Feeds

GSM heads for 50pc of US phones

Portability churn will change the landscape

  • alert
  • submit to reddit

Best practices for enterprise data

Analysis While the battle to set Iraq's mobile phone standard may be over, Nokia thinks that GSM can grab 50 per cent of the market back in the Homeland. And analysts seem to agree it's far from impossible. You might be as skeptical as we are, but the global GSM standard and its variants are indisputably on the rise in the United States.

Before the champagne corks start popping in Stockholm and Espoo, it's worth remembering a couple of things. Firstly, and rather obviously, the protagonists in the rival camps are increasingly mixing it. Nokia showed us its CDMA handsets at its Irving HQ, this week and the high end model outclasses the offerings that CDMA buyers currently face. Nokia's precise involvement in bringing Texas Instruments dominant OMAP platform for smartphones to CDMA, which we reported last week, remains unclear. OMAP is used in high-end Symbian smartphones from Sony Ericsson and Nokia, but is GSM/GPRS only. Now these vendors will be able to sell OMAP variants to CDMA network operators - a major boost for CDMA.

Meanwhile, Qualcomm itself seems to have remembered that it is, primarily, a radio company. It's following the market for 3G by providing software and infrastructure for W-CDMA, the not-Qualcomm 3G standard, as the final picture in our GSMWorld Cannes photo gallery illustrates.

Secondly, any discussion of winners and losers is meaningless without the context of the operators. In the aftermath of inflated telecoms evaluations, today's debt-ridden carriers have had to cut their cloth for leaner times. The vast sums paid for 3G licenses [MMO2, formerly BT Cellnet, wrote down its fee yesterday] are only part of the problem. As https://www.sys-con.com/wireless/contact.cfm editor points out, the consolidation will come, but right now, they're too broke to buy each other.

Going for broke

But the US, with its four incompatible digital standards, is a less mature market, and has not yet reached the saturation point carriers abroad discovered a couple of years ago. It has yet to face the crunch. While there are so still so many potential subscribers out there who are phoneless, the network operators feel that they can justify spending huge amounts of money to gain share. And one remarkable statistic we learned this week is just how much they spend.

The figures range from $450 per new subscriber for Nextel, to $250 at Verizon. T-Mobile, AT&T Wireless, Sprint PCS and T-Mobile range between $300 and $400. Clearly, this is an expensive business, and one that isn't sustainable in the long run, given that churn rates are likely to rise dramatically when browned-off US cellphone users are finally given the freedom of changing their network, but keeping their phone number. This is due to take place in November, and industry watchers have their own sweepstake on who'll fall the hardest and fastest.

Odd man out Nextel, the only carrier to use Motorola's iDEN system, reports the lowest churn and highest satisfaction. But Nextel's long term future may be in the nichest of niche markets.

The others have been nibbling at each other's market share without dramatic shifts in power between the camps. The new GSM player T-Mobile has gained at the expense of old Cingular, and Verizon has gained at the expense of Sprint PCS. AT&T is making strides converting its TDMA network to GSM/GPRS, and the market share of the GSM players combined (38 per cent) is larger than the two CDMA flagbearers at 34 per cent.

However , come the churn, one factor will play into the GSM operators favor - if they're shrewd enough to realize it. The SIM card model already allows you to take your phone number and address book with you and use it in another handset, while CDMA handsets are closed. And number portability allows you to change the network entirely. This puts more pressure on the carriers to offer more attractive handsets (which the model was designed to do, as much as it was intended to increase competition between network operators). And competing on features and style plays into the GSM operators hands, as the coolest kit and the widest variety of models have always come from the GSM boys, serving a far larger global market.

Add to the mix that Verizon is adopting the MMS picture messaging standard, and you have a potential for mass momentum behind standards: exactly what the US market has been lacking.

Do network operators have souls?

As with the GSM networks abroad, the US GSM operators may finally realize that a rising tide raises all boats.

By adopting GSM and MMS global standards the network operators will share significant competitive advantages, and can compete on features - features that give them important and very visible (from the high street) advantages of differentiation.

Assuming network operators have souls, this appeals to their kinder side. Right now the carriers offer near-identical selections of handsets, and compete on minutes. Anti-consumer practices are rampant. The changing landscape offers them a way to leave all this behind, and compete on features - both service features and more feature-rich handsets. All they have to do is turn to the light. ®

Recommendations for simplifying OS migration

More from The Register

next story
Trying to sell your house? It'd better have KILLER mobile coverage
More NB than transport links to next-gen buyers - study
iWallet: No BONKING PLEASE, we're Apple
BLE-ding iPhones, not NFC bonkers, will drive trend - marketeers
Auntie remains MYSTIFIED by that weekend BBC iPlayer and website outage
Still doing 'forensics' on the caching layer – Beeb digi wonk
Scotland's BIG question: Will independence cost me my broadband?
They can take our lives, but they'll never take our SPECTRUM
NBN Co adds apartments to FTTP rollout
Commercial trial locations to go live in September
Samsung Z Tizen OS mobe is post-phoned – this time for good?
Russian launch for Sammy's non-droid knocked back
Speak your brains on SIGNAL-FREE mobile comms
Readers chat to the pair who flog the tech
prev story

Whitepapers

7 Elements of Radically Simple OS Migration
Avoid the typical headaches of OS migration during your next project by learning about 7 elements of radically simple OS migration.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
Solving today's distributed Big Data backup challenges
Enable IT efficiency and allow a firm to access and reuse corporate information for competitive advantage, ultimately changing business outcomes.
A new approach to endpoint data protection
What is the best way to ensure comprehensive visibility, management, and control of information on both company-owned and employee-owned devices?