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`

`
`Mobile Communications
`in the U.S. and Europe
`
`Regulation, Technology, and Markets
`
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`
`The Artech House Mobile Communications Series
`
`John Walker, Series Editor
`
`Advanced Technology for Road Transport: IVHS and ATT, Ian Catling, editor
`An Introduction to GSM, Siegmund M. Redl, Matthias K. Weber, Malcolm W. Oliphant
`Cellular Radio: Analog and Digital Systems, Asha Mehrotra
`Cellular Radio Systems, D. M. Balston, R. C. V. Marcario, editors
`Cellular Radio Performance Engineering, Asha Mehrotra
`Mobile Communications in the U.S. and Europe: Regulation, Technology, and Markets,
`Michael Paetsch
`Land-Mobile Radio System Engineering, Garry C. Hess
`Mobile Antenna Systems Handbook, K. Fujimoto, J. R. James
`Mobile Data Communications Systems, Peter Wong, David Britland
`Mobile Information Systems, John Walker, editor
`Narrowband Land-Mobile Radio Networks, Jean-Paul Linnartz
`Personal Communications Networks, Alan Hadden
`Smart Highways, Smart Cars, Richard Whelan
`Wireless Communications for Intelligent Transportation Systems, Scott D. Elliott, Dania)
`J. Dailey
`Wireless Data Networking, Nathan J. Muller
`Wireless: The Revolution in Personal Telecommunications, Ira Brodsky
`
`For a complete listing of The Artech House Telecommunications Library,
`turn to the back of this book.
`
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`

`
`Mobile Communications
`in the U"S .. and Europe
`
`Regulation, Technology, and Markets
`
`Michael Paetsch
`
`Artech House
`Boston ~ London
`
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`

`
`Library of Congress Cataloging-in-Publication Data
`Paetsch, Michael
`Mobile Communications in the U.S. and Europe:
`Regulation, Technology, and Markets/Michael Paetsch
`Includes bibliographical references and index.
`ISBN 0-89006-688-4
`1. Telecommunications-United States. 2. Telecommunication-Europe.
`3. Mobile communications systems-United States. 4. Mobile
`communications systems-Europe. I. Title
`HE777F.P28 1993
`384'.0973-dc20
`
`93-12354
`CIP
`
`British Cataloging-in-Publication Data
`Paetsch, Michael
`Mobile Communications in the U.S. and Europe:
`Regulation, Technology, and Markets
`I. Title
`384'.0973
`
`© 1993 ARTECH HOUSE, INC.
`685 Canton Street
`Norwood, MA 02062
`
`All rights reserved. Printed and bound in the United States of America. No part of this book may be
`reproduced or utilized in any form or by any means, electronic or mechanical, including photocopy(cid:173)
`ing, recording, or by any information storage and retrieval system, without permission in writing
`from the publisher.
`
`International Standard Book Number: 0-89006-688-4
`Library of Congress Catalog Card Number: HE777F.P28
`
`10 9 8 7 6 5 4 3
`
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`

`
`Chapter 11
`Survey and Analysis of Second-Generation
`European Mobile Communications Systems
`
`11.1 CELLULAR MOBILE RADIO SYSTEMS
`
`11.1.1 A:nalogCelh.dar Mobile Telephone Systems
`
`11.1.1.1 Cellular Infrastructure Development
`
`Eight different cellular mobile-telephone systems are currently providing services in
`all EC and EFT A countries except Greece. The first European country to introduce a
`cellular telephone system was Sweden in August 1981, followed by Norway (Novem(cid:173)
`ber 1981), Denmark (January 1982), Finland (March 1982), Spain (November 1982),
`Austria (November 1984), United Kingdom (January 1985), Netherlands (January
`1985), Luxembourg (August 1985), Germany, Italy (September 1985), France (No(cid:173)
`vember 1985), Ireland (December 1985), Iceland (July 1986), Belgium (Aprill987),
`Switzerland (September 1987), and Portugal (January 1989). Table 11.1 depicts the
`numerous systems presently operating in Europe, along with their respective date of
`launch.
