Boundless Europe: The Wireless Revolution

Boundless Europe: The Wireless Revolution

Bhawani Shankar

European Microwave Journal Staff

Competition is compelling Europe's operators to lean on wireless systems as an alternative to the more expensive wireline networks. Over the past several weeks, the total headcount of subscribers to the Global System for Mobiles (GSM) networks surpassed the 100 million mark. For a system that was launched barely six years ago, GSM has supplanted even PCs as the most ubiquitous commodity. However, the GSM success story is not an isolated instance of the establishment of a mobile standard in Europe. Rather, the development of wireless services is a long-running, continent-wide endeavour that has the explicit backing of the European Union (EU) and its member governments. According to the European Commission's latest green paper on mobile services, "Mobility is at the very heart of the objective of the Union for the free movement of goods, people, services and capital…the prospect of Europe-wide advanced mobile communications services will support the commercial success of these services in the mass market." The latest industry forecasts indicate that the world will have more than 600 million users of cellular services by the early years of the next century — more than half of those are expected on GSM networks, as shown in Figure 1 .

Concept to Market

The European market for cellular services was first established in the early '80s. The Scandinavian Nordic Mobile Telephone (NMT) system, the first contemporary cellular system, was introduced in Sweden in 1981. Today over 20 analogue mobile networks in the EU connect more than 12 million customers. As one of the first commercial analogue systems in the world, NMT was adopted by operators in many countries outside Europe. Although the analogue systems market is said to be shrinking, NMT has been established in approximately 45 countries.The introduction of GSM in 1992 has seen the development of 25 separate networks. Over the past three years, GSM rollout has been enhanced greatly by the liberalisation of telecoms regimes and the injection of competition into mobile markets. Typically, every country in Western Europe now has at least two competing GSM operators. This competition is also becoming the norm in many of the Central and Eastern European countries. On the road to supremacy, GSM has absorbed several other standards such as the personal communications network and digital communications service (DCS). In Europe, both of these time-division multiple access (TDMA)-based standards were allocated frequencies in the 800 or 1900 MHz bands. Services based on these new standards, such as Mercury One2One in the UK, were meant to provide second-tier local or regional coverage for mobile subscribers at prices lower than that of GSM, which was presumed to be a high end system providing national and international roaming. Tumbling prices coupled with the European vision of developing homogenous mobile services have resulted in many of the local standards being written into GSM. As a result, GSM is now said to span and operate in the 800, 900 (its native frequency) and 1900 MHz bands. With this broadening of the GSM definition, the standard has gained acceptance in more than 100 countries worldwide, most notably the US, where analysts say the adoption of GSM is a blow to the proponents of the competing code-division multiple access (CDMA)-based IS-95 standard.

Cutting the Cord

Cellular systems aside, the European wireless landscape features several other standards that have expanded from being local to global. Digital Enhanced Cordless Telephony (DECT), a standard for cordless and low tier wireless local loop (WLL) telephony, was developed around the same time as GSM. DECT began life as Digital European Cordless Telephony but the success it experienced outside the continent has led to its renaming on a grander scale. DECT's initial success was patchy given the dominance of the analogue cordless telephony — second generation (CT-2) standard. But the DECT standard has since evolved from one that defines only cordless telephony to one that also allows limited mobility, making it an attractive option for many countries worldwide that are moving towards WLLs rather than the more expensive option of laying down twisted copper-pair cable. Although DECT does not yet enjoy the high penetration levels of GSM, more than a dozen countries around the world have either deployed it or are considering it as a prime option in addition to the half-dozen existing networks in Europe. By the turn of the century, DECT-based networks are expected to be in place in Africa, Latin America and Southeast Asia. But, critics say, the enhancement of DECT from cordless telephony to a local loop system has resulted in an ambiguous system with unclear positioning. While its capability as a high capacity radio interface is undisputed, DECT's future could be as a WLL extension to GSM networks, as a medium for private short-range local voice and data networks, and possibly for wireless private branch exchange solutions.

