- Buyers Guide
The recent study by Herschel Shosteck Associates Ltd., "Digital Market Forecasts: 1997-2000," analyzes and forecasts the deployment of 800/1900 MHz US digital standards worldwide. How those standards will be adopted by technology (time-division multiple access (TDMA)/IS-136, code-division multiple access (CDMA)/IS-95 and Global System for Mobile communications (GSM) North America) and frequency (800/1900 MHz), and the conditions under which the change is expected to occur are analyzed.
The US transition to digital actually began in 1996 when more than 10 percent of 800 MHz terminal sales were digital. Digital is forecast to account for 75 percent of sales in 2000.
In 1997, personal communications service (PCS) operators are expected to launch scores of services but will face serious challenges. Cellular penetration was estimated to exceed 16 percent by the end of 1996. Cellular terminals are less expensive and widely deployed. Cellular offers greater network density, more uniform reception and, in some instances, services equivalent to those offered by PCS. Under those conditions, US PCS carriers were forecast to attract no more than 345,000, or three percent, of new wireless subscribers in 1996. As PCS matures, it is expected to account for more than 40 percent of new wireless subscribers by 2000.
US digital standards are expected to be adopted at a slower pace in the Asia-Pacific and Latin American markets. Non-US carriers are moving with caution in those areas. Delays in the allocation of PCS frequencies have been experienced, and CDMA terminals have been expensive.
The study's analysis of the various technologies and their relative positions through the year 2000 finds that Advanced Mobile Phone Service 800 MHz analog terminals accounted for 88 percent of the US market in 1996 and will account for 25 percent in 2000. As TDMA/IS-136 matures its handset prices will drop, and AT&T Wireless is promoting that technology with its system. TDMA's share of the 800/1900 MHz US terminal market, estimated at nine percent in 1996, is forecast to grow to 36 percent in 2000. While CDMA is developing slowly to refine its networks and deals with high handset prices, its estimated 0.5 percent of the 1996 US terminal market is forecast to grow to 31 percent in 2000.
Finally, while GSM North America's time to market and economies of manufacturing scale offer advantages to PCS operators, carriers and manufacturers must deal with its limited coverage and roaming. The GSM North America US terminal market share of two percent in 1996 is forecast to grow to only eight percent in 2000.
In the contest for new subscribers, 800 MHz cellular is estimated to have captured 97 percent of subscribers in 1996, leaving three percent for 1900 MHz PCS systems. In 2000, the cellular gain is forecast to be 59 percent while PCS will gain 41 percent. For more information, contact Jane Zweig, Herschel Shosteck Associates Ltd. (301) 589-2259.
The UBS Global Telecommunications Research Team forecasts a global mobile communications market of $100 B by 2000 in its recently released report, "Global Mobile: Handicapping the Race." According to the report, price-sensitive, high end users in developed countries have accounted for the majority of early mobile subscriber growth. However, the next phase of industry growth is expected to be driven by subscriber growth in emerging countries, particularly the Asia-Pacific region, where mobile communications will serve as a substitute for poor or nonexistent wireline telephony infrastructure, and in developed countries through the increased segmentation of the potential mass consumer market.
The migration to low mobility (pedestrian) and wireless local loop applications will influence the development of these two new markets. Based on trends identified in the report, the total mobile communications subscriber base is expected to reach 340 million by 2000.
Three major trends are credited as major contributors to the forecast growth, including deregulation, competition and the development of new mobile technologies. Deregulation is particularly visible in Europe where the European Union has mandated deregulation by 1998, and in the US where major telecommunications reform legislation was passed at the beginning of 1996. Deregulation is also proceeding at a record pace in Asia and Latin America. An increase in the number of worldwide mobile licenses from the present 1700 to 4000 by the year 2000 is forecast.
Competition is expected to encourage a major change from centralized to distributed network architectures. The centralized systems in use currently are not expected to be able to handle the higher subscriber usage (projected from lower service prices) or serve advance intelligent network applications. In general, lower cost systems are going to be necessary to serve the pedestrian (low mobility) and basic telephone service (wireless local loop) markets, and both will have utilization significantly higher than existing high mobility networks.
Pricing phases (monopolistic, marginal and congestion/market segmentation) are examined as a function of time, as well as equipment markets and their probable profitability and the new technologies likely to be introduced in the near future. Major worldwide infrastructure manufacturers are profiled and market summaries for the US, Europe, Asia and Japan, as well as profiles of major mobile communications carriers in each region are provided. For more information, contact UBS Securities LLC, New York, NY (212) 821-4000; Union Bank of Switzerland, Zurich (+41) 1 234 11 11.
Ericsson has received two contracts totaling $300 M for its wireless communications equipment. A commitment from ComScape Telecommunications Inc., Columbus, OH, involves the purchase of $100 M in wireless communications infrastructure equipment and telephone handsets over the next five years. Initially, Ericsson will deliver $6 M in network switching equipment for phase one of ComScapeÕs C-band wireless network in Charleston, VA. The equipment will provide wireless service to private and public institutions in that city. A second phase, scheduled to go on line late this year, will offer service to other commercial subscribers and consumers in public and residential areas.
The second award from Tokyo Digital Phone (TDP) covers the expansion and upgrade of TDPÕs mobile communications network, and is valued at $210 M. New switching centers and radio base stations will expand the network, and advanced switching functions will improve performance. Currently, Japan enjoys the highest growth in cellular subscribers with more than 4.5 million subscribers added during the first half of 1996.
Omnipoint Communications Inc. has announced the inauguration of its PCS in New York, the first such system offered in that city. The system employs GSM digital technology with an advanced suite of services, including full encryption for voice and data privacy, a built-in answering machine with automatic message notification, a built-in pager, caller identification, text-based news and information updates, and two-way text messaging.
The service is available in New York's five boroughs and in parts of Nassau County, southern Westchester County and northern New Jersey. Initially, handsets will be provided by Ericsson, Motorola and Nokia, and will be available from Omnipoint and a variety of national electronics retailers.
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