3g mobile Licensing Policy

2.3The GSM Market

2.3.1The GSM Success Story

New PCS operators in the U.S. also recognized the advantages of an open standard in creating a global, multi-vendor market for products. This had the advantage of making network deployment more cost-effective. Once the FCC had opened the door, the major GSM vendors rapidly developed a GSM variation customized for the 1900 MHz-frequency band. The US therefore appeared to be very interested in the DCS-1800 (GSM-compatible standard). In November 1995, American Personal Communications launched the first commercial GSM service in the US. At around the same time, Qualcomm (in precursor CDMA phases) was developing “spread spectrum technology”, but no handsets had yet been developed. As an alternative to TDMA systems, it was perceived as somewhat of a ‘risky proposition’. The threat of being left behind in the rapidly advancing GSM marketplace was too great. By May 1997, there were already 15 PCS 1900 (now GSM 1900) networks and over 400,000 users.³⁵

In Europe, by 1997, one new customer was signing up to GSM networks every second, according to estimates from the GSM MoU Association, the global industry body that represents 239 international GSM network operators, regulators and administrators of 109 countries/areas. Customer totals for GSM had reached 44 million and were equivalent to 28% of the world mobile wireless market. In 1998, the EU Green Paper on Convergence was written, the purpose of which was to launch a debate on the regulatory implications of the convergence of the telecommunications, media and IT sectors, and to discuss options for future regulatory policy.

By 1999, the positive effects of GSM’s success were readily discernible on Europe’s equipment vendors, network operators, system integrators, and software developers. Europe’s vendors benefited from the economies of scale and efficiencies associated with the development of a stable technology platform. Companies like Nokia and Ericsson have been able to leverage their expertise in building GSM networks in Europe to sell their GSM infrastructure projects into emerging markets, such as those of eastern Europe where many telecomms operators have ‘leapfrogged’ wireline systems in favor of mobile wireless networks. These are often easier, quicker and cheaper to roll out. GSM network operators by 1999 delivered service to more than 200 million users, making it the most successful mobile wireless technology in the world; it had more than 400 million subscribers by the end of 2000, and has been adding about 10 million more each month.³⁶

Looking ahead, it is possible that GSM systems are heading for quieter times unless something can stimulate more growth. In many countries, networks will soon be reaching the limits of what can be achieved without extensive, and environmentally intrusive investments in new wireless masts. Also, as saturation among users approaches, growth will slow. Therefore, network operators are bound to face some critically important strategic decisions. In the next two years, they must continue to focus on satisfying rapid customer demand for mobile voice services and on meeting the basic customer needs of coverage, capacity and customer service. Those in countries with high mobile phone penetration rates will lead the way in developing services featuring data as well as voice. It is likely that acquisitions and alliance activities will help to pave the way not only for necessary geographic expansion, but for the discovery of opportunities like network- sharing.

2.3.2Future Market Development

In response to a survey question: How will your subscribers break down by network technology?

(Averages from 22 operators responding)