Cellular carriers have made significant progress in their efforts to upgrade their 800 MHz analog networks to digital technology.
Consumers’ appetite for digital features is demonstrated by the success of digital pricing plans such as AT&T Wireless Services Inc.’s Digital One Rate plan, said industry watchers, many of whom noted an increase in digital traffic and uptake rates. Many carriers, they said, aggressively are migrating high-end users to their digital networks and trying to scale back analog subscriber additions.
Digital buildout nearing end
With increasing demand for digital service, cellular carriers may be beginning to enter a new phase of digital deployment. Large regional and national carriers are nearing completion of equipping their infrastructure with the basic digital equipment. Bell Atlantic Mobile, for instance, said its digital network will cover 95 percent of its pops by year end, and BellSouth Cellular Corp. said all of its cellular base stations are equipped with digital radios.
Brian Cotton, research director for wireless communications at Frost & Sullivan, estimated between 85 percent and 95 percent of the work wireless carriers had planned to do to upgrade their networks is completed.
“Most carriers that have added digital schemes have done a good job at adding it in the metro areas and those regions where there was the largest concern with channel capacity,” said Larry Swasey, senior analyst with Allied Business Intelligence Inc. “A lot of carriers have had to put in analog capacity cells in their most robust areas, and they have used that as a rule of thumb to determine which regions need digital infrastructure first.”
Time to tweak
With the initial work largely completed, carriers are beginning to tweak their networks. Jeff Battcher, a spokesman for BellSouth Cellular, said the company monitors analog and digital traffic and continually adjusts its equipment to support the increases in digital traffic. Analysts agree that filling in for coverage comprises much of the work occurring on digital networks.
Initial penetration of digital cellular technology has been in urban markets through regional and national carriers and is now moving into secondary markets. Many rural carriers have expressed an interest in offering digital services as well, said Paul Sergeant, senior product marketing manager, CDMA, at Nortel Networks.
“You have to be competitive, and to be competitive you have to look at what other carriers around you are doing,” said Peter Nighswander, a wireless analyst with The Strategis Group, Washington, D.C. “Digital is one way to differentiate.”
The idea of using digital technologies on cellular networks originally surfaced as a solution for capacity problems. Interim-Standard 54 Time Division Multiple Access technology was an initial fix, but quality suffered, said Sergeant.
In 1996, IS-136, which added a digital control channel and a more effective vocoder, emerged as a comparable digital technology to Code Division Multiple Access and Global System for Mobile communications technologies, said Sergeant.
AT&T Wireless was one of the most aggressive carriers in the early stages of building a digital cellular network. The company had rolled out IS-54 technology in most of its markets by early 1996, and launched its first IS-136 market in December 1995 in Dallas.
CDMA technology started to make progress on cellular networks in 1996.
Feature hiccups
Deploying digital service, however, has become more about being able to offer digital features and less about capacity, said Sergeant. Deployment of digital technology has had its hiccups, though.
“There were two big factors,” said Sergeant. “The first was the need for cellular operators to go digital and invest in the network. A lot of them didn’t do that until the threat of PCS came along, and for that reason, we are seeing digital cellular and PCS deploying at about the same time.
“The other factor has been a lack of digital handsets at a reasonable cost,” continued Sergeant.
The deployment of digital infrastructure may go hand-in-hand with the availability of a selection of reasonably priced digital handsets. Herschel Shosteck, president of Herschel Shosteck Associates Ltd., in June noted that 38.8 percent of handsets sold were digital terminals.
Shosteck said with new digital handsets beginning to hit the market, he expects this holiday season to be the first real digital selling period for the industry. That could result in carriers finding they need to install more digital equipment, he said.
A trend toward higher minutes of use spurred by pricing plans like AT&T Wireless’ Digital One Rate plan also could pressure on carriers to add more digital equipment as traffic on their digital networks increases, said Shosteck.
