Nokia projects sharp growth of wireless data revenue

Nokia expects data services to account for 35% of mobile operators' revenue by 2006, up from 7% in 2001.

At a briefing on Thursday, the Espoo, Finland, equipment supplier projected that mobile-data revenue will contribute €280 billion ($262 billion) to operators' sales globally in 2006. Revenue from voice services will account for €530 billion during the same period, Nokia President Pekka Ala-Pietilä said.

"Operators in Japan are already seeing the share of data rise in their overall revenue, confirming what we expect to be the general trend in the industry," said Lauri Kivinen, a company spokesman.

Nokia's outlook for mobile data is based, in large part, on the emergence of new mobile data devices and services. In Japan, where camera phones have already been launched, data services have increased their contribution to operators' revenues to 20% in March 2002 from 11% in April 2001, Ala-Pietilä said.

Nokia sees four basic groups of data services: person-to-person, information and entertainment, transactions and business applications. "Of the four, we expect person-to-person data services to be the most popular," Kivinen said. "Content generated by users themselves, such as taking photos and sending them across the network, is very appealing. Messaging services, in general, have huge potential."

Kivinen said music downloads, e-mail and transactions will also have a significant impact.

Currently, Short Message Service is the main data service of most operators. But operators hope to boost data revenue with the rollout of new Multimedia Messaging Service offerings, which will allow mobile-device users to send pictures, sound and even video between devices.

As for new 3G broadband mobile services, Nokia executives said that numerous operators have been forced to delay commercial service partly for financial reasons. But Rene Svendsen-Tune, senior vice president at Nokia's networking division, said although the rollout may be slower than anticipated, the business case for 3G is still intact.

In addition to compelling services, 3G take-up will depend on seamless interoperability between phones and networks, and attractive prices, Kivinen said.

Separately, Nokia has no present plans to offer network outsourcing services to mobile operators, according to Kivinen. "In our business, you should never say never, but we don't have any concrete plans to offer these services at the moment," he said.

In recent weeks, equipment vendors L.M. Ericsson Telephone Co. of Stockholm and Alcatel SA of Paris have won network-management contracts from operators seeking to lower costs.

Typically, vendors have helped operators build networks and run them during the start-up phase. Now they are being asked to take over most or all of the operations. Not only that, they could face competition from IT service providers, such as IBM and Accenture Ltd.

The list of network operations being outsourced include network supervision, field maintenance and equipment installation. Operators, for their part, still want to keep billing and customer relationship management systems in-house.

The IDG News Service is a Network World affiliate.