`The deployment of a multitude of incompatible systems precluded the provision
`of Pan-European roaming from the outset onwards. Terminal equipment designed for
`one system (e.g., NMT-450, NMT-900, C-450, etc.) cannot be used in a market served
`by a different system. Transborder roaming agreements are therefore only feasible
`between countries using the same cellular standard. At present, two intra-European
`roaming areas exist. The four Scandinavian countries-Denmark, Finland, Norway
`and Sweden-have full roaming agreement for their NMT-450 and NMT-~00 sys(cid:173)
`tems, while the three countries in the middle of Europe-Belgium, Luxembourg, and
`Netherlands-offer roaming services on their compatible NMT-450 systems [1]. A
`Potential third roaming agreement between Austria, Italy, and Spain (TACS-900) is
`Under discussion. However, no roaming is possible between the systems installed in
`
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`
`Table 11.1
`Mobile Communications Systems in EC, EFT A, and Selected Nordic Countries, as of
`April 1, 1991
`
`Country
`
`ECIEFTA
`
`Austria
`
`Belgium
`Denmark
`
`Finland
`
`France
`
`Germany
`Iceland
`Ireland
`Italy
`
`Luxembourg
`Netherlands
`
`Norway
`
`Portugal
`Spain
`
`Sweden
`
`EFTA
`
`EC
`EC
`
`EFTA
`
`EC
`
`EC
`EFTA
`EC
`EC
`
`EC
`EC
`
`EFTA
`
`EC
`EC
`
`(CEPT)
`
`Switzerland
`U.K.
`
`EFTA
`EC
`
`NMT
`450
`
`XXX
`
`XXX
`XXX
`
`XXX
`
`XXX
`
`XXX
`XXX
`
`XXX
`
`XXX
`
`XXX
`
`NMT
`900
`
`TACS
`900
`
`Other
`Systems
`
`XXX
`
`XXX
`
`XXX
`
`XXX
`
`XXX
`
`XXX
`
`XXX
`
`XXX
`
`XXX
`
`XXX
`XXX
`
`RC2000
`NMT-F
`C-450
`
`Dec. 85
`RTMS
`
`C-450
`
`Comvik
`
`Launch
`
`Nov. 84
`Jul. 90
`Apr. 87
`Jan. 82
`Dec. 86
`Mar. 82
`Dec. 86
`Nov. 85
`Apr. 89
`Sep. 85
`Jul. 86
`
`Sep. 85
`Apr. 90
`Jun. 85
`Jan. 85
`Jan. 89
`Nov. 81
`Dec. 86
`Jan. 89
`Jun. 82
`Apr. 90
`Oct. 81
`Aug. 81
`Dec. 86
`Sep. 87
`Jan. 85
`
`Source: "Mobile Communications guide to European subscribers to mobile systems," FinTech
`Mobile Communications, 5; Modified and supplemented by Author.
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`279
`
`the four largest economies in Europe: Germany, France, Italy, and the United
`Kingdom.
`Based on information presented in Table 11.1, European mobile cellular-tele(cid:173)
`phone systems may be divided into essentially two groups. The first category includes
`systems that are implemented in three or more countries, and which are used by at least
`10% of all European subscribers to mobile telephone services. The second category is
`made up of systems generally used in only one country and having a respective
`subscriber base of less than 10% (See Table 11.2). It is interesting to note that three of
`the four major European economies, namely Germany, France, and Italy commenced
`on launching their own noncompatible cellular systems between September and
`November 1985-almost four years after the NMT-450 was initially introduced in
`Sweden and subsequently installed in Norway, Denmark, Finland, Spain, and Austria.
`The proliferation of incompatible cellular-telephone infrastructures in Europe pro(cid:173)
`vides a good example of how insufficient standardization and protective national
`procurement policies led to a duplication of R&D efforts, as well as the nonrealization
`of economies of scale.
`Between its introduction in October 1981 and 1989, the NMT -450 system
`operated in more countries and served more subscribers than any other competing
`system. During 1989, the number of subscribers using the T ACS (total access commu(cid:173)
`nications system)-although then only deployed in the United Kingdom and
`Ireland-surpassed the NMT-450 system's subscriber base (see Fig. 11.1).
`At the same time, the NMT-900 system was capable of progressively closing the
`"subscriber-gap" to the NMT 450 system, and eventually surpassed the NMT-450
`system technology market share during the first half of 1991. Notwithstanding, the
`TACS system remained the fastest growing cellular system, after Austria, Spain, and
`Italy opted to install TACS technology. During 1990, the TACS subscriber-base grew
`by 41%, compared to NMT-900 (25.5%); NMT-450 (11.1%); C-450 (10.1%);
`RC2000 (5.4%); and NMT-F, RTMS, and Comvik, with a combined 6.9%. In March
`1991, the three major systems (i.e., TACS 900, NMT-450, and NMT 900) provided
`service to 80.1% of all cellular customers in EC or EFTA countries.
