Intel Concerned for Telecom Industry

By Paul de Bendern

CANNES, France (Reuters) - Intel Corp, the world's largest computer chip maker, on Friday said the telecoms industry was heading for financial woes because of its heavy spending on yet unproven next generation wireless technologies.

"We're facing a situation of where an industry is heading for bankruptcy...before even a 3G (third-generation mobile phone) call is made," Intel Vice-President and General Manager Hans Geyer told delegates at the GSM World Congress.

Intel is quickly becoming one of the key suppliers of semiconductors to the wireless telecom industry, selling processors and memory chips.

Mobile telecom operators including Vodafone, France Telecom , Deutsche Telekom and Telefonica last year sank over $100 billion into new radio spectrum licenses, also known as 3G licenses.

Geyer said they were likely to spend a similar amount to buy networks to run these new systems which are expected to deliver fast Internet services to mobile phones.

Geyer, attending the world's largest annual mobile phone trade show in Cannes, said the industry should work on finding and building services and applications that consumers would want and would buy.

Sales growth of mobile phones is leveling off to 20-25 percent annually from 50-60 percent levels in the last several years, which means operators can no longer grow their way out of unprofitable business plans.

Geyer said the telecoms industry should learn from the personal computer market and warned operators and wireless companies from trying to find a single so-called ``killer application,'' one which alone would justify the technology.

"The PC industry has not seen one 'killer application'," said Geyer, who made the comments during a panel discussion which included executives from Psion, Siemens, Microsoft, and Handspring. The discussion came after Japan's Sony Corp and Psion presented their visions of the wireless future.

"We shouldn't worry about whether Sony's (or other companies) vision is the right one," Geyer said. "It doesn't matter which vision is the right one... users will decide what they want. I can't predict what they will want."

"The focus should...be on the current technologies and what can be done with them," said Joe Sipher, vice-president of product marketing at handheld device maker Handspring.

"I'm worried that the focus is too much on future technologies and what they will be able to do," he said.