“The market for universal phones may prove more limited than trade hyperbole suggests,” argues one analyst in response to industry buzz about satellite-based global telephone service-fueled by the successful launch May 5 of the first group of Iridium Inc. satellites.
“Extolled by the Iridium satellite consortium as its service differentiation par excellence, the universal phone is now taking terrestrial form,” says Herschel Shosteck, president and chief executive officer of Herschel Shosteck Associates, Ltd. and a prominent industry analyst.
“Over the past six months, the industry has been deluged with talk of [the universal phone’s] development,” Shosteck writes in the most recent edition of his bi-monthly newsletter, Shosteck Cellular Strategies. “[But] the focus on universal phones confuses a technology with a need. The need of international travelers is not for universal phones. Rather it is for the ease of network access and convenient billing which universal phones assumedly would provide.”
Noting that Motorola Inc. and Dancall (recently purchased by Bosch) have already developed what are being hailed as the “first iterations” of the universal phone-with terminals capable of serving both European Global System for Mobile communications at 900 MHz and U.S. GSM North America at 1900 MHz-and the GSM MoU Association is also working on a triple-band 900 MHz terminal, Shosteck adds: “While engineers are salivating at the technology challenges, financial officers are questioning the (research and development) costs. And rightfully so.”
Arguing that GSM “holds an insurmountable lead in market deployment,” Shosteck writes, “With the possible exception of multiband GSM products, we see little market possibility beyond the analog-digital units required for (Advanced Mobile Phone Service) markets.”
Shosteck believes that Time Division Multiple Access Interim Standard 136 and Code Division Multiple Access IS-95 technologies will continue to see future subscriber growth. “However,” he adds,”where multiple standards prevail, GSM will be most common. As such, GSM will provide the preferred roaming choice for most travelers.”
Even if universal phones were currently available, restrictions on roaming agreements, as well as incompatible technologies, would limit international roaming. “`Hassle free’ international roaming is [already] available through terminal rentals,” Shosteck writes. In fact, terminals registered to GSM countries can now be delivered to major airports and hotels throughout the world. InTouch USA offers the service, charging a $50 set-up fee, $59 per week terminal rental and airtime charges. And the service, which includes an overseas number, can be billed directly to American Express.
“For most international travelers from the U.S., Canada, or Latin America,” Shosteck says, “a GSM SIM card billed to a domestic AMPS number makes more sense than carrying a universal phone. The same holds for carriers. Carriers would have only to inventory and market cards costing cents rather than phones costing hundreds of dollars.”