution, the executives acknowledged that the capabilities of CDMA2000 are simply too great for operators to ignore them. De la Vega told BNamericas that mass marketing of 3G applications within the next year was unlikely, but, "I feel there are kinds of corporate applications that can bring us opportunities." To that end, BellSouth is already conducting trials of Qualcomm's (Nasdaq: QCOM) CDMA2000 1xEV-DO technology in Venezuela, and planning trials for two other countries, De la Vega said. Smartcom has also said it is evaluating EV-DO trials for 2003. EV-DO allows for data transmission speeds up to 2.4Mbps, compared to 1X's top speed of 144kbps. BellSouth is deploying 3G CDMA networks in six of its 11 Latin American subsidiaries: Colombia, Chile, Ecuador, Nicaragua, Panama and Venezuela. Smartcom was Latin America's first operator with a 3G CDMA network, which it commercially launched in Chile's capital Santiago in mid-2001. Business News Americas (BNamericas.com) ragingbull.lycos.com