In addition to being headquarters to a slew of businesses that have become known worldwide, including Microsoft Corp. and Starbucks, Seattle last week was ground zero for GSM technology as VoiceStream Wireless Corp. hosted the GSM Association’s 45th Plenary Meeting.
While the meeting is only the second GSM Plenary held in North America, VoiceStream Chief Executive Officer John Stanton and members of the GSM Association not only touted the worldwide acceptance of GSM technology, but used every chance to bring up the ease of international roaming using GSM technology.
“The strength of VoiceStream’s position in the marketplace today comes from our decision on day one to deploy a single technology and single band GSM-based network,” Stanton said. “The initial benefit to our customers has been the ability to use one phone/one number as they travel internationally.”
The GSM Association predicted the technology’s worldwide customer base would surpass 500 million subscribers by May, with one out of every 12 people in the world connected to a GSM network.
“GSM has clearly established itself as the globally dominant wireless system for both voice and data communications,” added Jim Healy, chairman of the GSM Association. “As it is the foundation for global 3G services, our meeting is key to the future of the world’s wireless industry.”
The GSM Association’s claim to worldwide superiority was backed up by numbers produced by EMC Worldwide Cellular Database showing CDMA subscribers were a distant second to GSM’s half a billion subscribers with 87.7 million customers worldwide, and TDMA counting just more than 70 million customers.
Remarking on the disparity in competition, Healy said, “This is not Coca-Cola vs. Pepsi.”
But, in North America, where the meeting was being held, GSM’s current customer base stands at a paltry 10 million subscribers of the more than 100 million people with wireless service, with VoiceStream as the only major carrier using the technology. The GSM Association was quick to point out this would change shortly as AT&T Wireless, with its 15 million customers using TDMA technology, was in the midst of switching its network over to GSM.
“Competing technologies, like TDMA operators, have taken a look at the success of GSM and have determined GSM has the only logical progression to 3G,” said Bob Brown, chairman of GSM North America and executive director of the GSM Alliance.
While most GSM networks in the world operate at 900 MHz, 1800 MHz or 1900 MHz, the association noted equipment manufacturers have said they would produce equipment for networks operating at 850 MHz if necessary. That could be good news for U.S. TDMA operator Cingular Wireless, which is expected to announce a similar overlay to AT&T Wireless, but has a large portion of its spectrum holdings at 850 MHz.
“Carriers looking at GSM have not had enough time yet to make announcements regarding the use of this spectrum for GSM,” Stanton said.
The international roaming issue was also at the center of a reported controversy between European telecom giant Vodafone and its U.S. partner Verizon Wireless. While Vodafone’s current European network is GSM based, with plans to convert to wideband CDMA for 3G services, Verizon Wireless’ U.S. network is CDMA based, with an expected 3G migration path to cdma2000 1x.
The London Financial Times reported Vodafone had persuaded Verizon Wireless, of which it holds a 45-percent stake, to put off its final 3G choice until later, though analysts think it would be foolish for Verizon to switch its network to accommodate the potential of international roaming with Vodafone’s GSM networks.
“People have so much doubt as it is about recouping the cost of 3G technology, I don’t see any sound business model for Verizon to switch its network,” said Elliot Hamilton, senior vice president and director of global wireless at the Strategis Group. “How could they explain to their shareholders a plan that would cost four or five times as much as going with 1X.”
Hamilton noted that while there is a market for international roaming, he did not think it was big enough to warrant carriers switching their networks over.
Verizon Wireless also just announced a $5 billion deal with Lucent Technologies Inc. to supply cdma2000 1X equipment for the carriers’ 3G migration. But, even with the deal, Verizon Wireless has said it has not officially made a decision on its 3G future.
“Wireless is a foundation of Verizon Communications’ long-term strategy and brand development,” said Ivan Seidenberg, president and co-CEO of Verizon, in response to the rumors. “We have an excellent working relationship with Vodafone, and we are looking forward to continuing to build Verizon Wireless with them.”
While intercompatibility between the two carriers’ standards may be at the heart of the dispute, Hamilton noted Qualcomm Inc. has recently said it will have a chipset within a few years that will allow both w-CDMA and cdma2000 to be handled on one handset.
But, according to the New York Times, the real meat of the dispute is Vodafone’s interest in taking over Verizon Wireless completely from partner Verizon Communications. Citing a source close to Vodafone Chairman Chris Gent, the New York Times reported Gent wants control of Verizon Wireless within nine months and is not interested in owning a network not compatible with Vodafone’s.
News of a possible takeover bid has sent Vodafone Group’s stock down more than $2 per share on the New York Stock Exchange since last Wednesday to $27.36 per share. Verizon Communications’ stock price followed suit, falling more than $3 per share before recovering slightly last Friday to $48.38 per share in mid-day trading.
While both companies have denied any takeover bid, Vodafone has been aggressive in the past in buying out its joint-venture partners. The telecom company acquired AirTouch from Germany’s Mannesmann in 1999, and bought rival U.K. carrier Orange in a $183 million hostile takeover after Mannesmann announced a $33 billion plan to buy Orange and stake a claim in the U.K. market.