According to recent research by KPMG, a UK-based consulting group, it is in conjunction with GSM and other cellular standards that DECT will enjoy the most success. "DECT appears to offer better frequency efficiency than either GSM or DCS 1800 and therefore could be used to alleviate any capacity problems on those networks," said KPMG's Martin Heath. Therefore, the DECT market could be located in high density urban environments where customers would use dual-mode GSM/DECT handsets. Such a scenario would increase the market for transceivers used in handsets — a boon for component and systems manufacturers. Besides DECT, Europe is also home to several of the world's best-selling local loop technologies. A proprietary WLL system designed by Cambridge, UK-based start-up operator Ionica and Nortel is now being deployed as far afield as Sri Lanka and Indonesia. This 3.4 GHz Proximity Fixed Radio Access system features a rooftop antenna fitted on houses to provide two telephone lines into customers' homes. Each telephone line is capable of handling integrated services digital network (ISDN) data rates of 64 kbps. Ionica was one of the first companies in the world to offer a WLL residential service now serving approximately 10,000 customers using this technology, which has also been licensed to Scottish Telecom and to an operator in Finland. Another development in Scotland uses frequency-hopping TDMA to provide a WLL system for Atlantic Telecom, an operator based in Glasgow. This development, described by some analysts as nothing short of revolutionary, employs several slots of noncontiguous 2 GHz spectrum in the commercial industrial, scientific and medical bands to provide telephony and data services in the high density downtown Glasgow area. The extent of resources and time being invested in WLL technologies by European manufacturers is a consequence of the firm belief that wireless is the technology of the future. The European telecoms industry is by far the most deregulated and liberalised in the world and, as a result, competition is far higher than anywhere else. For instance, in the UK, which has a population of approximately 50 million, there are more than 160 licensed telecoms operators, many of whom are privately owned niche players. For the vast majority of these operators, providing a service would mean buying interconnects from British Telecom, the incumbent dominant operator, or laying down fibre and copper networks themselves. The availability of WLL technologies means that s uch operators now can provide a service without digging up roads to lay more cable.The total installed base of WLL lines in 2001 is expected to be more than 33 million, approximately 40 percent of which will be located in the developed markets — primarily Europe, as shown in Figure 2 . Indeed, the industry agrees that it would be difficult to make a long-term business case for a mobile wireless service without a WLL content. "WLL in Europe will be the next GSM," said Alan Walp of Andrew Corp. in the UK. "The market for fixed radio access solutions is set to explode." Lateral integration is also expected in certain other markets such as private mobile radio (PMR). While both the wireless access and cellular sectors are potentially the biggest markets of the future for microwave equipment manufacturers, PMR based on the trans-European trunked radio access (TETRA) standard promises to be a valuable fill-in for the gaps in the capabilities of other wireless systems. TETRA, another successful development that is now finding acceptance beyond the continent, has a high capacity radio access that will enable customers to exchange data at ISDN rates and perhaps also transmit and receive slow-scan video. Manufacturers such as Andrew typically expect users in a PMR environment to use TETRA and, when they are away from their offices, to use GSM. This use of two networks would require dual-mode TETRA/GSM handsets — another potential market.

Data in the Air

The move towards higher capacity systems is fueled not so much by digitization of networks or the need for mobile communications, but rather by the demand for wireless systems that will provide a stable and reliable environment for the transmission and reception of data. Wireless network development has now reached a stage where acceptable service quality levels can be offered to users who are interested primarily in data. One UK-based consultancy, Baskerville Communications, says the wireless data market is poised for explosive worldwide growth and that revenues will grow fivefold between 1997 and 2001. Baskerville forecasts that by 2001, wireless data will be a US $30 B a year market. While this predicted growth may seem impressive — from the current figure of US $3 B — the surge in wireless services in general is equally significant.

Wireless services will account for US $231 B in revenues worldwide, says Baskerville. This growth underlines the expectation that voice will dominate the world's wireless networks. Marco Fasoli of Broadview Associates, another UK-based telecoms think tank, believes the future of voice is in wireless networks. "At present, almost all of the world's 100 million or so wireless subscribers also have a fixed-line telephone," said Fasoli. "But as wireless services penetration grows and they become more affordable, an increasing proportion of calls will be end-to-end wireless. This means that a growing volume of voice traffic will be routed outside wireline public networks." Already in some Asian countries penetration of wireless networks — based on any combination of cellular, WLL or PMR — is becoming comparable to fixed-line densities, as shown in Figure 3 . Overall, the value of owning and using a mobile phone is set to increase. Mobile phone users soon will be able to obtain a single device comprising what would now be two or three different types of telephones (cellular, satellite and personal communications service) capable of switching automatically between systems and allowing a subscriber to be reached anywhere on earth at any time on a single number. Also being planned are mobile telephones with intelligent functionalities, such as a household chip that will enable the user to remotely check household appliances, turn on the heating before arriving, check the alarm system and so on. The arrival in the market of the Nokia 9000 handset, which effectively incorporates a small computer into a hand-held GSM phone, is the herald of such new intelligent applications, which, when combined with the portability and convenience attributes of mobile phones for voice services, will continue to fuel the growth of personal wireless communications.

