Exhibit II (B) 1 – Part B: Level 1 Analysis for Wireless Service Provider Industry

Exhibit II (B) 1 – Part B: Level 1 Analysis for Wireless Service Provider Industry

Threat of Rivalry – Wireless service industry

Factors Underlying Rivalry	Response	Effect on Industry	Strength	Rank	Weight	Reasoning
Are Entry Barriers High?	Yes	Moderately Favorable	2	3	10%	The infrastructure costs are very high for wireless networks
Are Exit Barriers High?	No	Moderately Unfavorable	4	4	10%	Wireless service providers can sell the infrastructure to other wireless service providers. They can also use the same technology for different services
Is Demand High?	No	Moderately Unfavorable	4	5	20%	The current markets in US and Europe are in mature stage, while emerging markets are yet to be developed to spike demand
Is Product Differentiation High?	No	Moderately Unfavorable	4	7	10%	The basic voice technologies across globe are same, although the differences between 2G, 3G 4G are primarily for data users
Is the diversity of Competitors Low?	Yes	Moderately Unfavorable	4	9	15%	Most of the competitors are exclusively in the wireless market
Is Capacity Added in Large Increments?	Yes	Moderately Unfavorable	4	8	5%	Any new infrastructure in a new location opens up large geographical markets
Is Industry Growth Rate High?	No	Moderately Unfavorable	4	6	10%	The current markets of US and Europe are mature and the emerging markets are in early growth phase with five million new cell phone subscribers are signed up every month, while China has experienced growth of 30% over 2005cxxxviii
Is Number of Competitors High?	Yes	Moderately Unfavorable	4	1	5%	Globally there are a large number of wireless service providers
Are Fixed Costs higher versus the variable costs?	Yes	Unfavorable	5	2	15%	The fixed costs are high to setup the initial wireless infrastructure
OVERALL RIVALRY LEVEL		Moderately Unfavorable	4

Barriers to Entry – Wireless service industry

Factors Underlying Barriers to Entry	Response	Effect on Industry	Strength	Rank	Weight	Reasoning
Are there Economies of Scale?	Yes	Moderately Unfavorable	2	1	10%	Economies of scale are realized due to large subscriber base and high investment costs
Is Product Differentiation High?	No	Moderately Unfavorable	4	5	20%	The basic technologies across globe are CDMA and GSM
Is there Cost Advantage Independent of Scale?	No	Moderately Favorable	4	6	10%	There are only two wireless service protocols used across the globe-GSM and CDMA and hence there are no exclusive technological advantages to any particular firm
Are Capital Requirements High?	Yes	Unfavorable	5	2	25%	High infrastructure costs and hence large subscriber base needs to be acquired to justify these high capital costs
Is there Access to Distribution Channels?	Yes	Moderately Unfavorable	2	7	15%	Access to cell phone manufacturers. Also exclusive contracts for specific models of cell phones
Is there a High Chance of Competitor Retaliation?	Yes	Unfavorable	5	4	15%	Competitors have the ability and intent to retaliate to maintain their market share as they are in a mature industry
Governmental Barriers to Entry?	Yes	Moderately Unfavorable	2	3	5%	FCC regulations and access to exclusive bandwidths
OVERALL BARRIERS TO ENTRY LEVEL		Moderately Unfavorable	3.9

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