The Commercial Market

Reports Forecast Global Mobile Telephony/DTH Satellite Service Growth
 Baskerville Communications Corp. has released a new report, "Global Mobile Forecasts," which offers a highly detailed discussion of worldwide mobile telephony growth by region. Noting that the number of global mobile subscribers has tripled between 1995 and 1998 to 268 million, the report forecasts that subscriptions will grow an additional 167 percent to 715 million by 2007. A universal trend (independent of region) for voice traffic to transfer from fixed to mobile services is expected to continue to drive the rapid growth of mobile subscribers.

The report notes that Brazil in particular is expected to experience dramatic growth due, in part, to its ongoing telecommunications market reform. Mobile subscriptions are forecast to increase sixfold, generating 38.1 million subscribers by 2007. Currently the ninth largest cellular market with an estimated 5.9 million subscribers, Brazil is expected to emerge as the fourth largest cellular market worldwide by 2007 with $17.3 B in subscription revenues, preceded only by the US, Japan and China.

The report notes that future growth in all regions will be encouraged by the developing fixed/mobile convergence. Cellular telephones are increasingly being used to double as cordless handsets for home and/or office use. Mobile service growth is forecast to continue to benefit from its ability to serve as an alternative to new fixed service facilities because it eliminates both high fixed service infrastructure costs and waiting periods for access to fixed lines.

Mobile service price reductions due to increased competition and lower access fees and handset prices are also expected to contribute to growth. Prepaid services have been particularly effective in promoting growth in developing countries because they permit customers to control expenditures and eliminate denial of service on the basis of credit risk. In addition, growth may be encouraged by the introduction of worldwide wireless service via satellite and dual- and multimode handsets (which offer access to both cellular and PCS systems) as well as the increasing availability of other services such as Internet access and voice mail. For additional information, contact Olivia Gibney or Mark Newman at Baskerville Communications +44-171-299-4524.

In related news, the Baskerville Communications report entitled "Global Digital Satellite TV" forecasts that worldwide subscriptions to digital direct-to-home (DTH) satellite services will increase sharply from 16.8 million in 1998 to 61 million by 2008. Overseas growth is expected to be larger than that in North America during this period. With Europe expected to account for 40 percent of worldwide subscribers by 2008, North America's share is forecast to decrease from its 54.5 percent 1998 level to 20 percent by 2008.

The report expects that the top five countries will generate 65 percent of the total digital DTH revenues, which are expected to reach $38.6 B by 2008 ($634 per subscriber). While the US will account for only 28.6 percent of the total (down from its 1998 share of 62.5 percent), it is expected to continue to serve the largest number of homes and produce more revenue than any other country. At 22.4 percent, the UK is predicted to generate the highest digital penetration by 2008 due primarily to BSkyB's opportunity to convert a large part of its analog subscriber base to digital service. For additional information on this report, contact Simon Murray at Baskerville Communications +44-171-299-4508.

Ku-band Satellite Proposal Filed
 Virtual Geosatellite LLC has filed an application with the Federal Communications Commission (FCC) for authority to launch and operate the VIRGO™ satellite system, which will provide digital, high data rate and telecommunications services (including Internet access) to consumers worldwide. The system will comprise 15 satellites in elliptical medium earth orbits with angular separation from the geo arc of 45° or more, a configuration that will permit re-use of presently allocated frequencies.

The system combines very high elevation angles, low signal propagation delays, limited intersatellite handoffs and proportionately more capacity allocated to the northern hemisphere to meet demand efficiently. The system's orbital architecture will synchronize constellation movement with continental landmasses, giving the appearance of virtually geostationary characteristics. Subscriber terminals will employ 0.5 m (18") antennas and the low satellite orbits will accommodate the use of relatively low power transmission levels in both directions. Signal processing will be handled by the system's ground stations. The $2.6 B system is expected to be operational five years after FCC licensing.

New CDMA Digital Wireless Telephone Introduced
 QUALCOMM Inc. has introduced the Thin Phone series fourth-generation CDMA digital wireless telephone, which features an ultra-thin design with an internal battery and hot-swappable external battery options. The telephone provides 10 hours of digital-mode talk time and supports standby times of up to eight days with external battery options. The unit weighs slightly over 4 oz.

The two models offered include the QCP-860™ dual-mode 800 MHz CDMA digital and analog cellular telephone and the QCP-1960™ 1900 MHz single-mode digital PCS version. Both units support telephone, pager, voice mail and data transfer features. Data connectivity is available through an optional data cable that permits transfers from PCs or personal data assistants to internal telephone book memories. The instruments will also support Internet wireless microbrowsers.

Study Forecasts Broadband Networks to Dominate Telecommunications
 According to a recent study published by The COOK Report on Internet and marketed by Datacomm Research Co., "IP Insurgency: Internet Infrastructure and the Transformation of Telecom," the Internet's foundation technology has become a force that will change the entire telecommunications industry. Citing the rapid deployment of next-generation fiber-optic networks, the report indicates that the rapid buildout of transmission control protocol/Internet protocol (IP) networks is a direct threat to the global public switched telephone network (PSTN). Next-generation telecommunications companies such as Qwest, Level 3, IXC, Williams and Enron are beginning to surround and threaten the PSTN.

The study concludes that in 1998, IP-based technology began demonstrating performance and cost efficiency at levels that made it a serious competitor to circuit-switched technology used in modern telephone networks. The Internet's expansion has led to deployment of optical networks far earlier than forecast and the rapid maturation of wave division multiplexing (WDM) and dense WDM technology has increased the carrying capacity of fiber from 20 to 400 Gbps. In addition, the report finds that the rate of change has eliminated traditional 20- to 30-year central office equipment depreciation cycles and that next-generation carriers will use IP packets to carry voice, data and fax. The new fiber networks are expected to allow services to be delivered at a fraction of what they would cost using existing telecommunication networks.

The study also identifies developments introduced through 1998 and explores topics such as quality of service, peering among privately interconnected Internet backbones, optical techniques enabling elimination of asynchronous transfer mode and synchronous optical network layers, operational routing policy, the struggle over top-level domains, router and switching advances, IP telephony protocol development and business models, IP fax and IP-PSTN convergence. For additional information, contact Datacomm Research at (314) 514-9750, fax (314) 514-9793 or e-mail: info@datacommresearch.com.