`
`11.1.1.2 Regulatory Aspects
`
`Based on the description of the European telecommunications policy, prior to the
`partial implementation of the Green Paper recommendations [2], it is clear that
`cellular-telephone services in most European (and EFTA) countries were exclusively
`provided by monopolistically operating PTTs. Within the twelve EC Member States,
`however, there are exceptions: the United Kingdom and France.
`From the early 1980s onward, the United Kingdom's telecommunications mar(cid:173)
`ket has consistently been the most liberalized one among all its EC neighbors. One
`Year after awarding Mercury a license to provide fixed network services, the U.K.
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`Table 11.2
`Overview of European Cellular Telephone Systems as of April I, 1991
`
`Systems
`Type
`
`Freq.
`Band
`(MHz)
`
`Occup.
`Bandwth
`(MHz)
`
`Channel
`Spacing
`(kHz)
`
`TACS-900
`
`NMT-450
`
`900
`
`450
`
`15
`
`4.5
`
`25
`
`25
`
`NMT-900
`
`900
`
`25
`
`12.5
`
`C450
`RC2000
`RTMS
`NMT-F
`Comvik
`Total
`
`450
`200
`150
`450
`N/A
`
`4.5
`28
`N/A
`6
`N/A
`
`20
`12.5
`N/A
`N/A
`N/A
`
`Countries
`
`Subscriber
`
`-%
`
`Oper.
`Since
`
`U.K., Ireland, Italy, Austria,
`Spain
`Austria, Belgium, Denmark,
`Finland, Iceland, Spain,
`Netherlands, Sweden,
`Norway, Luxembourg
`Netherlands, Norway,
`Denmark, Finland, Sweden,
`Switzerland,
`Germany, Portugal
`France
`Italy
`France
`Sweden
`
`1,494,790
`
`40.1
`
`1/85
`
`777,860
`
`20.9
`
`10/81
`
`713,420
`
`19,1
`
`12/86
`
`319,040
`245,000
`93,400
`65,000
`17,900
`3,726,410
`
`8.6
`6.6
`2.5
`1.7
`0.5
`100
`
`9/85
`11/85
`9/85
`3/89
`8/81
`
`Data: Balston, "PAN-European cellular radio," 7; "European Cellular System Summary," 16.
`
`""' Co a I
`
`I
`
`I
`
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`

`
`s
`y
`
`s
`
`t
`
`e
`
`m
`
`TACS-900
`
`NMT-450
`
`NMT-900 ~ malllliiiiiiiiiii!IIIOOOO
`
`C-450 f""A
`
`iZOX!EI!/IItttt!
`
`Radicom 2000 v/J
`
`!1299111\II!H-1
`
`RTMS
`
`NMT-F
`
`Comvic
`
`~ ToDec87
`0 ToDec88
`I§Bl To Dec 89
`[ill To Dec 90
`rn:lToMay91
`
`0.0
`
`0.2
`
`0.4
`
`0.6
`
`0.8
`
`1.0
`
`1.2
`
`1.4
`
`1.6
`
`1.8
`
`MILLIONS
`
`Figure 11.1 The diffusion of European cellular telephone systems between 1987 and March 1991. (Source: "European Cellular
`System Summary)
`
`tv
`
`Oo -
`
`1,,_;
`
`I
`
`I
`
`'li
`
`: :!
`
`~::
`
`I
`
`. ,I
`
`I
`
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`282
`
`Government in 1983 extended its duopoly policy to provide mobile telephony, and
`consequently licensed two cellular network operators-Cellnet, a joint venture be(cid:173)
`tween British Telecom and Securicor [3], and Racal-Vodafone [4]. The licenses for
`two T ACS systems, each using 15 MHz, were issued on condition that both systems
`were operable by April 1985, and covered at least 90% of the population by 1990 [5].
`In order to elevate the competitive pressure between both network operators, the U.K.
