We have been waiting for Groupe Speciale Mobile or Global System for Mobile communications digital cellular telephony for so long now that it seems strange actually to see services based on the digital cellular standard come into service. However, the war for dominance in Germany’s commercial digital cellular telephone market – between Deutsche Bundespost Telekom’s D1 and Mannesman’s D2 networks – has been launched with a vengeance, with monthly service and handset prices lower than the existing C-net analogue cellular network. This peculiarity – in other countries digital cellular is likely to be more expensive than the older technology – means that it fails as a generalised model; nonetheless the tussle following the opening of a new market makes fascinating viewing.
Year’s delay
After a year’s delay caused by an inability to get type approval for the handsets, Telekom and Mannesmann Mobilfunk GmbH both announced this month that they have been delivering equipment and connecting subscribers since mid-June. Philippe Nieto, director of marketing and finance, Deutsche Bundespost Telekom SARL Paris, says the only subscribers so far on its D1 network are those from the network’s pilot project. Mannesmann, which started pre-signing subscribers at the Hannover Fair in March, said it has signed over 10,000 subscribers since that time and has delivered 5,000 handsets since mid-June. A Mannesman spokesman says the company hopes to get 100,000 subscribers in its first year of commercial operation. Telekom, says Nieto, hopes for over 2.5m by the year 2000. 10,000 since March is a realistic number, says Dean Eyers, Dataquest Europe’s mobile communications market analyst in Denham, Buckinghamshire. Up until now there’s been no competition for cellular. And, there is a potential demand there that C-net is increasingly not able to meet. C-net, says Eyers, has a total, theoretical capacity, nationwide, of 800,000 subscribers, and it’s now at 650,000. It’s impossible to say that 800,000 is the exact maximum load C-net can handle, he explains, since a cellular network’s capacity is computed using a formula, rather than on a precise measurements of a physical infrastructure. Already, he notes, there are some areas in Germany where C-net service and reliability is not what Telekom would like it to be. Neither does pricing on C-net compare favourably with either of the two new GSM networks, considering the difference in the technologies. Little reason exists for the service pricing discrepancy, says Eyers, despite the fact that C-net is the only analogue network that uses a Smart Card for user log-on and identification.
By Marsha Johnston
Although Siemens would defend the network they built to the death, C-net is slightly over-engineered and has had no success outside of Germany except in Portugal and South Africa, where Siemens is really strong, he said. Equipment prices are likely to be used early on as the competitive weapon to gain market share, Eyers says. At Hannover, Mannesmann introduced telephone handsets costing between $1,577 and $2,523, a move for which it has been criticised. Telekom wasn’t very pleased when Mannesmann announced those, and a lot of manufacturers at CeBit were saying Mannesmann did not need to bring phones in at that low price, because the demand is there. Neither would the supply have outstripped demand, because there would be only limited production runs initially. The suppliers would’ve liked to start at a higher base price, he said. Telekom has since introduced its handsets at between $2,000 and UKP2,400 as a response to Mannesmann. By contrast, handset prices for the C-net start at $2,525. In the UK, low equipment pricing has proven to be a good way to get subscriber numbers up, but what you tend to get if you take it too far is that a sizable portion of your user base can’t afford regular use. That’s why we are approaching a 30% turnover of subscribers in the UK, he says. Mannesmann’s pricing strategy hasn’t pleased a lot of people, Eyers says, but the company is under tremendous pressure
to begin recouping its enormous investment. A Telekom spokesman says the company will have spent about $1,600m by the end of this year, and over $2,500m by the end of the century. Both D-networks had originally targeted July 1991 as the start date for their commercial service, but the still-evolving Groupe Speciale Mobile standard prevented the launch, Eyers says. You had a moving target for GSM, following even the first phase of specifications.
No test equipment
It was impossible to have typed equipment on July 1 last year approval was issued the first of June this year, he said. The first approval is interim, Eyers explained, because, even now, no test equipment is available that will test all 400 of Groupe Speciale Mobile’s original specifications. Over the last year, the consortium of GSM operators in Europe agreed to reduce the number of specs so that the handsets could be developed more quickly, he said. The GSM consortium fully intends to require compliance with all 400 specifications, and the market is awaiting test equipment that can certify such compliance, Eyers said. In Germany, he said, once Rohde & Schwarz delivers the full type test equipment and software, all of the [telephone] models on the market will have to be tested, and may have to undergo either hardware or software changes.
