ARTICLE   

3G Mobile Telephone Will Blow Your Socks Off - GSM Alliance

November 27, 1998

WASHINGTON, D.C., Newsbytes: The North American GSM Alliance, a consortium of US digital wireless operators, has published a white paper looking at the issue of third generation (3G) wireless technology. The white paper concludes that, while some users of digital cellular are enjoying advanced facilities already, consumers can look forward to a wide variety of services and facilities with 3G wireless technology.

Interestingly, however, the Alliance says that consumers of such 3G networks will be better served by open market competition in the industry rather than a single, government-enforced standard.

The white paper's conclusion is ironic, Newsbytes notes, as the GSM standard itself is the direct result of European Commission (EC)-led "guidance " in the mid-to-late 1980s, when no-one could have predicted how cellular communications would take off in the way it has.

The white paper has been written by Joseph Farrell, Professor of Economics at the University of California, Berkeley and former chief economist of the Federal Communications Commission (FCC) and says that "allowing multiple third generation standards to compete can create greater product variety and -- stronger incentives for innovation."

According to Don Warkentin, the Alliance's chairman, the white paper reaffirms the Alliance's belief that the free market is the best option for American consumers. It will, he said, allow consumers to obtain the least costly, most technologically advanced wireless communication equipment.

"Multiple standards provide companies flexibility to respond to varying consumer demands and will allow the manufacturing of all types of wireless equipment to continue here in the US," he explained.

In the white paper, Farrell argues that marketplace competition provides consumers with a greater variety of products from which to choose. Competition in second generation wireless standards, he notes, led to Nextel's Direct Connect feature, allowing consumers instant access to conference calls from their wireless phones.

Similarly, the white paper goes on to say, the ability of GSM customers to make calls from almost any location using the "smart card" is the result of marketplace competition.

In addition to this, Farrell says, the evolution of CDMA (code division multiple access) speech coding technology is yet another example of the benefits of market-driven innovations.

According to the white paper, national roaming across the US, which was a supposed benefit of a single standard, is already happening regardless of a mandated standard.

This, Farrell says, is because wireless service providers have recognized consumer demand for it.

Farrell notes that AT&T, Sprint PCS and Nextel have the ability to offer seamless, near-national roaming now and several other firms and alliances are not far behind. Likewise, he notes, manufacturers' economies of scale will adjust to reflect the choices made by wireless equipment buyers.

The bottom line to all of this, the white paper says, is that a government mandate is not necessary to bring about what the marketplace is already causing to happen.

Interestingly, Farrell says he foresees nothing to prevent US manufacturers from producing equipment compatible with any 3G standard adopted by a group such as the European Telecommunications Standards Institute (ETSI).

He notes that endorsement of a US-developed standard would not ensure manufacturing jobs are created domestically. North American-based Motorola, Lucent, Qualcomm and Nortel, he says, all manufacture second generation wireless equipment abroad.

"Requests to base standards policy on alleged employment advantages of nationally sponsored standards are unconvincing even on their own terms: `foreign' manufacturers can and do manufacture to `US standards,' and foreign and US firms alike manufacture both in the US. and abroad," Farrell concludes.

Reported by Newsbytes News Network, http://www.newsbytes.com .

(19981125/Press Contact: Mike Houghton, North American GSM Alliance 703-799- 7383/WIRES TELECOM, BUSINESS/)

<<Newsbytes -- 11-25-98>>