In the previous chapter, we reviewed the value chain and business models, both key components to any industry analysis. In this section we will look at some of the challenges being faced by the wireless industry – in both the business and technology realms. This chapter focuses on the business issues and the next chapter will address some of the challenges in the technology arena. Although many industries have some common idiosyncrasies, the wireless industry is unique and sometimes issues and problems are specific to a geography or nation. For instance, spectrum (which we will discuss later) is squarely a US issue while their counterparts in Japan do not encounter such problems and 3G spectrum auctions are driving many carriers out of business in Europe. While Europe and Japanese markets are approaching saturation in the consumer market, the US market is largely untapped. On the other hand, China (which is the biggest wireless market in the world) has its own challenges as it tries to define itself amidst government control. The business issues and challenges we are going to be discussing in this chapter are as follows:

1. hyping

2. transition from flat rate to à la carte billing models

3. mobile SPAM

4. WLAN business

5. interoperability

6. churn and increasing the ARPU

7. 3G auctions and spectrum

8. consolidation

9. market saturation and search for new markets

10. privacy

11. security

12. position location rollout and privacy

13. mobile fraud.

Some of these issues are geography-specific while others apply to the industry as a whole. We will try to give examples wherever possible to illustrate our points.