AT&T Wireless has announced it will add GSM capabilities to its US network.
Whilst in Europe all digital mobile networks use the GSM standard, in the US, the majority of operators use TDMA (Time Division Multiple Access) or CDMA (Code Division Multiple Access) networks. AT&T currently uses TDMA, planning to migrate to an intermediate standard called EDGE in the medium term. However, its long-term use of EDGE may be in question.
TDMA is very technologically similar to GSM, but less widely used globally. Were AT&T to base its next generation mobile strategy around EDGE, this could prove incompatible with other networks around the world. Incorporating GSM allows it to follow the same upgrade path as European networks, first to ‘2.5G’ GPRS, then to the wCDMA 3G standard. Shareholder NTT DoCoMo is promoting this standard globally; following this route will allow AT&T to benefit from its partner’s expertise when 3G networks can finally be rolled out in the US after planned auctions in 2002.
But whilst this is likely to save AT&T effort and risk in upgrading (although it may cost more), a large part of the commercial logic for the move is in roaming. As mobility between countries becomes more commonplace, and mobile phones become more important in people’s lives, incompatible standards mean the loss of potential customers. One of DoCoMo’s stated reasons for taking stakes in global mobile operators is to encourage them to build 3G networks compatible with its own, allowing Japanese users to roam.
Roaming will be key in the US: as eventually takes control of VoiceStream, it is likely to emphasize the fact that Americans can use their VoiceStream GSM phones almost anywhere. Deutsche Telekom will also collect revenues from traveling Europeans and Asians.
AT&T will certainly benefit from being able to compete with VoiceStream in this area. But it’s not good news for everyone. If other TDMA operators, notably Cingular, follow the same route, Qualcomm, which invented the CDMA and 3G CDMA2000 standards could suffer. Qualcomm risks being marginalized in 3G, as more and more operators commit themselves to wCDMA as an upgrade path.
