Projected cellular radio subscribers in Western Europe
Units: 000's 1991 1993 1995 1997 1999 2001
Germany: Analogue 535 935 1,125 1,165 1,175 1,170
Digital - 20 120 520 1,050 1,350
France: Analogue 370 465 490 500 500 480
Digital - 30 130 440 870 1,175
UK: Analogue 1,225 1,375 1,515 1,600 1,525 1,200
Digital (a) 40 140 400 850 1,425
Italy: Analogue 550 900 1,005 1,025 1,030 1,005
Digital - 5 45 175 475 950
Spain: Analogue 105 315 545 620 640 650
Digital - - 20 100 340 600
Scandinavia:Analogue 1,280 1,520 1,580 1,560 1,435 1,250
Digital - 25 90 200 380 620
Other: Analogue 500 845 1,045 1,070 1,040 925
Digital - 20 135 360 660 1,045
Total: Analogue 4,565 6,355 7,305 7,540 7,345 6,680
Digital - 140 680 2,195 4,625 7,165
- service not launched
The first steps towards creating a pan-European cellular radio network were taken 10 years ago; digital mobile phones were already on the horizon. So why is it still difficult to make a call?
Within the European Community, nothing moves quickly. The first steps towards creating a pan-European cellular radio network are now a decade old. Even so, despite many agreements, much preparation, and billions of investment, it is still very difficult to make a call even though the initial idea was simple enough.
Back in 1982, when cellular mobile phones were still in their infancy, there was already a new technology on the horizon; digital mobile phones that would work faster and offer a greater range of services than the original analogue systems. For the Eurocrats that represented an opportunity to introduce a common system for the new technology spanning the Continent. The theory was that a businessman travelling around the single market making deals would be able to move around Europe making calls from wherever he happened to be located, using the same handset. "The big advantage for the future will be the ability to make calls anywhere in Europe," says Mike Caldwell of Vodafone. "That is really something different."
Between the idea and the reality, however, lies many obstacles. It took five years for the European Council of Ministers to adopt the idea of creating a common Continental system. its first move, naturally, was to set up a working party, the Groupe Special Mobile (GSM), to devise a common standard to be operated by all the European countries.
The task was formidable. Thirteen countries signed a 1987 Memorandum of Understanding, committing them to introducing the new standard within their own borders. In the years that followed, another five countries signed up for the programme, creating one of the largest attempts to introduce technological co-operation across national boundaries ever undertaken. The 18 countries involved in the project had to agree a common radio frequency for the new system to broadcast over, and then pass legislation in their own countries to reserve that frequency for the GSM network.
At the same time, they had to issue licences in each of their own countries for companies to operate the network. One of the driving ideas behind the network was that there should be at least two licence holders in each of the 18 countries; a move which would start prizing open the heavily regulated, monopolised and protected telecoms markets in much of Europe.
A target date for the introduction of the new system was set for July 1991. But before then, the technology to make the new system work would have to be put in place. The aim of the GSM was to create a system that would outscore the older, national grids in five important areas: quality of transmission, system efficiency, portability, cheapness, and ease of introduction.
One of the key advantages of the GSM system would be that executives could key into the same system anywhere in Europe. But at the same time as introducing a common European standard, the creators of the network were also trying to make a leap forward in technology.
The digital system offers big advantages over existing analogue networks. As soon as a mobile phone is switched on, it will automatically log on to that country's network, with the result that calls from anywhere in Europe can be automatically re-routed to the phone set. Without that technology, you would have to know which country a person was in before you could call them.
Users will also get a smart card, the size of an ordinary credit card, which records their personal account. This can be plugged into any GSM phone, turning it temporarily into the person's set; calls will be routed to their personal number, and calls charged to that person's account when they use the phone. So, hire cars, for example, can be fitted with standard GSM phones, allowing people just to plug in a card to turn it into their phone.
Other advantages of the new digital system include the ability to send short messages to all the phones within a defined geographical area; warning of traffic problems, for example. Fax and data transmissions will also move faster over the digital systems than they will over the old analogue systems. And the lines will also be much more secure against interception (current mobile phone conversations can be eavesdropped by anyone with a very basic rediotracker).
The technology involved in the GSM network is an ambitious step forward. "There is no question that the GSM network is the future of the industry," says William Ostram of Cellnet. "By the end of the decade it will be the only system." "And yet there has been a price to pay for the attempt not just to integrate European network but to advance them into the future. All high-technology projects are a step into the dark. And in that darkness, they often get lost."
On 1 July last year, the date on which the GSM network was supposed to be up and running, the only place where calls were likely to be made was in Finland, a place far from the heart of European commerce. Everywhere else had been struck down by delays.
