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Wireless use to nearly double by 2006 — Study

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CIOL Bureau
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CHICAGO: Wireless usage in the US will nearly double by 2006 from 2001 levels as more and more consumers use their cell phones to make calls that they previously made from traditional telephones, a study said on Monday.



According to a study by the Yankee Group, wireless subscribers are expected to increase their monthly minutes of use to 641 by 2006 from 356 in 2001 and 109 in 1994.



"Although only 3 percent of U.S. consumers use their mobiles as their only phone... 26 percent of mobile users' minutes are already being displaced from wireline to wireless and 45 percent of mobile users indicated at least some substitution," the research firm said in a study, citing a survey it conducted.



Wireless analyst Keith Mallinson said in a report that mobile phones were perceived by many to be cheaper, more indispensable, more permanent and more accessible as wireless service prices fall to levels similar to traditional telephone service. Users also see wireless phones as a more reliable communication tool to reach someone regardless of the time of day or their location.



These findings support evidence already seen by traditional telephone companies, who have reported a decline in access lines as consumers choose cell phone service over second or third lines in the home. Mallinson said he sees strong market demand for wireless services, with subscribers increasing to nearly 200 million by 2006 as 70 percent of Americans come to own cell phones. Nearly 50 percent of Americans own cell phones currently.



However, he added that the industry must undergo consolidation, eliminating at least two major players, before adequate financial returns can be achieved. "Buoyant market demand for mobile services... is in danger of being wrecked by a stalemate on the supply side," Mallinson said. "Limited scope for differentiation in the national marketplace has resulted in a price war, with too much capital and too many competitors resulting in anemic financial performance."



Mallinson said he believed VoiceStream Wireless, the nation's sixth-largest wireless operator and a subsidiary of Deutsche Telekom AG would be the first company to be consolidated.



Separately, another Yankee Group study said it expected industry-wide investments in network operations and services to increase to $9.6 billion by 2005 from $6.4 billion in 2001 as wireless operators finish rolling out advanced wireless networks with high-speed Internet and data access.



"As operational support systems (OSS) is crucial to delivering and assuring high-performing services in high-volume environments, we see OSS as one of the next waves of investment supporting the delivery of data-enabled mobile services," it said.



© Reuters

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