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Cell phone market surprises even itself

2002 was supposed to be a flat year, or maybe one with minimal growth, as major cell phone markets ran out of new customers. But--surprise--it wasn't half bad.

T-Mobile USA on Monday provided the latest evidence that 2002 was a better than expected year for the U.S. cell phone industry.

The nation's sixth largest carrier said it added 2.9 million new subscribers in 2002, a 40 percent increase from 2001.

That's impressive for a cell phone service provider that spent the last 12 months dogged by merger rumors and battered by the same economic conditions that slowed the U.S. economy to a crawl, said IDC wireless analyst Keith Waryas.

And surprise: It was a relatively good year for all carriers. Instead of flat subscriber growth as expected, the nation's top six carriers all upped their totals by an average of about 10 percent, according to IDC figures.

Handset sales, too, have apparently rebounded from 2001, market analyst Gartner Dataquest said in a study, also released Monday. The study suggests 423.4 million cell phones were sold last year in the United States, a 6 percent increase from 2001.

In January 2002, most insiders believed the following 12 months would amount to a second straight year of declining handset sales. As late as November, when Nokia lowered its global handset sales forecast, industry insiders weren't holding out much hope for anything but a disappointing year.

But new and veteran American wireless dialers did what they weren't expected to: They bought the more expensive color screen handsets carriers began selling, said Gartner Dataquest wireless analyst Bryan Prohm. "The market may again prove stronger than expected during 2003," Prohm said.

Cell phone chip maker Qualcomm apparently thinks so. On Monday, the company said it plans to ship 1 million more advanced cell phone chips in the second quarter than it had expected. The resulting total of 28 million chips is double the number shipped during the same period in 2002, Qualcomm said.