The system designed for establishing the network was to licence operators in each of the 18 countries. In Germany, for example, licences were awarded to Deutsche Telekom, the state telecom operator, and to Mannesman Mobilfunk, a new division of the giant engineering company Mannesman. In France, the licences went to France Telecom, and to SIP, in Italy one licence went to the state-owned Telefonica, and contenders are still jostling for the second licence. In the UK, the country where mobile phones have scored the greatest penetration of any of the European countries, the two licences went to the two established operators, Cellnet and Racal-Vodafone.
Each of the licence holders, of which there are 24 across Europe already, would have to build a network of receivers and transmitters to set up the system. Mobile phone systems operate much like a radio network, requiring stations to be built all around the country to pick up and transmit calls. The cost of installing that amount of physical infrastructure is huge.
Both Cellnet and Vodafone, for example, estimate that it will cost them in the region of £600 million to establish their networks in Britain. The cost will be the same for other large European countries, indicating a total investment for the entire European network running to well over £5 billion.
Those networks have not yet been built in the UK. Cellnet and Vodafone have begun building their networks, and hope to have them completed by the end of this year. Progress in other countries has not been so fast, however, and completion of the European network is now reckoned to be a long way off. "What you will see is partial coverage," says Ostram. "You will probably never see total coverage of every square foot of the Continent, but the major industrial areas will be covered. We expect that by about 1995 it will start to be a serious proposition, particularly for the businessman."
Getting the physical infrastructure in place, however, has only been one side of the coin. Just as important as the receiver and transmitters has been the phones themselves. And they have proved a problem. A year after the system was meant to be launched the phones are still not on the market in any numbers.
"You still can't buy a handset," says Caldwell. "And so, while we have the system there, there isn't really a lot of point in our pushing it."
A host of leading European companies are involved in manufacturing the handsets for the GSM network. In the UK, for example, GPT/Siemens, Ericsson, Nokia and Motorola of the US will be manufacturing the phones, while across Europe companies such as Philips, Alcatel, AEG and Bosch are either manufacturing consortia. This heavyweight line-up, however, has not delivered the handset to the market on time.
The problem has been not so much making the equipment as testing it. There is only one accredited supplier of GSM testing equipment, Rohde and Schwarz, which has been late in delivering its equipment, so causing delays all the way along the chain. There have also been disputes over patent rights on the new equipment.
The EC has been working hard to standardise equipment across the Continent, pushing manufacturers to make their patents available to other companies, with the aim of opening up the market among suppliers. This hasn't happened, however. The manufacturers have preferred to do deals with each other, to safeguard their own competitive positions. Alcatel has done deals with Motorola, for example, and Ericsson with Philips, both for sharing GSM patents. Yet the time it has taken for those deals to be agreed, and, just as importantly, to come into effect, has held up the supply of equipment onto the market.
There are other reasons for the delays. Robin Meakin, a manager at the telecoms consultancy CIT Research, who has studied the new system, believes not enough time was given for the development and introduction of the GSM network.
He points out that despite years of preparation, the GSM standard was not finalised until May 1991, just two months before the service was due to be launched. And the standard, even when it was agreed, turned out to be mind-bogglingly complex; the technical specifications for the network run to 15,000 pages. "What is surprising is that the EC and several of the licensees would not admit that the launch date was unrealistic," he says.
There has also been evidence that the licence holders have not been in a big hurry to introduce the new system. Often they are the same companies that already operate the old analogue systems, and often they have considerable spare capacity on the old networks. GSM may be fore the future, but the future can often wait.
There is also, according to Meakin, a game of wait and see being played out among the different European countries. Some of the operators are preferring to sit on the sidelines and watch the problems encountered by the pioneers before making any substantial progress towards building their own networks. That may make a lot of commercial sense - learning from others' mistakes will, of course, reduce the cost of installation - but it also slows down the whole process of getting the network in place.
So far, there are considerable drawback for purchasers of the new phones. In the UK when sets are available they will cost well over £1,000 compared with as little as £200 for an existing analogue handset. They will also be bigger and more than twice the weight. Factors such as those have held back the launch of the network in this country and will continue to do so. "Until the handsets are smaller and cheaper it won't be a realistic alternative to the existing system for most customers," says Cellnet's Ostram.
The problems encountered in getting the GSM system running has cast a long shadow over the project. "Perceptions are pretty low," says Caldwell. "We launched our network officially last year, but so far we haven't really pushed it." And yet, despite that, the project viewed over the longer term, takes on a different shape.
""OSM has been a political success in that countries have agreed to the European Community's basic principle of licencing organisations to compete within countries to provide a common pan-European cellular service," says Meakin. Within the heavily regulated and protected world of European telecommunications to achieve both a common set of standards for the Continent, and to break it open to at least an element of genuine competition and choice is a substantial achievement; an achievement, also, which may provide a model and an inspiration for other high technology projects within Europe.
It may not have happened very smoothly or on time. But then it is perhaps miracle enough that it has happened at all.