GSM by the Numbers

GSM by the Numbers

Truth, they say, is often the first casualty of conflict, and the facts have taken a beating in today's take-no-prisoners telecom marketplace.

That's certainly the case with the Global System for Mobile Communications (GSM), where despite a growing mountain of evidence, some have attempted to cast doubt on the viability of this wireless technology and its role as a pathway to the third generation.

There has been a lot written and said about 3G evolution lately and, unfortunately, not everything is entirely accurate. The road to 3G presents the mobile industry with two distinct, yet interconnected, development paths. And while some have suggested CDMA 1x is gaining ground in this evolutionary competition, the more efficient and preferred path is and will continue to be GSM.

Making claims is easy, so in the interest of clarity, let's let the GSM facts speak for themselves.

The Global Leader
In the 10 years since the first network was commercially deployed, GSM has become the world's most popular and fastest-growing mobile technology standard. Today GSM serves more than 745 million subscribers in 184 countries and regions, and is now the world's leading mobile technology, accounting for seven out of ten wireless customers.

Industry observers expect the GSM family of technologies to account for 80-85% of next-generation subscribers, and this wireless technology is now expected to be the preferred 3G technology path for more than 75% of all wireless operators worldwide. GSM networks carry 24 billion Short Message Service (SMS) messages a month, and are projected to deliver 360 billion SMS messages a year by the end of 2002.

Why is the world choosing GSM? The simple fact is, GSM is an open and continually evolving system that offers three significant advantages:
1.   Cost: GSM creates unparalleled economies of scale that translate into the lowest-cost handsets and infrastructure, encouraging greater and broader service creation to the benefit of operators and consumers alike.
2.   Competitive voice and data: It delivers an open and unified services environment that supports the least expensive voice, very affordable data performance, and the overall widest variety of applications from a global developer base.
3.   Roaming and other benefits: GSM offers the seamless services, global roaming, and spectral efficiency today's operators need to achieve their highest revenue potential.

To understand more fully how this technology can meet the needs of both network operators and their subscribers, let's take a look at GSM by the numbers.

1: Cost
The GSM evolutionary pathway offers significant cost-related benefits, including higher capacity and increased speed, seamless services, greater network efficiencies, and other 3G timing and market advantages.

GSM's open interface encourages broader industry involvement and a healthy competition between equipment vendors, both of which help drive down the cost of devices and network infrastructure. This, coupled with the fact that GSM enjoys the highest volumes in the industry, yields efficiencies that support the lowest capital expenditure (CAPEX) requirements of any technology pathway. TDMA carriers for example have saved from 25-50% of their CAPEX by migrating to the GSM evolution pathway versus other competing technology options, and it's doubtful that any other technology will ever match these volume-driven cost efficiencies.

Because it accounts for 70% of the global cellular marketplace, GSM will continue to help drive down the cost of mobile devices. Right now GSM-related efficiencies translate into cost savings of $10-$20 per handset. In a global market where hundreds of millions of handsets are sold each year, those numbers add up to annual cost savings in the billions of dollars. Those sheer numbers will continue to tilt the economics away from CDMA2000 1x and toward the GSM evolutionary pathway.

GSM's open standards-based platform architecture also gives operators an unparallelled range of terminal options. There are now dozens of color-screen GPRS terminals and PDAs available, most featuring dual- or tri-band capabilities and standardized service technologies such as Java, MMS, and WAP/XHTML.

Because GSM avoids the fragmented technology problems that plague competing standards, these standardized terminals can be used by virtually any GSM-based network. And because operators can buy from multiple vendors, the highly competitive GSM marketplace will continue to drive down costs, reduce time-to- market, and improve overall terminal quality and selection.

2: Competitive Voice and Data
GSM provides superior voice and data performance. GSM achieves outstanding voice capacity though frequency reuse and the effectiveness of the voice codec. GSM frequency reuse is being further enhanced with the introduction of intelligent underlay-overlay, frequency hopping, dynamic frequency channel allocation, and other techniques. Adaptive Multirate Codec (AMR) has greatly improved voice coding, and will eventually be capable of packing four GSM calls in the space of a single full-rate call.

Those capacity gains, coupled with lower GSM terminal and infrastructure costs, will allow GSM to deliver the most affordable voice capacity for years to come. Although usage is moving toward higher-margin data applications, voice prices remain under constant pressure, and successful operators will always seek the best possible margins on voice.