`Government adopted the so-called two-tier approach to service provision, meaning
`that the actual service provision function and the marketing and distribution functions
`are separated. Cellnet and Racal-Vodafone operate the network (first tier) and also
`appoint airtime distributors or resellers (second tier), which then sell airtime and
`equipment to end users [6]. A detailed analysis of the merits of such a regulated
`cellular market will be given in the following section.
`As noted above, France is the second EC Member State that licensed a competi(cid:173)
`tive (analog) cellular network operator. The first quasi-cellular telephone network [7]
`introduced in France, in November 1985, is the Radiocom 2000 system operated by
`France Telecom. Amidst an intensifying discussion regarding the deregulation of
`services, the Ministry of Posts, Telecommunications and Space (PT &E) [8] decided in
`July 1987 to license a second, independent network-operator [9]. The decision was
`partly motivated by the trailing performance of France with regard to the penetration(cid:173)
`rate of mobile communications systems (e.g., cellular) as compared to other European
`countries [10]. The license was awarded to Societe Francais du Radiotelephone (SFR),
`a consortium whose largest shareholder is Compagnie Generale des Eaux [11]. The
`system commenced operation in March 1989 with an initial frequency spectrum
`allocation of 2 MHz-later increased to 6 MHz-and a total (initially) projected
`capacity of 120,000 subscribers [12]. In addition, both cellular operators are presently
`in the process of creating a two-tier service structure according to the U.K. model. In
`fact, SFR intends to commence reselling airtime for its analog system from early 1992
`on. In contrast, France Telecom will not begin selling through service providers prior
`to the launch of its second cellular mobile-telephone system [13]. Table 11.3 gives an
`overview of entities operating analog cellular telephone systems [14] within the twelve
`EC countries.
`
`11.1.1.3 Market Aspects
`
`The development of the number of subscribers in 11 EC countries and 5 EFT A
`countries illustrates the in·egularity with which the technology diffused in various
`European countries.
`In 1985, for example, more than 75% of all users of cellular services in the
`above-stated nations were accounted for by the four Nordic countries forming one
`intra-European roaming area: Finland (11% ), Denmark (17% ), Norway (23%) and
`Sweden (24% ). In contrast, the four major EC countries introduced their non-
`
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`
`Table 11.3
`Operators of Analog Cellular Systems Within the European Communities
`
`Country
`
`Operator
`
`U.K.
`
`Germany
`Denmark
`Ireland
`Luxembourg [15]
`Portugal [ 16]
`
`Cellnet
`Racal Vodafone
`DBP Telekom
`Telec. Denmark
`Telec. Eireann
`via Netherlands
`Movatel
`
`No.
`Sys.
`
`2
`1
`
`Country
`
`Operator
`
`France
`SFR
`Belgium
`Italy
`Greece
`Netherlands
`Spain
`
`France Telec.
`
`RTT
`SIP
`None
`PTT Telec. BY
`Telefonica
`
`283
`
`No.
`Sys.
`
`2
`0
`2
`2
`
`compatible cellular systems significantly later. Hence, by 1985 these countries had
`only 17.7% of the total subscriber base of all seventeen countries: United Kingdom
`(16.3%), France (0.04%), Germany (0.5%), and Italy (0.9%). During the following
`five years this situation almost reversed itself. In 1990, the subscriber base of the four
`Scandinavian countries decreased to 31% compared to the total number of users in all
`seventeen European nations, while the four major EC countries- United Kingdom
`(33%), Germany (8%), Italy (7.7), and France (8.8%)-reached a combined 57%. As
`deducible from Table 11.4, the United Kingdom recorded a dramatic increase in
`subscribers between 1985 and 1990, and clearly dominates the European cellular
`market with more than 1.1 million (33%) cellular users.
`The above-stated absolute subscriber numbers do not explicitly take the market
`size into consideration. In order to be able to evaluate the relative diffusion of cellular
`telephone service in these countries, the penetration rate (i.e., the number of users per
`1 000) must be compared. Table 11.5 depicts the penetration rate for the 17 European
`countries [17].
