Wave Issue 0102 1/9/01 Article 2-01

***World Cellular Subscriber Base Likely to Exceed 700 Million
(January 9)

According to EMC estimates, at year end 2000, the total world
cellular subscriber base is poised to exceed 700 million with
over 213 million added during the year; this compares with 169
million additions in 1999. The year 2000 is likely to have
represented a growth peak, with the absolute number of new users
set to stabilize or drop slightly during the next few years. EMC
expects to see a further addition of 184 million during 2001
bringing the world total to 875 million at year-end.

At year-end 2000, GSM will have accounted for 425 million users
and this number will rise to 540 million by year-end 2001
representing 65% of the digital market. China accounts for 16% of
the world GSM subscriber base at year-end 2000, and 11% of the
world cellular market. The subscriber growth, worldwide, is
largely attributable to the marketing of prepaid tariff options,
and the introduction of calling-party-pays in some markets.

Indicators for cellular world at year end 2000

Indicator Year End|Year End
2000 1999

ARPU $/month 42.11 44.32

MOU outgoing/month 147 121

Monthly churn 2.56% 2.24%

SMS messages sent per 30 10
GSM subs/month

World's largest GSM China| China
market 73.3m 43.5m

World's largest CDMA USA| Korea
market 31.2m 23.4m

World's largest TDMA USA| USA
market 30.4m 18.2m

World's largest USA| USA
cellular market 100.7m 81.1m

World's largest Morocco|Botswana
cellular growth market 629% 507%
2.7m 93k subs

Highest penetrated Iceland| Finland
market (expressed in 77.4% 65.1%
terms of % of population)

Source: EMC World Cellular Database

The overwhelming requirement of users will continue to be a
reliable voice service at a moderate cost. Although enhanced data
modes will begin to appear during 2001, there remains little firm
evidence of real growth in user demand for these services.

As some markets begin to approach or exceed the 100% penetration
of population mark, there will be a determined shift in emphasis
from an increase in absolute subscriber numbers to growth in
airtime usage and associated revenue. In preparing for this
shift, those relying on it must bear in mind that positive
evidence for the take-up of transaction-based m-commerce has not
been forthcoming in 2000.

Questions probably persist in the minds of consumers over the
security of m-commerce solutions and whether goods and services
are more conveniently bought over a mobile data interface than
over the fixed Internet or indeed in a shop.

The uptake of stock-trading services in the Far East gives some
indication that where real-time information and response collide,
demand for mobile applications that can deliver instructions
securely and near instantly does exist. This emphasis on
increased usage has resulted in an almost accidental explosion in
SMS traffic in the year 2000. Although an inherent feature of the
GSM specification, SMS was never designed with person-to-person
messaging in mind. Despite this, mature Nordic operators are
reporting 7-10% of wireless revenues being attributed to SMS
traffic. Based on GSM Association SMS worldwide traffic reports,
EMC estimates that SMS traffic per month per GSM subscriber has
tripled from year-end 1999 to year end 2000 averaging 30 SMS per
subscriber per month.

Handset shortages, particularly of top-of-the-range models - will
continue to have an impact on the industry. There will be some
impact to planned introduction of GPRS; there will be severe
impact on the dates for planned 3G launches.

Third generation chipsets are still at an early stage of
development and considerable progress is required in the
development of battery technology to support the planned
applications. An indicator will be provided by the presence, or
otherwise, of working prototype handsets as opposed to design
concepts, at early exhibitions such as the GSM World Congress,
CeBIT 2001, and CTIA. Nokia will continue to hold its dominant
position as world market leader of the handset business.

In the area of delivery of data services and content NTT DoCoMo
will continue its determined efforts to export its established i-
MODE services outside Japan. Trials may be expected in various
European countries, USA, Brazil, and Hong Kong.

As with fixed Internet products, there is likely to be increased
emphasis on phones that support multiple microbrowsers, available
to manufacturers for no license fee, such as Read HTML, c-HTML or
XML compatible versions. WAP's position within the overall
expansion of the field is unlikely to improve. There is little
prospect of recovery from a legacy of failed user expectation and
unsuccessful marketing of the technology rather than the access
to content.

GPRS systems will come on stream during 2001 and have the
potential to stimulate the market for wireless data. Success will
depend on the ability of the operating companies to market the
services in an attractive way, to ensure that performance matches
expectation at a reasonable tariff level, and to secure a
reliable supply of handsets.

There is continuing confusion over the level of service that will
be provided by GPRS. There are still frequent references to data
speeds of 115Kbps or even 171Kbps. It is clear that in a
practical, operational network, data download speeds are unlikely
to exceed 30Kbps; the true 'character throughput speed' has yet
to be assessed. However, the ability to provide good performance
at these speeds, when operating on a packet based system, should
not be underestimated. Given the likely delays in widespread
availability of 3G, there is scope for optimism over the market
potential for GPRS.

EDGE technology has been proposed to boost network capacity and
operating speeds. However, there is no real implementation
commitment from any significant number of operators, and there is
no indication that any user devices supporting EDGE are currently
being planned. Proposals to use EDGE as a path towards 3G in TDMA
systems are looking less likely to proceed, especially in light
of the recent decision by AT&T to pursue a path structured around
W-CDMA rather than TDMA/EDGE. Some TDMA operators, particularly
in Latin America, are now looking to overlay their networks with
GSM/GPRS capability so that they can offer high-level data
functionality and open their networks to the advantages of
worldwide GSM roaming.

www.emc-database.com/