Magazine

Tearing Down the Wireless Babel


The U.S. government's reluctance to meddle in technology has generally served both the industry and the public well. Wireless phones are the glaring exception. Laissez-faire has produced a digital Babel. Whereas governments in other countries have mandated a single standard, U.S. carriers offer four incompatible digital technologies operating at different frequencies (table). And with carriers all concentrating their efforts on the same lucrative urban markets, none can offer anything close to true national coverage.

There are signs, however, that market forces are finally taking hold. Global consolidation and the demand for moving data as well as voice are forcing a rationalization of U.S. networks.

The most important development is the coming demise of one of the main digital wireless technologies in the U.S. As part of a complex deal in which Japan's NTT DoCoMo (NTDMY) took a $10 billion stake in the company, AT&T Wireless (AWE) will phase out the technology it uses, called time division multiple access (TDMA), in favor of the global system for mobile communications (GSM) standard used in most of the world. Cingular Wireless, which offers TDMA as part of its pastiche of networks, is also expected to move to GSM.

TDMA was probably doomed, anyway. It is a voice-only technology--in a market where data transmission, whether for Web access or wireless laptops, is a big concern for both carriers and their customers (Technology & You, June 11). Meanwhile, GSM, heretofore a bit player in the U.S., is poised to be one of the key survivors. Its position has been further strengthened by Deutsche Telekom's (DT) acquisition of VoiceStream (VSTR), the leading U.S. GSM provider. In the future, most of the market will be split between GSM and CDMA, offered by Sprint PCS (PCS), Verizon Wireless (VZ), Alltel Communications (AT), and Qwest (Q). Nextel (NXTL) will continue to offer a specialty service to businesses that value its phones' distinctive ability to emulate push-to-talk two-way radios. And the original analog cellular network will stay in service indefinitely.

Ideally, consumers need not know or care about the technology, but these changes are important. With bigger carriers using fewer technologies, coverage should improve, leading to solid nationwide availability of GSM and CDMA. The fact that some services run at 800 megahertz and some at 1,900 Mhz is less important; it's far easier to build a dual-band handset than one that uses different basic technologies.

POKY. A second benefit will be much-improved data service on browser-equipped phones, handhelds, and laptops that use the phone network. Currently, GSM and CDMA systems carry data up to 14.4 kilobits per second, and even that poky rate is rarely achieved. Furthermore, the phone network is very inefficient for data. Even though data usually move in brief bursts, current technology requires that an entire voice channel be devoted full-time to each data call.

GSM carriers in Europe are rolling out a service that speeds up the system and lets multiple data transmissions share a single voice channel. In addition to offering speeds up to 64 kbs, and with faster service planned in the future, the new system connects without the delay now required to set up a voice call. Greater efficiency should translate to lower prices. In South Korea, which has an advanced CDMA network, carriers are deploying a similar, somewhat faster, technology.

Farther down the road, the wireless industry promises true broadband service. Called 3G, for third generation, it will let you watch video on your phone, if that's your idea of a good time. But European carriers spent so much on the 3G licenses that they may never make money on the service. And the U.S. has yet to allocate spectrum for 3G.

Those are problems for the distant future. Meanwhile, more modest system upgrades in the works represent a vast improvement in wireless data and, with luck, they will start to show up in the U.S. next year. I, for one, will be delighted to have wireless service that's simple and widely available, even if the speed is no faster than today's dial-up modems. By Stephen H. Wildstrom


Steve Ballmer, Power Forward
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