consumer use of the Internet. Considering how local scene: low data rates, abbreviated user interfaces, such telephone companies in the U.S. missed the opportu- as those of the Short Message Service(SMS)and the nity to become major ISPs when AOL emerged Wireless Application Protocol(WAP),text-centric out he initial dominant provider, mobile carriers wi put, and low-resolution graphics. As the capabilities of want to ensure a similar sit- wireless networks to deliver uation does not occur with U ta as well as the nun the wireless Internet this etwork subscribers rise, growth simi- means reduction of wireless lar to that of the fixed Inter Internet prices. However net will occur for the wireless will be difficult to match or Internet as well. The growth reduce the costs to equal Figure 1. The calling party in the number of wireless subscribers and data use is thoseofthewiredInternetaffixedandthemobilebecomingevidentinrecentyears(seewww.wow- because wireless bandwidth workscom.com).Inadditiondataapplicationsalbeitinthe a scarce and expensive primitive form of text messages, are experiencing a sim- resource ilar increase: according to studies, one billion text mes- The portal role. Mobile carriers will also have to sages were being exchanged in Europe alone over the runtheirownportalstothewirelessInternetworldwirelessmedium(seewww.sims.berkeleyedu/research/ In this case, it is likely that portals already flourish- projects/how-much-info-2003/telecom. htm).When ing on the wired Internet will have an advantage carriers deploy higher-speed networks, the usability of over those of mobile carriers wireless internet will become much more obvious due to The application service provider role. Many new the use of data-rich applications. The iMode system in services will appear in the 3G and beyond genera- Japan is one example, which we will briefly review here tions of wireless networks, and the mobile carriers A number of capacity-demanding data applications are potential providers of are expected to increase wire- these new services, whichUser Mobile Mobile user less data traffic[5,6],includ may constitute a signifi ing video telephony and cant portion of revenue. videoconferencing, Internet role. Mimicking the fixed /A The content provider 2一区 browsing. mobile commerce, multimedia messaging and Internet, mobile carriers will also have to prepare Figure 2. The receiving party geolocation applications. content for their portals pays for usage of the mobile Wireless Internet success Case Study: iMode Because the cost of the equipment for the rollout of Although in its relatively early stages, the wireless Inter- new services is estimated to be two to four times more net already has shown signs of its potential. a good than the cost of 2G equipment, a reduced number of example is the success of nT T Do CoMos iMode sys- carriers is likely to characterize each market. This num- tem in Japan that enables users to access Internet ser ber is estimated between two and four carriers for each vices via their cell phones. The iMode system had 29 theory that the maximum numf roved through game million subscribers by 2002, increasing by approxi- not impede profitability is four [41 work. com/pr-2002/jan/mainpr1020 htm). The Carriers associated with telecom operators, espe- success of iMode has helped DoCoMo to become one Cla ally for data services, will have a relative advantage of the largest mobile phone carriers worldwide. The ecause in most cases consumers appear to prefer bun- iMode system is about to penetrate other markets as dled products. Changing traffic patterns are another well, such as those of Germany, Netherlands, and factor affecting mobile carriers. Increased intra-country Spain mobility, especially within the European Union where Technological Alternatives and their Economics a common standard--GSM-is used, increases traffic There exist a number of candidate technologies for related to roaming between countries. In some small offering data transfer in wireless networks, including: countries, it is probable that traffic due to roaming will cdma2000, High Data Rate(HDR), Wideband constitute more than half of the exchanged traffic CDMA (WCDMA), and General Packet Radio Ser vice(GPRS). In 6], based on a cost-per-megabyte sce Wireless Data Forecast nario, it is estimated that CDMA-based technologies A somewhat similar situation with that of the early have an economic ad over gPrs due to the phases of the Internet characterizes todays wireless data limited capacity of the latter. From the CDMA-based April 2004/Vol 47, No 4 COMMUNICATIONS OF THE ACM84 April 2004/Vol. 47, No. 4 COMMUNICATIONS OF THE ACM consumer use of the Internet. Considering how local telephone companies in the U.S. missed the