Breakthrough Ideas (Continued)
The Context of the Telecommunications Standard War
Cellular standards evolved through three generations, each marked by new leaders, and by new architectures that advanced price/performance: (1) first-generation analog; (2) second-generation digital; and (3) third-generation CDMA.
In the late 1940s, Bell Systems introduced the first commercial radiotelephones. Advances such as duplex channels, direct dialing, FM channel bandwidths of 25 to 30 kHz followed. All analog systems employed FDMA. Beginning as early as the late 1970’s, and building out in the 1980’s, the first commercial analog systems also used recently invented microprocessors and digital control links to provide local mobile wireless services in the U.S. and national services in smaller European countries. The features in 1G systems can be characterized as voice only, macro cell only, outdoor coverage, limited capacity, no applications, weak security, heavy car phones that were focused on a niche market of early adopters.
With 50 million users, AMPS became the most popular standard, remaining the second-largest system until the late 1990s. Motorola was its largest vendor. Ericsson was a 1G leader in Europe. These local systems were usually closed proprietary systems, mobile-to-mobile rather than an extension of the PSTN, and focused on businesses markets. There was no standards war because local/national companies entered a small niche business-to-business local market; the local standards used were predominantly closed and proprietarily integrated systems; the competitive stakes were yet to scale in size, and the industry had not yet moved to best-of-breed open-component-systems.
The single exception to local proprietary systems was Nordic Mobile Telephone (NMT), which introduced its regional 450 MHz system internationally, with 4.5 million people in 40 countries still using it. In 1969, Finland, Sweden, Norway, and Denmark began developing a set of wireless system requirements, with the first NMT launch in Sweden coming in 1981. This first-generation regional Nordic collaboration foreshadowed the future leadership of Ericsson and Nokia in setting coalition-based standards.
The second digital generation introduced smaller and lighter handsets, longer battery life, and outdoor/indoor coverage as a complementary service to the PSTN. The second-generation was focused on the late-adopter business and early-adopter consumer markets. It featured digital, voice/data, macro/micro cells, outdoor/indoor service, increased capacity, SMS and e-mail applications, improved security, and regional roaming. Having both more capacity and more consumer appeal, the market expanded from business markets to include consumer and international markets.
Four 2G digital standards emerged; three based on TDMA and latecomer Qualcomm’s new CDMA. The first commercially operated 2G system was Global System Mobile (GSM), which was pioneered by Ericsson and Nokia and adopted by the EU, with the first commercial 2G GSM network in Finland in 1991. By far, GSM became the most widespread and widely used 2G standard. The Japanese developed Personal Digital Cellular (PDC), but failed to make rapid progress because of turbulence from the sharp downturn in Japan’s bubble in real estate and their strategic error of making PDC a closed, proprietary system. Commercially introduced in 1991, AT&T’s TDMA may have had the most technical glitches and ended up with the smallest 2G-market share, stranding its installed based as 3G arrived. |
