Mobile Telephone TechnologyOne of the hallmarks of the industrial revolution was the introduction of new communication technologies as mechanisms of control that played an important role in almost every area of production and distribution of manufactured goods. These communication technologies have evolved throughout the past two centuries at an increasingly rapid rate. The evolution shows no signs of slowing, so an understanding of this evolution is vital for any individual wishing to attain or retain a position in business, government, or education. Cellular Telephony Having a phone that can be carried around to make or receive calls at any time is becoming quite popular in the US. One in six Americans is now using a portable cellular phone, and 30,000 more are joining this group everyday. If this growth continues however, there will be a problem of overcrowded because there is a limited amount of airwave space allocated to cellular phones. The current cellular structure will soon be unable to support demand with the combination of new users and new cellular phone features such as data transmission . In an effort to create more competition in the mobile phone market and to increase the ability to meet user demand, the Federal Communications Commision (FCC) has allocated a new band of radio spectrum to be used for personal communications services (PCS). PCS is any number of wireless communication technologies, including cellular telephones, pagers, and cordless telephones, that focus on individuals. PCS is broadly defined to include many different wireless services,but it will ultimately be a combination of the mobile technologies that are implemented using PCS spectrum space. Many of the PCS spectrum purchasing companies are planning to offer services similar to regular cellular telephone service. PCS cellular phones will be able to provide some enhanced capabilities that current analog cellular phones cannot because of the nature of PCS spectrum airwaves, and because PCS networks will be completely digital. History Of Mobile Before the 1980s, the year cellular technology was implemented, mobile phone service was provided by placing a single transceiver (transmitter/receiver) at a high point in the middle of the service area. Mobile phones transmitted and received information to and from the transceiver. Signal from the transmitter travelled about 50 miles in all direction. Users had a car phone unit with a mobile transceiver that could transmit and receive signals from the main transceiver. But only 44 calls could be made at one time in any given area with this system due to limited spectrum allocation. Research was done to circumvent this problem by AT&T and combined a number of technologies to create cellular telephony. There are three main components of a cellular telephone system:
Information from all the cells are sent to a main computer called mobile telephone switching office. Each cell is connected to the MTSO via wires, and MTSO is also connected to the local telephone network. The MTSO is decides and route calls between a cell and the local phone system or between two cells if both parties are on mobile phones. One or more cell transceivers receive the transmitted signal, when a mobile user turns on the phone. MTSO decides which cell is receiving the strongest signal after each cell reports the signal strength. while the user is within that cell's area, the selected cell will serve the mobile phone user. When the user begins to make a call or if someone is calling the user, the MTSO finds and assigns open channels within the cell for transmitting and receiving. If while a call is in progress, the mobile user leaves the range of its current cell, the cell's transceiver starts to receive a weak signal from the mobile phone. The MTSO is notified by the cell of the fading signal. Neighbouring cells are instructed to report signal strengths, and again, the MTSO decides which cell is receiving the strongest signal, finds open channels in that cell, and switches the control over to the new cell. Personal Communication Service PCS telephones are very similarly to traditional cellular phones, but with a few variations. Traditional cellular phones use airwaves in the 824MHz to 896MHz range. PCS use higher frequency waves in the 1.85GHz to 2.2GHz range. High-frequency PCS waves can only travel a short distance, so the size of each PCS cell must be less than a few hundred meters. More cells will be needed, so PCS cellular will be more costly to implement as each must be furnished with a transceiver. But PCS waves are able to carry much more information than their lower-frequency counterparts and are thus able to handle more calls simultaneously. Also, the mobile phone's transceiver requires less battery power, since cells are closer together. Handsets can be smaller and lighter due to reduced battery size. Digital Technology Mobile telephone technology is clearly moving away from analog and toward digital technology. PCS cellular phones will use only digital technology, and non-PCS phones are gradually moving to digital. Digital technology is able to provide a number of improvements over analog technology. Major annoyances with analog phones are static and cross-channel interference. These problems are non-existent with digital. Digital can also provide 10 times as many channels for phone calls, and tighter security and privacy can be easily implemented through encryption methods. Europe made a clean break from analog technology by adopting