`The data compiled in Table 11.5 illustrates a significant disparity between the
`ranking in market size and the ranking in penetration levels. Indeed, the four Scandina(cid:173)
`vian countries enjoy the highest penetration levels in Europe. In contrast, the more
`populated countries, such as Germany, Italy, France, and Spain, have penetration
`levels in the order of one-tenth of that of Sweden and Norway. Crucial factors are, inter
`alia, terminal prices, service charges, and the number of years cellular systems are in
`operation (see Table 11.6) [18]. The high penetration rate in Sweden and Norway, for
`example, coincides with the fact that their respective cellular systems have been
`operational since 1981, while the cellular networks in France, Germany, Italy, and the
`United Kingdom were not launched prior to 1985. Substantial discrepancies are also
`noticeable with regard to the terminal prices and service charges in the European
`countries.
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`284
`
`Table 11.4
`European Cellular Telephone Subscribers 1984-1990
`
`Country
`
`1985
`
`1986
`
`1987
`
`1988
`
`1989
`
`1990
`
`1991
`
`Austria
`Finland
`Iceland
`Norway
`Switzerland
`Sweden
`Belgium
`Denmark
`France
`Germany
`Ireland
`Italy
`Luxembourg
`Netherlands
`Portugal
`Spain
`U.K.
`Total
`Annual
`Growth%
`
`9,762
`32,309
`
`63,186
`
`17,454
`49,600
`2,106
`87,061
`
`65,000
`
`110,000
`
`46,098
`114
`1,103
`135
`2,320
`60
`4,800
`
`57,604
`9,482
`17,973
`1,000
`4,095
`160
`12,600
`
`26,223
`17,598
`5,008
`120,029
`5,470
`150,000
`5,700
`78,215
`39,254
`48,747
`2,800
`13,240
`260
`22,000
`
`36,904
`104,551
`6,519
`152,103
`30,770
`220,000
`19,160
`101,215
`98,338
`99,865
`5,300
`31,860
`360
`32,000
`
`772
`44,000
`269,659
`100%
`
`1,693
`122,000
`492,928
`83%
`
`4,225
`260,000
`852,569
`72%
`
`11,629
`507,000
`1,457,734
`71%
`
`72,407
`50,721
`225,983
`157,969
`10,010
`7,893
`203,312
`173,237
`126,047
`73,000
`482,903
`350,147
`47,170
`31,000
`149,186
`123,870
`283,506
`179,500
`273,860
`165,000
`10,500
`22,097
`265,902
`66,000
`450
`608
`50,000
`81,510
`6,386
`2,900
`54,958
`30,000
`1;139,500
`860,000
`2,338,516 3,449,704
`60%
`47%
`
`114,307
`287,097
`12,889
`234,423
`174,557
`589,182
`50,478
`176,933
`373,395
`532,251
`31,696
`567,498
`873
`116,900
`12,570
`108,451
`1,230,100
`4,615,600
`34%
`
`Source: McCartney, "How competition is developing in global markets," Chapter 4. Supplemen-
`ted by: FinTech Mobile Communications Issue 73 (February 1991). Market Data for 1991: MZA,
`Wiltshire, England.
`
`In fact, equipment prices within these countries vary by more than 150%,
`reaching from $1,140 in Sweden to $2,780 in Luxembourg [19]. Even more extreme
`are the differences with regard to the monthly service charges, which are spanning a
`range from $68 in Iceland to $361 in Frm1ce. To determine whether-and if so, to what
`extent-equipment and service prices influence the penetration rate, a linear
`regression analysis was performed. The result indicates that the two independent
`variables, equipment prices and service charges, are poor determinants of the actual
`penetration rate. More particularly, the linear regression had a large standard error of
`16.82, and an R-square of only 0.33. Based on these values, it can be concluded that
`equipment prices and service charges are insufficient to prognosticate the penetration
`rate within a country. In a second step, two additional, independent variables were
`included: the number of years since a cellular system was first launched in a country,
`
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`285
`
`Table 11.5
`Cellular Market Penetration in the EC, EFTA Countries, and Sweden in 1990
`
`Country
`
`Sweden
`Finland
`Norway
`Iceland
`Denmark
`Switzerland
`U.K.
