Cellular data market will surge: report

The value of the worldwide cellular data market, which currently makes up less than five per cent of network use, is expected to mean US$80 billion to cellular operators by 2010, driven mainly by the business market.

However, it may be a few more years before the cellular data industry really starts to grow. The market includes GSM (global systems for mobile communications) and CDMA (code division multiple access).

“It will increase gradually over the next couple of years, starting with small messages offered at low or no [additional] cost,” said Katrina Bond, one of the authors of “Data over Mobile: Commercial Strategies for Mobile Operators,” a new report from U.K.-based Analysys Ltd.

“I would say it will begin growing rapidly from 2003,” she added of the nascent market, expected to reach $80 billion in consumer spending on cellular services.

The expansion of cellular data is already causing new alliances to form. U.K.-based cellular service provider Orange PLC has a content agreement with Independent Television News Ltd. (ITN) and Nokia Corp. has an agreement with Cable News Network (CNN) to offer content over the Nokia 7110, based on WAP (wireless application protocol). Nokia also has an agreement with IBM Corp. and the on-line travel agency The Sabre Group as well, according to Bond.

“All operators should be thinking about forming alliances with content providers to offer tailored content,” she said.

There is currently a test under way in Finland with Sonera Ltd. (formerly Telecom Finland Ltd.) offering the ability to purchase items from vending machines using a cellular phone. The items purchased are billed to the customer on the next telephone bill. They are currently expanding the project to include jukeboxes and car washes, among other things, according to Bond.

In developed countries, 70 per cent of businesses that already subscribe to cellular networks could be using advanced cellular data services, including Internet access and messaging, by 2005.

Some companies looking to take advantage of new market opportunities have formed new ventures such as Symbian, a collaboration with L.M. Ericsson Telephone Co., Nokia, Motorola Corp. and Psion PLC. Symbian designs software for wireless devices, WAP and Bluetooth, which is a standard allowing wireless devices to communicate with each other and with PCs or laptops.

The current mobile-network licence holders have the obvious advantage, but to keep the edge, they can’t slow down, according to the report. As they continue to upgrade their networks with second-generation and third-generation technologies, they can attract more users to their networks early on.

Success will lie in how well the operators understand the market, know where to invest money, and when and where to implement the features customers want, the report said.

More information on the report can be found at www.analysys.com.