The transition from analog to digital handsets in the United States is finally taking off, says a new study published by Herschel Shosteck Associates Ltd.
“After four years of false starts, the U.S. digital transition is finally underway,” said Jane Zweig, senior vice president of the firm. “1996 marked the first year in which digital exceeded 10 percent of 800 MHz terminal sales. For some 800 MHz carriers in some markets, digital made up the majority of terminal sales. Digital will comprise 75 percent of total terminal sales in year 2000.”
The study, “Digital Market Forecasts: 1997-2000,” analyzes and forecasts the deployment of 800 MHz U.S. digital standards worldwide.
By 2000, the study predicts Time Division Multiple Access Interim Standard 136 handsets will make up about 36 percent of the U.S. market. Code Division Multiple Access technology will follow with 31 percent. Analog handsets will have 25 percent of the market share and Global System for Mobile communications will hold 8 percent.
“TDMA/IS-136 is reaching maturity,” said Zweig. “Handset prices are dropping. AT&T Wireless Services (Inc.) is promoting terminals. This assures profits to the manufacturers who supply them.”
CDMA has not fully developed, said Zweig. Network adjustments and high handset prices are hampering quick network rollouts. “Nonetheless, in the year 2000, CDMA terminals will comprise 31 percent of total terminal sales,” she said.
Although GSM provides time to market advantages and economies of manufacturing scale, limited coverage and roaming could put carriers and manufacturers at a disadvantage, said Zweig.
The study predicts that analog handset sales will remain strong through 1998. Cellular operators will continue to offer analog service to attract low-use subscribers, which will ensure profits for cost-efficient manufacturers of analog terminals. Digital should take the majority of handset sales for both 800 MHz and 1900 MHz by late 1998, according to the study.
Digital’s success will depend on marketing, the brand names associated with carriers using the technology and the packaging of services and handsets, said Zweig. Personal communications services providers will survive only if they have strong brand awareness and financial backing that runs deeper than vendor financing.
“PCS faces numerous challenges. By year-end 1996, cellular penetration will exceed 16 percent. Cellular terminals are lower cost and cellular carriers have ubiquitous service,” said Zweig.
“Cellular provides greater network density and more uniform reception. As important, cellular is competing with digital services equivalent to those offered by PCS operators.”