the global system for mobile communication (GSM), a purely digital network with no backward compatibility for older analog phones. The US market is still 90% analog, and its digital phones have analog capabilities. A digital standard has not yet been adopted in the US, but it will likely be GSM, time-division multiple access (TDMA), or code-division multiple access (CDMA). Two of the main digital wireless cellular phone technologies, the US-developed CDMA and the European-developed GSM are fighting to replace the analog-based cellular phone systems with a digital service that can deliver data as well as voice and offer more capacity for phone calls and users. Many US companies are having difficulty in choosing between these two, in their bid to set up regional and national personal communications service (PCS) networks. Code-division multiple access was developed by California-based Qualcomm and is widely regarded as the best. CDMA offers outstanding voice quality, strong signal hand-offs, position location abilities, fewer cell cites, more privacy, longer talk time, and a dynamically changeable number of calls per cell. CDMA can handle more than 10 times the capacity of the current Advanced Mobile Phone Service (AMPS) system. Lucent Technologies, Motorola, and Qualcomm own patents that would be quite valuable should CDMA emerge as the standard. CDMA however, has yet to prove its claims of superior performance and capabilities and CDMA equipment is still difficult to find, while GSM is an established technology with a large base of equipment providers. Sprint Spectrum plans on eventually using CDMA, but uses GSM for its Washington D.C. implementation because it was already available. Some companies are waiting until CDMA is available before implementing their PCS networks. Most US cellular companies are planning on using CDMA when it becomes available because at least theoretically, it is much better technology than TDMA or GSM. Global system for mobile communications, an older digital technology, is proven to work well, although not as efficient as CDMA or TDMA. GSM already has 13 million users in Europe. Ericsson and Northern Telecom, GSM equipment companies, are hoping that GSM will emerge as the world standard. Since GSM is a reliable system, many of the new PCS license holders will be implementing it in the US because it that can be implemented now. Licenses cost a lot of money, and the companies want to start earning money immediately. GSM's communications equipments are also cheaper than CDMA's because of higher manufacturing volumes. CDMA equipments, which are in their first generation, will take some time before developing the same economies of scale. GSM receives much more support in terms of chips, software and operating experience which is in contrast to CDMA chips. Current Status Back in the 1980s, many analysts and companies underestimated the growth of cellular telephones, predicting that the US would have one million cellular phone users by the year 2000. Currently, there are 40 million cellular users in the US and about 30,000 new subscribers per day. The Arthur D.Little technology firm predicts that half of all telecommunication traffic will be wireless by the year 2000. Digital cellular phone equipment is selling well and will get even better. Giga Information Group predicts that non-PCS digital cellular phones will grow from 21,000 units sold in 1993 to 2.9 million in 1998. The PCS equipment market is predicted to generate $5 bn in 1996 and $23 bn by 2005, by the MTA-EMCI research company. Also, for 1999, PCS handset sales will be $3 bn and PCS services will generate $8 bn in revenues. Dataquest predicts that PCS and non-PCS cellular phone sales will grow from $13.9 bn to $16.3 bn in 1996 in the world market. Giga estimated, the cost of chip content of a CDMA phone at the end of 1995 is $90 but only $60 for GSM phones. Prices for both chips are certain to drop over the next few years but Giga believes that CDMA chips will still cost more than GSM chips. CDMA have been chosen by some of the largest US companies for their PCS networks which represent about half the potential market when measured by possible end-users. The rest have chosen GSM or a variation of GSM. The first GSM network in the US was activated in the Washington DC area in November 1995. Several other GSM networks are now online including in San Diego, by the California-based PacBell Mobile. A customer trial for CDMA has begun in Austin, Texas, by GTE of the US and they plan to roll out commercial CDMA network in San Jose, California, and other markets in 1997. In Japan, CDMA was given a boost firms in Japan are recommended to use CDMA by the Japanese government. Other countries supporting CDMA are Singapore, Hong Kong, South Korea and Brazil. In many developing countries, GSM has been the technology of choice, where GSM networks can be quickly established and are supplanting older telephone networks. GSM has been chosen over CDMA in Poland, China, Slovakia and India. The battle between GSM and CDMA will ultimately be decided in the market-place. Mobile Suppliers The big equipment suppliers to the world's fast growing mobile networks have suffered alarming disruptions in 1995. The world's largest single mobile market, the US, fears of a slowdown in worldwide growth, and falling prices, prompted by growing competition, have all conspired to hit profit margins and share prices - sometimes spectacularly. But the industry remains confident that there is still