Wireless firms face fear and next generation at conference

Yukari Iwatani

CHICAGO: Amid a gloomy economic outlook and a loss of investor faith in the

telecommunications industry, wireless firms are poised to jump-start the

momentum for the launch of next-generation technologies during the nation's

largest wireless industry conference this week.

Hundreds of companies ranging from start-ups to technology giants such as

Motorola Inc. and Microsoft Corp. are expected to unveil a slew of 2.5G and 3G

products and services, from phones to combination devices to software. These

so-called 2.5 generation (2.5G) and third-generation (3G) networks are based on

costly technologies that promise significantly faster Internet connectivity and

multimedia capability. Current wireless networks are considered second

generation.

However, analysts expect the conference to be fraught with anxiety over a

possible delay in the rollout of the next-generation networks. Key wireless

giants like Motorola and Ericsson have recently issued profit warnings, and a

wireless trade fair in Cannes last month did little but fuel concerns that new

telecom networks and handsets will be delayed.

"I think that we will see vendors putting on a really happy face with

this 3G story, but the underlying currents are going to be felt

throughout," said Jane Zweig, chief executive of the Shosteck Group. To add

to that, the industry is also facing skepticism about its ability to generate

money with the new, expensive networks.

Debt crisis, a potential danger



In Europe, telecom operators have just spent around $100 billion to date on
3G mobile phone licenses, and they are now faced with a possible debt crisis if

it cannot recover its expenses. "We're facing a situation that an industry

is possibly heading for bankruptcy ... even before a single 3G call is

made," Intel Corp. vice president and general manager Hans Geyer told the

audience in Cannes.

Industry watchers fear the same could happen with US telecommunications

firms. "This market is going to be much slower to take off," Zweig

said. "It's going to be much more costly, and a lot of the start-ups may

not even make it until that time," she added.

Wireless service providers in the United States are currently not expected to

roll out their first 2.5G services until later this year. True 3G services are

not expected in the United States until 2006 or 2007, according to Zweig. Japan

will be the first country to roll out 3G services in May and Europe is expected

to follow in 2003. But even in those countries, experts predict that it will be

another few years before the technology really takes off as a mass phenomenon.

Too soon to call next-gen tune



It's too early to tell how the next-generation technologies will play out,
but technology companies at the CTIA conference this week are hoping to allay

these fears and present an upbeat front.

Handset makers including Nokia Corp. and Motorola, the world's No. 1 and No.

2 mobile phone makers, respectively, are expected to unveil new models of their

phones and discuss their 3G strategies.

Qualcomm Inc. will be talking about the next-generation version of its CDMA

technology and wireless service providers such as Sprint PCS Group and AT&T

Wireless Group Inc. will be touting their plans for next-generation services.

A myriad of smaller companies will also be introducing everything from mobile

commerce applications to billing, and from customer care management software to

information services, all designed to work optimally on 3G networks.

(C) Reuters Limited 2001.