`Austria
`Italy
`
`Population
`(millions)
`
`Penetration
`per 1,000
`
`Country
`
`Population
`(millions)
`
`Penetration
`per 1,000
`
`8.4 (9)
`4.8 (13)
`4.2 (14)
`.24 (17)
`5.1 (12)
`6.6(!1)
`56.9 (3)
`7.6(10)
`57.3 (2)
`
`70.0 (I)
`59.8 (2)
`55.7 (3)
`53.7 (4)
`34.7 (5)
`26.4 (6)
`21.6 (7)
`15.0 (8)
`9.9 (9)
`
`Ireland
`Gem1any
`Netherlands
`France
`Belgium
`Spain
`Luxembourg
`Portugal
`
`3.5 (15)
`61.2 (1)
`14.7 (6)
`55.6 (4)
`9.9 (8)
`38.8 (5)
`0.4 (16)
`10.3 (7)
`
`9.0 (10)
`8.7 (11)
`7.9 (12)
`6.7 (13)
`5.1 (14)
`2.8 (15)
`2.1 (16)
`1.2 (17)
`
`Note: Germany does not include the population of the former East Germany. Data based on Table
`10.1 and Table 11.4.
`
`and the gross-domestic-product per capita. The result of the second regression analysis
`showed a lower standard error (10.5) and a significantly higher R-square (0.77).
`Hence, 77% of the variations of the penetration rate can be explained by the four
`independent variables.
`Of interest also is the question of to what extent terminal plices and services
`charges are related. Based on a regression analysis, it can be concluded that there is no
`correlation between these two factor, as reflected by an R2 of 0.07. Further analysis of
`data in Tables 11.4 and 11.5 clearly indicates the cost-penalties associated with
`fragmented, national markets. While terminal prices in the five Nordic countries
`(Sweden, Norway, Finland, Iceland, Denmark) average $1,380, equipment in the three
`large EC markets with incompatible systems (i.e., France, Germany, and Italy) average
`$1,976. The extremely low terminal price of $20 in the United Kingdom is a reflection
`of the intense competition between the two competing airtime providers and the two(cid:173)
`tier structure. Indeed, service providers began to heavily subsidize mobile telephones
`[20]. As noted by a recently performed study, equipment prices-and not airtime
`prices-are used to create markets [21]. Hence, while equipment prices have declined
`rapidly, service charges remained at high levels.
`In summary, it can be concluded that there is presently no homogeneous Euro(cid:173)
`pean market for cellular telephony. In fact, considerable differences are evident in
`virtually all areas associated with the provision of cellular services (i.e., penetration,
`terminal prices, airtime).
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`Table 11.6
`Lowest Available Cellular Equipment Prices and Service Charges in EC, EFTA Countries,
`and Sweden, as of September I, 1990
`
`Terminal
`Local
`(Currency)
`
`Monthly
`Terminal Service
`(US$)
`(US$)
`
`Country
`
`Terminal
`Local
`(Currency)
`
`Monthly
`Terminal Service
`(US$)
`(US$)
`
`Country
`
`Spain
`
`Pta 300,000
`
`2,780
`
`141
`
`Finland
`
`Fmk 7,000
`
`1,770
`
`Portugal
`
`Esc 400,000
`
`2,700
`
`124
`
`Netherlands
`
`Fl 3,230
`
`1,720
`
`Germany
`France
`
`DM 4,250
`Fr 12,500
`
`2,530
`2,190
`
`Luxembourg
`Belgium
`
`Fr 75,000
`Fr 75,000
`
`2,150
`2,140
`
`Austria
`Switzerland
`
`Sch 25,000
`SFr 3,000
`
`2,120
`2,010
`
`278
`361
`322
`229
`127
`
`132
`88
`
`Italy
`Denmark
`
`£ 1,900,000
`Kr 9,500
`
`1,590
`1,470
`
`Iceland
`Sweden
`
`Ireland
`U.K.
`
`Kr 80,000
`Kr 7,000
`
`1,330
`1,140
`
`£700
`£ 10
`
`1,110
`2019
`
`197
`125
`162
`159
`149
`100
`
`68
`134
`123
`147
`155
`
`Note: Monthly service charges are based on five two-minute calls per day during peak time
`Monday to Friday for one month.
`Source: McCaltney, "How Competition Is Developing in Global Markets," chap. 4.
`
`11.1.2 GSM-Digital Cellular Mobile Telephone System
`
`11.1.2.1 The Development of a European Cellular System
`
`In 1981, France and Germany initiated a joint-study program for a second-generation
`digital cellular system. To prevent a technological fragmentation, as was the case with
`the first generation of cellular systems, the European Conference of Postal and
`Telecommunications Administrations (CEPT) established in 1982 a special working
`group-the groupe special mobile (GSM) [22]. By 1986, the working group started
`testing various technological concepts in Paris and finally decided-after an intensive
`debate-that the group named standard (GSM) for the first European digital cellular
`system should be based on TDMA [23].