much more growth in building mobile network infrastructure and in the sale of handsets. The number of mobile subscribers in the world, by latest estimates has passed 100mil, and is still growing at an annual rate of some 50%. In Scandinavia, penetration rates have reached as high as 25% of the population. But even in countries like the US and the UK, where mobile growth has been relatively fast, penetration rates remain below 20%. They are much lower than that in other potentially big markets such as Japan, France and Germany. Estimates that there will be more than 350mil subscribers worldwide in the year 2000 are regarded as quite conservative within the industry. The supply of mobile equipment, is still dominated by three companies: Ericsson of Sweden, Motorola of the US and Finland's Nokia. They hold as much as two thirds of the world's markets between them. Ericsson, is the leader in infrastructure supply while Motorola leads the sale of handsets, followed by Nokia. But all three supply both infrastructure and handset equipment. The dominance of these three is not universal however. Lucent, the former AT&T equipment supply division, and Canada's Northern Telecom, are big infrastructure suppliers in north America. Meanwhile, Germany's Siemens and Alcatel of France are fighting for market share in Europe. The three leaders face competition from a growing number of companies, including those four, in handsets. Others include Phillips from the Netherlands and Japan's NEC and Panasonic. The press of competition and uneven developments in different markets have jolted Ericsson, Motorola and Nokia over the past year. Demand slowed as US operators moved to introduce new digital networks. There was problem for the European suppliers because of the decision by several of the biggest operators of digital networks to choose systems based on an CDMA which Ericsson and Nokia do not supply. At the same time growing competition led to tumbling prices for handsets, by as much as 25% last year in 1995. The hiatus in the US hit Motorola and Nokia hard. Nokia's profits crashed from FM3bn to FM1.13bn, in the first half of this year. Ericsson on the other hand, has not suffered such swings. It posted a 31% rise in profits in the first half of this year and did quite well for the remainder of 1996. This is partly because of Ericsson's belief that barriers to entry to the infrastructure business means that unlike handsets, margins will not fall as precipitately. In the new generation of networks in the US, Ericsson clearly will not dominate any longer, now that the key operators have opted for CDMA. But what gives it great strength, is its powerful position in the European digital standard GSM and GSM-related systems, which are the fastest growing network choices outside the US. Nokia also plans to use its similar GSM strength in infrastructure as more networks are established worldwide and build out existing networks to expand capacity and coverage. In handsets, the pressure will be on the established big groups but they can withstand falling margins with their big volumes. But to build up the market share that will give them critical volume mass later, the smaller competitors are likely to be willing to sacrifice profits. Much greater market segmentation between market function, cheaper handsets, and multi-function, expensive phones is already developing, emphasising on styling and marketing. Conclusion The technological development and innovation in the communication industry is proceeding at a remarkable rate.When predicting the likely success of an innovation, the safest prediction is always failure. Of all new products, services, and technologies introduced, only a fraction reach the market, with a few of these lasting more than a few years. The ones which last, such as the telephone, radio, and television, have the potential to bring about profound changes in society. The first prediction, therefore, is that many of the new technologies will fail. Some will fail because the technology could never live up to its promise,while others will succumb to marketplace competition. Some superior technologies will fail because of inferior marketing or distribution. Finally, some will fail because they were introduced a the wrong time: too early, too late, or during economic recession. External factors such as the general state of the economy are critical to any new technology. The level of investment in development of a technology must be matched by the investment in marketing the technology. Competitive factors will become more important than ever in determining the success of new communication technologies. Many industries such as telephony and cable television, which have operated as virtual local monopolies, will face competition from both inside and outside their industries. The primary beneficiary of competition will be the consumer, who will see prices for services fall to the cost of providing the service. As people make decisions to adopt new communication technologies, the thing they will look for first is the delivery of information they are already receiving from another source. Then, they will look for a relative advantage in price, quality, etc. As important as these factors are in early adoption, the next step is even more important. Once a technology is able to gain a foothold in the market, it can begin offering new services or features not found in the older technology. Consumers like both novelty and familiarity - but not too much of it either. |