Building the network for a single-service protocol provided its own challenges. GSM, despite its worldwide acceptance, had to work out a profitable model. That compelled carriers to determine what kind of base stations to deploy, how many towers to install and where to locate them. CDMA, too, in spite of its relatively smaller market, had to play the game of harmonizing networks with services.
Services provide the bottom line, and all the infrastructure buildout, staff deployment and figuring out customer demographics were pieces that made the service machine work.
That was for second-generation buildout.
The major carriers in the United States-Verizon Wireless, former AT&T Wireless Enterprises, Cingular Wireless L.L.C. as well as Sprint PCS and T-Mobile USA Inc.-had to follow an efficient business model to match networks with demographics and match demographics with services.
In spite of all the rigorous exercise, services have not been perfect. Dropped calls, weak reception, glitches and sometimes breakdowns undermined superhuman efforts to ensure communication.
Now, the situation is different and more complex. Two reasons account for this. First is the migration to multi-service networks. The second is the wave of carrier consolidation.
Both developments throw up peculiar challenges, but industry, with its strong optimism, looks at the advantages.
Explains industry analyst Peter Rysavy, “In the case of Cingular, the merger provides the company the spectral resources and funding to do a national rollout, and Cingular is moving forward with that.”
Cingular is not alone in the tide of mergers. Sprint has proposed to buy Nextel Communications Inc., which provides a different kind of integration challenge than Cingular.
Says Rysavy: “Both Sprint and Nextel will face challenges because their next-generation technologies are data only, but they are complexities that the combined companies can handle.”
When GSM began its battle with CDMA, industry thrilled that the next generation was going to throw up only one technology that would harmonize the feuding protocols. The hope was that wideband-CDMA would be the standard protocol. But today, in addition to W-CDMA, the industry is contending with Flash-OFDM from Flarion Technologies Inc., UMTS-TDD from IP- Wireless and a slew of broadband technologies like WiMAX, metropolitan area networks or 802.20, on top of in-building technologies like ultra-wideband, Wi-Fi, Bluetooth and ZigBee.
All these options present not only competition among themselves, but interoperability bottlenecks.
So as carriers migrate to third-generation deployments, the challenges will be more extreme than industry has known to date-challenges that could make Cingular’s merger with AWS look easy.
“The carriers have to make decisions based on how to consolidate networks, customers, infrastructure, retail stores, and sales for of business to business,” remarked Chris Cherry, strategic industry manager for communication industry at MapInfo Inc.
Adjusting to the multi-service networks is more complex than the fixed challenges in moving to next-generation services, explained Othmer Kyas, director of marketing at Tektronix, which just unveiled its network management and diagnostics tools for next-generation networks.
“It’s a big change,” Kyas commented, adding the challenge means carriers have to implement true quality of service with growing bandwidth demand.
In the case of Cingular, the consolidation will not face technology collision problems. Both Cingular and AWS come from a GSM background, and both have followed the migration path of GPRS/EDGE and are moving to UMTS and HSDPA.
Sprint’s integration with Nextel likely will be more complex. Sprint comes from a CDMA platform while Nextel, often the industry maverick, uses iDEN technology. Both companies will maintain their networks for the second-generation protocol, but are expected to migrate to CDMA2000 EV-DO and EV-DV. This implies that Nextel’s part of the network will be upgraded and forklifted for CDMA to achieve harmony with Sprint, which is the bigger partner.
Cingular is already working on adjusting its network because of the company’s merger. The two companies had combined cell sites of about 48,000, according Ritch Blasi, spokesman for Cingular. He explained that the company had shared sites with T-Mobile USA, paring the sites down to 45,000. He still believes that some of the cell sites may be redundant.
“What we are doing is going to where we don’t need some sites, decommissioning them and using them in other parts of the country to enhance quality,” he explained. He added that the company may still build about 5,000 new sites, noting that by the end of this year Cingular is expected to have about 47,000 cell sites.
Analyst Jonathan Atkin with RBC Capital Markets made the following comment in a research update on the tower industry: “Although Cingular has identified a sizeable number of sites in each region for review, we have seen no evidence of lease terminations thus far and remain doubtful the network integration will affect the overall prospects for the towers in our coverage list.”
Blasi said the carrier is working on HSDPA, the evolutionary phase of W-CDMA in the 850 MHz and 1900 MHz bands. “Where we’re upgrading, we’re also enabling HSDPA,” he said. “We want technicians to visit only once.”
EDGE technology is also a top priority, Blasi explained, noting that the protocol enjoys more than 220 million pops. Partnerships with other carriers raise that figure to 253 million subscribers, he explained.
Finally, network buildouts do not happen with the devices in sync. For EDGE, Blasi said the business market is using laptops, a variety of modem cards and emerging converged devices like the EDGE-Wi-Fi device. Siemens AG also is rolling out a PDA with GPRS and Wi-Fi.
Cherry said the mergers also will compel the carriers to work on consolidating distribution channels, including two sets of retail stores, two sets of third-party networks and two sets of business-to-business sales forces.
“They will have to manage sales territories for business-to-business without competing with each other,” said MapInfo’s Cherry.
He said the first step for carriers is to save money, after which they can focus on new revenue streams.
“There will be niche marketing,” he said, adding not every customer needs high speed, but they will target areas with high propensity for that.
