U.S. CELL PHONE TECHNOLOGY LAGS JAPAN, EUROPE

By: Martha L. Stone Advanced Wireless Applications Several Years Away



When it comes to mobile-phone technology, the U.S. is still doing the
figurative dial up. Japan and Europe (particularly Scandinavia) are
quickly implementing wireless applications still only dreamed of in
America.



While cultural and technical differences will likely alter the future
wireless experience for Americans, analysts say there clearly is a cell-

phone tsunami headed to the States.



According to Merrill Lynch research, mobile-phone penetration is 61% in
Finland, 57% in Norway, 53% in Sweden and 40% in Denmark, compared with
24% in the U.S. In another report, the number of Japanese wireless phone
subscribers (60 million) surpassed fixed-line clients (58 million) in
Japan last month. Every day, about 25,000 new Japanese mobile-phone
clients - mostly teenagers - sign up for service. Of the 60
million subscribers, about 10 million are wireless Internet users,
according to Japan's four wireless telcos.



Meanwhile, Access Media International in February reported that just 11%
of Japanese homes are online, compared with about 37% in the U.S.
Merrill Lynch reports slightly different statistics: Internet
penetration in the U.S. is 46%, while Sweden is 41%, Norway 36%, Denmark
34%, and Finland 32%.



'The primary distinction between Europe and the U.S. is that there's
much more homogenous infrastructure in Europe,' says Mark Plakias, vice
president for voice and wireless commerce at the Kelsey Group,
Princeton, N.J. 'Europeans were able to settle on a single standard
around GSM [global system for mobile communications] for wireless, and
in the U.S. we have a much more divergent environment.'



Plakias says the multiple competing approaches in the U.S. are creating
the lag behind Europe. 'Europe is already a WAP beehive,' he says. 'What
we're seeing in Europe suggests that communicating with wireless phones
and providing text information will be a part of any publisher's
required interactive platform in two to three years. Anybody looking
hard at the European wireless data environment today is struck by just
how backward and Web-centric the U.S. environment is.'



Japan is also ahead for cultural reasons. Only 14% of Japan's population
uses the Internet via computer. Analysts chalk up the low percentage to
lack of space for computers in homes, and language roadblocks that make
it difficult to communicate online. To be computer literate, Japanese
computer users must be proficient at the Western and Japanese alphabets
and about 3,000 Chinese ideograms.


Instead of opting to communicate via computer, young Japanese are
flocking to i-mode, a wildly popular phone-generated e-mail service that
has jumped to more than 7 million users in less than 15 months. I-mode
services include reserving airline and concert tickets, banking and
trading, games, downloading pictures and sounds, news, weather, e-mail
and general Internet pages of more than 5,500 providers.



Throngs of Japanese and European young adults are addicted to SMS, or
short messaging, which allows simple text messages and graphical images
to be transmitted in real time. SMS users have created a culture of
sending messages across classrooms and playgrounds to make after-school
plans, to send love messages with pictures and cute sayings, and to
contact friends to meet for a night on the town.



Developed by Finland's Nokia phone manufacturer, SMS volume has hit a
fever pitch: European telcos report that SMS messages outnumber wireless
phone calls 10-to-one. Japanese and European wireless companies charge
about one-third the price for each SMS transmission. SMS is expected to
be available in the U.S. by the end of the year.



Forrester Research, Cambridge, Mass., reports that by 2004, one-third of
all Europeans (about 219 million consumers) will regularly use their
mobile phones to access Internet services. But in the U.S., the focus on
PC-based Web usage may hinder wireless Internet developments.



And America's Web portals seem to be attracting alot of the wireless
attention right now. 'The online portals in the U.S. are in danger of
sucking the oxygen out of the emerging wireless data market,' Plakias
says. 'Publishers need to look beyond the posturing of the Yahoo!s and
Excites and Infospaces of the world and determine what's best for their
market.'



Cell-phone history



Here's a look at the history and future of cellular phones:



First generation wireless phones allowed voice transmission via analog,
with spotty quality. Some cell-phone networks in the U.S. still use
analog.



Second generation phones are digital, and used widely in the U.S.,
including the WAP phone made for either the European or Japanese GSM
standard, or the standards specific to individual U.S. telcos. By the
end of the year, general packet radio service (GPRS) technology will
supplant WAP in Europe and Japan, which will allow for faster, always-on
connections.



3G (third generation) phones are all about speed and compatibility with
Internet phones worldwide. The universal mobile telephone system (UMTS)
phone answers the need for a global standard. The UMTS promises
transmission rates of 2 million bits per second (BPS), or 200 times the
speed of most present-day wireless phones. 3G phones are capable of
delivering high-quality sound and video in color, and will be available
in the U.S. in two to three years, analysts say.



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