Cellular carriers and manufacturers need to appreciate the value of analog technology well into the future if they want to succeed, said industry consultants at an annual strategic cellular and wireless radio seminar.
For the first time in the seven-year history of the seminar, presented by Herschel Shosteck Associates Ltd. and RTT Systems Ltd., delegates from the Pacific Rim and Latin America outnumbered those from Europe and the United States, reflecting the explosion in wireless development throughout the world.
More than 50 senior level attendees from 18 countries joined the five-day conference. “Oxford Programme” was held in July at Oxford University in England. An abbreviated two-day version was held in the United States.
The seminars provide third-party industry perspective and analysis, independent of the corporate agendas which typify trade conference presentations.
“We strive to provide a dispassionate analysis of the fundamental economic and technical issues of our industry,” said Geoff Varrall, a principal of RTT. “This enables us to establish the essential foundation for appraising the true risks-rewards of new technology adoption. By so doing, we hope to disperse some of the cloud of hyperbole which too often masks what new technologies can and cannot deliver.”
The marketing track was presented by Dr. Herschel Shosteck, president of Herschel Shosteck Associates. Roger Belcher, a principal of RTT, led the technology track with Varrall.
Not withstanding the apparent differences between the U.S. and European experiences, the seminar pointed much more to commonalities.
Both tracks pointed to the expanding political and economic dominance of cellular. This is being driven by the growing recognition of governments that spectrum used for cellular has enormous market value. Likewise, it is being driven by the efforts of manufacturers to profit through providing larger volumes of equipment at ever-lower prices.
As part of the marketing track, Shosteck documented the extraordinary worldwide acceptance of Global System for Mobile communications technology. With the exception of the Americas, GSM has become the dominate digital technology and will remain so into the 21st century, Shosteck concluded.
Likewise, Shosteck released his December 1993 comparisons of the perceived quality of Advanced Mobile Phone Service and U.S.-Time Division Multiple Access technologies.
For the first time since the inception of digital service 18 months before, the average quality of U.S.-TDMA rated equal to, and indeed higher than, that of AMPS. Based on these findings, Shosteck concluded that digital cellular had passed its introductory stages and was progressing toward what eventually would be replacement of analog infrastructure.
Nonetheless, analog cellular will continue to provide value well into the future, Shosteck and Varrall cautioned. Carriers and manufacturers who fail to appreciate this will place themselves at market and profit disadvantage.
In reaching this conclusion, Shosteck and Varrall made a number of observations that diverge from popular assumptions:
For three reasons, new consumer subscribers place little incremental loading onto established networks. Compared to business subscribers, consumers use the network less frequently, use it during off-peak times and away from usual “hot spots.” Due to this, established analog networks will support far more subscribers than conventionally assumed.
Thus, an unrecognized challenge facing analog cellular carriers is not only the transition to digital but filling in system dead spots. For this reason, a focus on network enhancement through microcells and repeaters will provide greater improvement in quality of service than an exclusive focus on digital.
In summation, to optimize their networks, carriers must continue to develop their analog infrastructure even while they make the transition to digital.
The performance of today’s 800/900 MHz cellular networks, both digital and analog, demonstrate that capacity advantages of any personal communications services network (PCS/PCN) options at 1.8 GHz do not provide sufficient fiscal advantage to outweigh the disadvantages.
Those disadvantages include reduced coverage and increased administrative costs of maintaining a four-fold larger number of cells. For this reason, PCS carriers at 1.8 GHz and above will always be at fiscal disadvantage in head-to-head competition with carriers at 800/900 MHz.
Digital signals, whether GSM or U.S.-TDMA, attenuate in shorter distance than often assumed, in particular, in high traffic RF environments. Due to this, both GSM and U.S.-TDMA require at least 30 percent more base stations to delivery area coverage comparable to AMPS and Total Access Communications Systems technologies. This is especially the case for handheld portables.
The cost benefits of established AMPS systems are sufficiently great that digital overlays (TDMA/IS-54 and/or CMDA/IS-95) are unlikely to account for as much as 10 percent of terminal sales before 1997.
In 1993, GSM made up 43.2 percent of European cellular sales. However, in countries with TACS systems, GSM made up only 6.6 percent of sales. This confirms that, parallel to TDMA/IS-54 in the United States, adopting GSM will be gradual in countries with established analog networks.
Given the above, AMPS/TACS, in terms of existing installed base, will continue to remain dominant and to offer profit for silicon providers, radio manufacturers, carriers and test equipment manufacturers well into the 21st century.
This year’s Oxford Programme marked the fourth year of collaboration between Herschel Shosteck Associates and RTT Systems. “We have forged an exceptionally powerful collaboration in that both of us have reached similar conclusions from our separate economic and technology perspectives,” Shosteck noted. “This enables us to provide engineering and marketing teams from our client companies the opportunity of gaining a strategic profit appraisal of the industry from both engineering and marketing perspectives.”
AMPS/TACS, in terms
of existing installed base, will continue to remain dominant…
The effectiveness of using the United States and United Kingdom as models for cellular market evolution and technology adoption for other parts of the world was clear from participant reactions. As one delegate responded,
“The marketing [analysis] is very informative. I have learned a lot from what has happened in U.S.A. and U.K. It will certainly help me out of the difficult situation [in my own country].”
The record number of attendees included chief executive officers, managing directors and senior-level strategic marketing, financial and engineering personnel. They represented major silicon providers, equipment manufacturers, carriers, end-user communities and regulatory authorities.
Countries represented included Thailand, Malaysia, Singapore, Philippines, Japan, New Zealand, Kuwait, Pakistan, Israel, Argentina, Brazil, Ireland, Portugal, Finland, Norway and Austria.
Key sections of the technology track were presented by U.K. academics, who are undertaking leading edge research in wireless technologies. These included Dr. Andrew Bateman of Bristol University, a widely respected specialist in linearization techniques and Dr. Chris Gibbins of Rutherford-Appleton Laboratory, a leading expert in millimetric technologies.
A key point of Gibbins’ presentation centered on the rapid attenuation of RF at 30 GHz and above and the implications of that in adopting millimetric frequencies for broadband landline telephony connectivity in lieu of “fiber to the home.”.
In the marketing track, Shosteck analyzed and forecast the U.S. cellular market through year 2000 and the implications for worldwide trends based on the firm’s quarterly surveys of U.S. carriers, dealers and resellers.
Herschel Shosteck is the president of Herschel Shosteck Associates Ltd., a Silver Spring, Md.-based wireless market research and consulting firm.
