Communications Regulatory Authority

One of the main factors that have characterized the market during the past year
is the decrease in average revenue per user (ARPU) deriving from voice services,
which, in spite of the increase in users expected for the coming years, will translate,
starting in 2009, into an erosion of total voice revenues.
This phenomenon is due to the lively competitive process taking place in this
region, to which the presence of the mobile virtual network operators (MVNOs) active
on the US market has contributed. During 2005, new MVNOs such as ESPN, Movida,
and Amp’d Mobile started their commercial activity; it is expected for others to follow
suit in 2006. The MVNOs focus mainly on the exploitation of market niches, not
adequately served by the main operators which, instead, traditionally pursue strategies
aiming to expand their user bases as much as possible, differentiating their offerings
almost exclusively through their rate plans. A significant example is Movida, which
targets the Hispanic community resident in the United States, offering not only services
such as Spanish-language customer care, but also specific content addressing
community members. Another example of an MVNO recently launched in the United
States is Helio, which used the Verizon Wireless and Sprint networks, and which is the
result of a joint venture between the Korean SK Telecom and Earthlink. This mobile
virtual operator has concentrated its efforts on the supply of multimedia services such as
the MySpace community services, with the possibility for users to send their photos
online (on the MySpace pages) directly from the mobile terminal and to share video
messages.
With a service penetration level that has by now reached 70% of the population,
operators are seeking to arrive at those segments that still have development margins.
Thus it is probably that even infrastructured mobile operators will tend to customize
their services more and more in order to meet the needs of the single market segments.
The mobile market segment characterized by the greatest growth prospects is
that of value-added mobile services, which registered a considerable increase in
revenues in 2005, driven mainly by entertainment type services. With regard to this,
worthy of mention is the launch in 2005 of third generation (3G) services, on dedicated
mobile terminals, first by Verizon Wireless (VCAST service), and later, in October
2005, by Sprint Nextel (Power Vision). In both cases, the launches followed the 3G
services on “data cards” already available and mainly targeting business customers. The
operators that use the CDMA/EV-DO standards (Verizon and Sprint/Nextel) are thus at
an advantage over the operators that use the GSM/UMTS/HSDPA standards (Cingular
and T-Mobile), as far as the supply of 3G services is concerned, Nevertheless, right at
the end of 2005, Cingular announced the launch of its 3G services which, following the
path undertaken by the other operators, first concerned the data cards for portable
computers. These services were joined, during the first quarter of this year, by dedicated
3G terminals. As for the content offered, all the mobile operators working with 3G have
focused on news, movie trailers, sports, and TV series.
18