opportu￾nity to become major ISPs when AOL emerged as the initial dominant provider, mobile carriers will want to ensure a similar sit￾uation does not occur with the wireless Internet. This means reduction of wireless Internet prices. However, it will be difficult to match or reduce the costs to equal those of the wired Internet because wireless bandwidth is a scarce and expensive resource. • The portal role. Mobile carriers will also have to run their own portals to the wireless Internet world. In this case, it is likely that portals already flourish￾ing on the wired Internet will have an advantage over those of mobile carriers. • The application service provider role. Many new services will appear in the 3G and beyond genera￾tions of wireless networks, and the mobile carriers are potential providers of these new services, which may constitute a signifi￾cant portion of revenue. • The content provider role. Mimicking the fixed Internet, mobile carriers will also have to prepare content for their portals. Because the cost of the equipment for the rollout of new services is estimated to be two to four times more than the cost of 2G equipment, a reduced number of carriers is likely to characterize each market. This num￾ber is estimated between two and four carriers for each country’s market—it has been proved through game theory that the maximum number of carriers that does not impede profitability is four [4]. Carriers associated with telecom operators, espe￾cially for data services, will have a relative advantage because in most cases consumers appear to prefer bun￾dled products. Changing traffic patterns are another factor affecting mobile carriers. Increased intra-country mobility, especially within the European Union where a common standard—GSM—is used, increases traffic related to roaming between countries. In some small countries, it is probable that traffic due to roaming will constitute more than half of the exchanged traffic. Wireless Data Forecast A somewhat similar situation with that of the early phases of the Internet characterizes today’s wireless data scene: low data rates, abbreviated user interfaces, such as those of the Short Message Service (SMS) and the Wireless Application Protocol (WAP), text-centric out￾put, and low-resolution graphics. As the capabilities of wireless networks to deliver data as well as the number of subscribers rise, growth simi￾lar to that of the fixed Inter￾net will occur for the wireless Internet as well. The growth in the number of wireless subscribers and data use is becoming evident in recent years (see www.wow￾com.com). In addition, data applications, albeit in the primitive form of text messages, are experiencing a sim￾ilar increase: according to studies, one billion text mes￾sages were being exchanged in Europe alone over the wireless medium (see www.sims.berkeley.edu/research/ projects/how-much-info-2003/telecom.htm). When carriers deploy higher-speed networks, the usability of wireless Internet will become much more obvious due to the use of data-rich applications. The iMode system in Japan is one example, which we will briefly review here. A number of capacity-demanding data applications are expected to increase wire￾less data traffic [5, 6], includ￾ing video telephony and videoconferencing, Internet browsing, mobile commerce, multimedia messaging and geolocation applications. Wireless Internet Success Case Study: iMode. Although in its relatively early stages, the wireless Inter￾net already has shown signs of its potential. A good example is the success of NTT DoCoMo’s iMode sys￾tem in Japan that enables users to access Internet ser￾vices via their cell phones. The iMode system had 29 million subscribers by 2002, increasing by approxi￾mately 37,000 subscribers per day (see pressreleasenet￾work. com/pr-2002/jan/mainpr1020.htm). The success of iMode has helped DoCoMo to become one of the largest mobile phone carriers worldwide. The iMode system is about to penetrate other markets as well, such as those of Germany, Netherlands, and Spain. Technological Alternatives and their Economics. There exist a number of candidate technologies for offering data transfer in wireless networks, including: cdma2000, High Data Rate (HDR), Wideband CDMA (WCDMA), and General Packet Radio Ser￾vice (GPRS). In [6], based on a cost-per-megabyte sce￾nario, it is estimated that CDMA-based technologies have an economic advantage over GPRS due to the limited capacity of the latter. From the CDMA-based -3 +1 Fixed network A +2 0 Mobile network B User Mobile User Figure 1. The calling party pays for usage of both the fixed and the mobile networks. -1 +1 Fixed network A +2 -2 Mobile network B User Mobile User Figure 2. The receiving party pays for usage of the mobile network