GLOBAL FINANCE

was one of the great successes of the 1990s. By the end of the decade,
the number of mobile subscribers worldwide was over 400 million; in
OECD countries, about 1 in 4 people had mobile phones, whereas 10
years before the figure was about 1 in 100, an average annual growth
for the decade of 56%. In 1999, global mobile revenues were around
$300bn.

There is no sign of a slowdown. Global revenues are expected to

double to $600bn by 2003 and the number of subscribers may reach 1.2
billion by 2004. As might be expected, the three largest regions in the
cellular market are the richest areas Western Europe, North America,
and Asia-Pacific but consumers in poorer countries are ``leapfrogging''
to mobile phones, especially where fixed line telephones are hard to
obtain or expensive. Much of the growth is being by the introduction
of prepaid tariffs that attract lower-income groups such as the young
or people in LDCs. Market saturation is not expected in developed
countries until 2010.

Free marketeers applaud these developments that have transformed

an industry dominated by state-owned monopolies. The OECD, for
instance, argues that, ``Analysis clearly shows a strong correlation
between market growth and market openness. During the 1990s, those
markets that had liberalized the most, and had four or more operators,
have consistently outperformed markets with monopolies, duopolies,
or three operators.''

The extremely rapid growth of mobile telephony has thrown compa-

nies and regulators into chaos, however. There are a number of reasons
for this, including the following.

» Mobile use is outpacing fixed line use in some areas, threatening

revenues from the traditional phone business.

» The appetite for data transmission grows and grows huge invest-

ments are needed in infrastructure that can accommodate the
increase in traffic. The appetite for speed just grows and grows.

» No one is quite sure how to price services or licenses in a rapidly

changing market.

» Manufacturers are competing fiercely to introduce newer, ``smarter''

products, in many cases before there is the infrastructure or compel-
ling content to make them appealing to consumers.