Nomura says technology will destroy Nokia

date: 18th March 2001, source by: sunday-times.co.uk/

COMPANIES that have spent billions of pounds on third-generation mobile-phone licences face a "grave threat" from a new wireless technology that will expose them to "hyper-competition", according to a blistering critique from Nomura International.

Keith Woolcock, Nomura's technology analyst, says companies such as Vodafone, Nokia and BT Cellnet "face a bleak few years as they readjust to hyper-competition".

He likens the impact of the wireless local area network (LAN) technology to the damage caused to IBM by the launch of the personal computer. He suggests wireless LAN is a "disruptive technology" that threatens to turn Nokia into "the IBM of our times".

As The Sunday Times reported last week, a wireless LAN technology known as 802.11b is being rapidly adopted in America. This uses free and unlicensed radio spectrum at 2.4 GHz, making its deployment massively cheaper than 3G mobile-phone networks. Additionally, 802.11 is potentially much faster than 3G and can be used for many of the video and data-heavy services that had been expected to generate huge revenues for mobile- phone operators.

It has also emerged that Jippii Group, a Finnish company, is looking to raise 100m euros (£65m) to launch a wireless LAN network in Britain.

Jippii has already started rolling out its network in Finland and on Friday announced its first 13 base stations in Helsinki.

Harri Johannesdahl, Jippii's chief executive, said the service costs about £25 a month and that the small base stations are available from retailers for about £300.

In its report called The barbarians at the gate - Wireless LAN storms the 3G citadel, Nomura warns that the technology will mean it is not widely adopted until about 2005.

Woolcock says: "We are not saying this means that 3G will be dead on arrival but it might be gasping for breath due to the presence of cheaper networks that will be in a position to reduce its oxygen supply."

Users of 802.11 need to be within about 100 yards of a base station, but Woolcock believes this is not a serious problem: "What will be the need for mobile customers to receive data-intensive services while they are on the move?"

top