`In order to cement a Pan-European solution, the Council adopted 1987 Recom(cid:173)
`mendation 87/37 I /EEC [24] for the coordinated introduction of public Pan-European
`digital-mobile communications, and Directive 87/372/EEC [25] on the frequency
`bands to be made available for the cellular system. According to the Directive, the
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`Member States will have to assign an increasing part, and eventually all, of the 890-
`915 MHz and 935-960 MHz spectrum to the GSM network(s). The Recommendation
`specified that the commercial service should begin in 1991, following preoperative
`trials. By 1993, the minimum coverage area of the GSM system in all Member
`Countries should include capitals and airports, and should then be extended to cover
`the transport routes between capitals during the following two years. In reaction to the
`Council Recommendation 87 /371/EEC, a Memorandum of Understanding (MoU) had
`been ratified initially by 17 European telecommunications organizations, among them
`all EC PTTs. The signatories of the MoU are committed to implementing the 900 MHz
`digital cellular system with international roaming capabilities, in adherence to the
`Council Recommendation and Directive. In contrast to the anticipated implementation
`of digital cellular mobile telephone systems in the United States [26], European GSM
`networks will operate entirely independent from existing analog systems. Specifically,
`GSM will be exclusively allocated 2 x 25 MHz in the 900 MHz frequency band, and
`terminal equipment is designed to work only within the GSM network. While this
`approach is beneficial in that no dual-mode MS is required, it is obvious that a user is
`confined to a smaller coverage area in theinitial phase of network construction and
`expansion.
`
`11.1.2.2 Technological Aspects
`
`11.1.2.2.1 The GSM Standard
`
`The GSM public land-mobile cellular system is comprised of two parts-a base
`station subsystem, and a network subsystem. The GSM standard itself is an open
`nonproprietary-standard, which means that not just the air interface [27] is specified
`but all interconnections between the base station and network subsystems. It is,
`therefore, possible that cellular system components are supplied by different vendors.
`Also, the CEC strongly encouraged this development, since it allows smaller compa(cid:173)
`nies to participate in the market with certain niche products [28]. With regard to the
`ISO seven-layer model, GSM is defining layers 1, 2, and 3 (i.e., physical, data link, and
`network layer). As mentioned in Section 10.2.5, the work for the GSM standard was
`transferred in 1989 from CEPT to ETSI. The GSM standard itself includes 164
`Recommendations, of which 121 have been stabilized during the so-called Phase I
`[29]. In fact, these Recommendations specify the various interfaces between the key
`elements of the system (i.e., air interface, fixed network, base stations, and mobile
`stations, as well as all switching and networking aspects) [30]. The remaining 43
`Recommendations essentially focus on the definition of supplementary services and
`half-rate codecs, and are going to be completed in Phase II [31].
`On the outset of the GSM standardization process, substantial efforts were
`concentrated toward evaluating and selecting the most appropriate radio technology
`for the link between BS and MS. Three alternatives were available: FDMA, TDMA,
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`CDMA. In the end, a digital transmission method, TDMA, was chosen. One of the
`major reasons for favoring a digital standard was the fact that digital systems greatly
`facilitate the incorporation of improved single elements (e.g., voice coders) without
`needing to redesign the entire system [32]. The various technical aspects that have to
`be considered for the design of spectrally efficient digital communication systems
`were delineated in Section 5 .4. One of the most important decisions lies in the trade-off
`between speech quality and bit-rate. The initial (Phase I) speech codec used for the
`GSM system is 13 kbps RELP-LTP (residually excited linear-predictive coder with
`long-term predictor) [33]. Gaussian mean shift key modulation (GMSK) was chosen
`for the modulation of the bit stream. The channel spacing of the GSM system is 200
`kHz and provides a data transmission rate of 270,833 kbps. Given the assumed
`nominal user data rate of 16 kbps, the GSM system offers 8 channels per 200 kHz
`band. As briefly mentioned, Phase II of the GSM specification process will inter alia
`standardize a half-rate codec, which will provide toll-quality with a 8 kbps codec. This
`will effectively double the capacity of GSM, since 16 instead of 8 duplex channels can
`then be accommodated per 200 kHz band.
