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To: Eric L who wrote (3080)	6/17/2003 3:41:37 PM
From: Eric L	Respond to of 9255

EMC on MMS Interworking and Handset Critical Mass Article contains 3 Charts GSMA PRD IR.52 "MMS Interworking Guidelines" v3.1.0 (February 2003) here: gsmworld.com >> Interworking Agreements - The Catalyst to Jump Start MMS Take-Off? EMC World Cellular June 16 2003 e-searchwireless.com Over a year after the launch of MMS, the market is yet to experience a significant upturn in traffic volumes. The lack of interworking agreements among network operators has been cited as one of the hindrances to rapid MMS take-up. All that is now beginning to change as operators are increasingly beginning to put these agreements in place on the national level. Portugal, Germany, the UK, France, Finland and Singapore are among the markets where all network operators have entered MMS interworking agreements enabling the exchange of picture messages across rival networks. While the operators' priority is on the national level, on the international level (interworking agreements across geographical markets) things appear to moving far more slowly. Though many operators are already offering MMS roaming capability, this is through GPRS roaming agreements, and not the result of international MMS interworking agreements. Only a handful of operators can, as of today, boast of having international MMS interworking agreements, among which can be counted the agreements between Sonera (Finland) and TDC (Denmark) and Sonera and CSL (Hong Kong). The market is likely to see more activity in this area when there is a viable business case to justify the resource investment. In the interim, interworking within a geographical market remains the priority. In the markets where full interworking amongst operators has been achieved, the expected benefit is an upsurge in MMS traffic. Parallels can be drawn to the SMS experience, where the introduction of SMS interconnect in the UK mobile market in Q2 1999, for example, led to a dramatic surge in SMS traffic volumes, as a result of the network effect. The network effect is the consequent increase in traffic volumes resulting from the increase in the number of users with which an individual user can communicate, which leads to traffic volumes larger than the sum of the traffic in the individual networks. The experience in the UK was much in line with all other markets where SMS interconnect was introduced. Though there can be little doubt that MMS interworking will be a key driver for the whole MMS business, as documented by the network effect in the case of SMS, with MMS this will not immediately translate into an upsurge in MMS traffic volumes since the time frame will depend on handset availability. Looking back to the SMS experience, the introduction of interconnect agreements coincided with a then high penetration of SMS-enabled handsets. The circumstances surrounding MMS handsets are, however, different. MMS-enabled handsets are to date still not widely available and nowhere near a level of penetration to generate traffic volumes larger than the sum of the traffic in the individual networks. For the network effect to kick in, a 25%-30% penetration level is usually required. [See Chart at Link] All in all, though the introduction of interworking agreements among operators will be a catalyst to help jump start an MMS take-off, it will not immediately translate into an upsurge in traffic volumes, as take-up will be closely correlated to the level of handset penetration in a given market. Judging from trends in Norway, Germany and the UK, three advanced messaging markets, MMS take-up appears to be slow, though the general mood among operators is that developments are promising. [See Chart at Link] According to ARC's estimates, there are forecast to be just over 240 million MMS-enabled handsets sold worldwide in 2004, which is approaching 50% of handsets sold worldwide in 2002 (405 million units, according to Nokia). [ARC Chart at link interpreted below] MMS Handset Penetration MMS Handsets as a % of MMS Handsets total sales 2003 ~70 million 16% 2004 ~250 million 45% 2005 ~400 million 70% With MMS handset penetration forecast to reach 16% by the end of 2003, the prospects of the network effect kicking in during 2003 do not look promising. Critical mass will be achieved by year end 2004, with an expected penetration level of 50%, bearing in mind that the level of penetration will vary greatly between countries and regions. By this time MMS handsets should also be widely available in the mid to low-end price range. As such only during H2 2004 are we likely to see any quantum leap in MMS traffic levels among users. Until then, the optimism surrounding these interworking agreements needs to be held in check. - Eric -