The GSM pathway also supports a graceful, revenue-oriented pathway to the increasingly data-oriented wireless future. General Packet Radio Service (GPRS) has made great strides in terms of commercial acceptance, and many anticipated 3G applications (i.e., MMS) are already available with current GPRS and Enhanced Data Rate for GSM Evolution (EDGE) offerings.

In the United States, for example, EDGE capacity upgrades to GPRS will be available before the next comparable phase of the CDMA 1x capacity evolution. Because it dominates with an almost four-fifths share of the mobile marketplace, GSM remains the preferred technology choice for network operators and application developers alike. GSM's market-leading position alone often means more to operators than the technical attributes of the data bearer technology itself.

A number of leading industry players are working to support the success of the GSM/GPRS/EDGE/WCDMA evolutionary pathway.

Nokia, for example, is collaborating with third-party application developers and content providers to facilitate the creation of GSM-enabled data solutions. Nokia's global developer program gives developers early access to the tools, technical information, support, and distribution channels they need to build and market applications around the globe, including, but not limited to, MMS, MIDP, Java, and Symbian.

Direct technical and business development support helps developers and operators ensure the successful launch of services to consumers and enterprises. Today, consumers can download applications directly to their handsets and mobile operators can access and further commercialize these third-party applications through their own service portals.

The debate, then, is not just about the technological advantages of a particular network platform. Operators should ask themselves: Which solution provides the market viability, the economics, and the evolutionary flexibility needed to meet consumer demand and maximize ROI? When you ask those tough questions, GSM is the logical answer.

3: Roaming and Other Benefits
In an increasingly mobile world, roaming is a key question for any wireless operator. Today's second-generation GSM networks deliver secure, high-quality mobile voice and data services with full roaming capabilities across the world. GSM roaming is currently available in 184 countries or regions of the world, and more than 400 GSM operators have currently signed some 20,000 roaming agreements worldwide.

Because GSM currently serves approximately six times as many subscribers as CDMA, GSM offers unmatched roaming revenue potential. In fact, only GSM operators will benefit from global roaming to any meaningful extent.

In addition to delivering significant, high-margin voice performance, these same GSM mechanisms support emerging data services in the form of GPRS roaming. Short Message Service (SMS), for example, now constitutes the vast majority of data in today's wireless networks. In GSM networks, SMS is self-evident between operators and when subscribers are roaming. The success of SMS proves that with the right application, even narrowband data can generate substantial operator profits.

Thus, GSM provides an economically viable foundation as networks evolve from traditional voice to increasingly data-centric business models. This revenue shift has already begun in most mature and developed telecom markets. Traditional revenue streams, which derived 95% or more of ARPU from voice communications, are rapidly becoming a thing of the past. In some international markets, 25% of mobile operator ARPU already comes from nonvoice services.

Spectral efficiency is another important factor when considering the relative advantages of potential evolutionary pathways. While some have questioned the spectral efficiency performance of GSM/EDGE as compared to CDMA2000, in fact the introduction of GSM features such as adaptive multirate codec, frequency hopping, and automated planning have virtually eliminated any practical differences in spectral performance.

Real Choices
It's true that the selection of an air interface is one of the most important decisions a wireless operator will ever make. But as we have seen, this decision involves far more than a simple evaluation of competing technologies. It also requires a clear understanding of market realities, evolutionary pathways, and bottom-line business requirements.

GSM offers the clear advantages of a global leadership position that translates into greater product availability, economies of scale, and a vast and growing worldwide subscriber base. Continued technical innovations enable GSM to deliver superior voice and robust data performance. GSM also offers substantial roaming and spectral efficiency benefits to network operators the world over.

Given those competitive factors, it is not surprising that the roll call of operators who have endorsed the GSM-driven EDGE pathway include AT&T Wireless, Cingular Wireless, T-Mobile, Entel Movil, Rogers Wireless, Telecom Personal, and Telcel.

Consider those names and consider the numbers. Because when you separate wireless facts from marketplace fictions, GSM stands out as a logical, profit-driven pathway to the 3G future.

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jim murray 02/04/03 01:20:00 PM EST

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John Davies 01/23/03 04:35:00 AM EST