`In light of the radio environment of the GSM system-frequency (900 MHz),
`cell size (up to 35 km), and speed (up to 250 km/h)-it is clear that multipath
`propagation represents a potential! y severe problem [34]. Instead of opting for bit rates
`that are sufficient to compensate for the multi path delays, the GSM system employs an
`equalization technique. Although equalization allows for shorter bit rates, and is
`therefore a more spectrum-efficient solution, it is highly processing intensive, re(cid:173)
`quiring VLSI chips with 50,000 and more gates [35]. The overall complexity of the
`GSM system is reflected in the product development of leading manufacturers, which
`will initially require seven to ten VLSI chips totaling 600,000 transistors, as well as
`microprocessors, memory chips, and at least 125 kbytes of software [36]. To achieve
`size and cost advantages, it will be necessary to combine all functions in one single
`chip [37].
`
`11.1.2.2.2 The GSM System
`
`The main switching elements of the GSM system are identical to the ones outlined in
`Section 4.2.1.3. As depicted in Figure 11.2, the base station subsystem includes base
`transceiver stations (BTS) and base station controller (BSC). The base station subsys(cid:173)
`tem is principally responsible for establishing, synchronizing, and maintaining the
`radio link between BS and MS.
`The network subsystem is composed of network databases such as the visitor
`location register (VLR), the home location register (HLR), the authentication centers
`(AUC), the equipment identity register (EIR), and-most important-the mobile
`switching center (MSC) [38]. All interconnections between BSC and MSC (A(cid:173)
`interface), as well as MSC and the various databases, employ CCITT Signaling
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`Base station system
`
`I
`
`Mobility network
`----,
`
`@I~
`
`A-Interface
`
`Visitor location
`database
`
`:I
`I!
`
`Figure 11.2 GSM architectural model for a public land-mobile-network. (Source: Ballard and Verhulst)
`
`N
`Oo
`'0
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`i '' i
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`System 7 [39]. The MSC represents the key element of the cellular system: it routes
`traffic and signaling within its own network; performs handoff and roaming; and
`handles the signaling and traffic with other networks, such as the PSTN, ISDN, and
`circuit and packet-switched data networks. It should be noted that GSM has been
`designed to interface with an ISDN environment, and to utilize additional ISDN
`bearer, tele-, and supplementary services. It is furthermore noteworthy that although
`the GSM bearer-channel Bm/Dm requires only 23/0.75 kbps, it will be fully converted,
`so as to use the full ISDN capacity of 2B + D channels (2 x 64 + 16 kbps).
`Before a customer with an MS is allowed to use the desired service, an authen(cid:173)
`tication process is performed. The procedure already starts when the MS is activated
`(not used), as well as at regular intervals thereafter. The respective (nonhome) MSC(v)
`[40] will use the unique international mobile-subscriber number IMSI to retrieve
`relevant subscriber information from the user's HLR and enter them into the MSC's
`VLR [41]. The MSC(v) then requests authentication via the AUC located in the
`MSC(h) of the subscriber [42]. Depending on the operator, the equipment may be
`verified by means of an equipment identity register (EIR). After the authentication
`process is concluded positively, the MSC routes the call to its destination.
`In addition, the MSC performs handoff and roaming functions. Each MSC
`controls several cells/base station subsystems (S;) and is therefore responsible for
`inter- and intra-network routing. A simple change from one cell to another cell within
`the same MSC is known as handoff. Generally speaking, the MSC will perform a
`handoff when signal strength and bit-error rate of the radio link between MS and the
`current BS is less optimal than between the MS and an adjacent BS. A change from a
`subsystem S 1 controlled by a MSC 1 to a subsystem S2 controlled by a different MSC2 is
`defined as roaming. Since GSM is a Pan-European cellular network, it is conceivable
`that the roaming process involves two operators in different countries (e.g., France and
`Germany). International roaming, however, necessitates the exchange of accounting
`information in order to ensure accurate billing and revenue splitting [43]. The provi(cid:173)
`sion of Pan-European roaming thus requires a dedicated intelligent network that is
`based on the CCITT Signaling System 7 [ 44 ]]. The SS7 used by GSM is referred to as
`mobile application part (MAP). MAP, however, is a nondedicated network that has
`been implemented in different ways throughout Europe, and is presently not fully
`t