ICT market research company BMI-TechKnowledge says cellular service providers are facing increasing competition as the global wireless market becomes saturated, with accompanying slowdowns in subscriber growth and significant declines in the price of voice service.
"Competition has fostered lower rates in many markets, bringing down cellphone costs to end-users," says BMI-T communications analyst Mark Rotter. "To attract customers, service providers are including larger bundles of airtime in their monthly plans and bringing down the price of long-distance calling or monthly service charges."
He says service providers are hoping that compelling data applications will promote usage, boosting revenue from data traffic as well as applications.
BMI-T says service providers are becoming alarmed in certain markets, where falling monthly charges, airtime fees and per-minute call rates have brought down average revenue per user (ARPU).
If subscriber growth is slowing and ARPU is declining, wireless providers fear they will not be able to sustain the healthy growth rates they have shown in recent years, says Rotter. "Service providers are concerned that this trend will be exacerbated as they penetrate less affluent communities and as new subscribers tend to be lower volume users."
What has emerged from this potential crisis, says Rotter, is a fierce battle for a successful data service. "There is a showdown between WAP [Wireless Application Protocol] and Japan`s NTT DoCoMo i-mode. Whereas WAP has proved to be relatively ineffective, i-mode has enjoyed runaway success. The problem lies in Internet markup language.
"Web sites have historically been grounded in HTML, which is not compatible with a WAP phone. WAP phones are best served by wireless markup language (WML). Unless a Web site is written in WML, a WAP phone cannot access it and there are not that many WAP-accessible sites.
"However, practically every major telecommunications company in the world has adopted WAP as the de facto standard to transmit data on cellphones. WAP boasts the worldwide support of over 500 major phone carriers and manufacturers that have been working together to ensure that their services are compatible with each other."
He says that in contrast, NTT DoCoMo`s i-mode is a proprietary service only offered in Japan and cannot be made readily available on any other service provider`s network.
The i-mode can read practically any Web page with varying degrees of legibility and charges users for the amount of information downloaded rather than airtime. This is because i-mode is served by "compact HTML", or cHTML, which technically allows users to access desktop HTML sites, although it is better if it has been written in cHTML.
Rotter says this is where WAP falls short. "Since WAP defines a new markup language, content providers have to learn how to make content with it. Additionally, user interface, affordability and ease of use are inferior.
"Japan`s i-mode offers more affordable access rates, more robust content and higher connection speed, while i-mode`s user-friendliness has contributed greatly to its success, and although it enjoys global backing and support, WAP, on the other hand, is floundering."
Rotter says large service providers, such as KPN and AT&T, have cottoned on to this trend and are hoping to benefit from NTT DoCoMo`s success in Japan. They are working directly with the company to roll-out its thriving i-mode service, or a version of i-mode (such as m-mode), in their own markets. Others, such as Vodafone, are also eager to tap into the data-receptive Japanese wireless market, but are doing so by investing in NTT DoCoMo`s competitors.
Despite declining ARPU figures, worldwide subscriber growth is still strong at a compound annual growth rate of 11.3%, and total subscribers will surpass 1 billion by the end of 2002.
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