Handset Blowout

The big question in the wireless operator world is which standard will predominate the world to provide these multidimensional services? The development and success of GSM is without a doubt significant but GSM operators are being lobbied worldwide by proponents of the CDMA-based IS-95 standard developed in the US. But, not surprisingly, the mood of the manufacturer is one of jubilance. "We stand to benefit, whichever standard is adopted anywhere in the world," said Andrew's Walp. Indeed, many manufacturers are already preparing for the next-generation handset markets where multimode and multiband (the capability through which multitransceiver handsets will be able to handle communications in more than one frequency band and work with more than one standard) will be the norm. Unit sales of dual-mode, dual-band cellular phones were 3.4 million in 1996, accounting for just seven percent of the digital handset market. By 2000, sales of 94 million terminals are expected to represent 90 percent of the global market, Baskerville's estimates say. This huge shift will occur because it serves operators and vendors worldwide who are attempting to concentrate on the production and deployment of fewer lines and achieve economies of scale as the cellular market becomes truly global. Wholesale handset revenues will similarly shift towards dual mode and dual band, rising from the US $1.2 B generated in 1996 to US $19 B by 2000. Single-mode, single-band revenues are forecast to peak this year at US $16.7 B, falling to US $874 M by 2005. Table 1 lists the global annual multimode/multiband handset sales by region. Western Europe is expected to generate the highest growth among all regions of the world with sub-

scriber numbers rising sixfold between now and 2005. The exponential growth in the handset market will inevitably lead to an even more noticeable growth in wireless network traffic. But can operators cope with this traffic using existing infrastructures? Obviously not. So, will they be able to install new infrastructure in time for the expected increase in traffic? The economics of installing high speed core networks dictate that wireline backbones are not only prohibitively expensive but would also take longer to deploy than operators can afford. The answer to quick and cost-effective deployment of a fast network backbone that can tackle future traffic lies in microwave links — a technology that only two years ago was dismissed as outdated.

Riding the Microwave

Microwave radio technology is enjoying a major resurgence in communications networks worldwide. Only a short time ago considered obsolescent in an age of fibre optics and belonging to the era of monopoly carriers of the past, few people thought it could meet the needs of next-generation networks. But then, until approximately a year ago few people could forecast the changes in the wireless industry, necessitating radically new approaches in infrastructure."In the past, most countries had only one fixed network operator and most people thought it was the end of the story once a microwave network was installed," said Jerome de Vitry, vice president in the Radio, Space and Defence division of Alcatel Telecom. Almost by definition, new cellular operations require radio networks for transmission and base station interconnection. In addition, new fixed operators are being established that require rapid — practically overnight, in some cases — market entry. In their case, radio may be the only viable approach for fast network setup. While few people are predicting a major boom at the moment, microwave technologies do look set for healthy growth.Moreover, much of the world is still relatively untouched by telecom penetration, further substantiating this microwave link resurgence according to de Vitry. "Countries like India and China have huge unaddressed markets," he said. Even in Europe, there is significant potential. "We are not at the end of the deregulation process," said de Vitry. "While the UK has been through a major deregulation cycle, many other countries have it still to come. Spain, Italy, France and Germany all potentially have huge fresh requirements in terms of transmission capacity."de Vitry foresees a future world market that will be more and more concentrated in the hands of a few suppliers, at least in the radio area. At the same time, he said, Alcatel will concentrate on value-added steps within the business, controlling but not necessarily manufacturing technologies that are widespread already but do not require significant expertise to produce. According to de Vitry, "Significant technology evolution has allowed a dramatically improved performance and a reduced cost; and in doing that we have enlarged the scope of applications that the equipment offers." Already, European microwave manufacturers are making inroads into this market. In Argentina, for example, 2000 km of microwave links were installed within a year of full privatisation in the telecoms market. Similar deployments are planned by private operators throughout the coming year. These links are used principally to provide synchronous digital hierarchy transmission at speeds of 155 Mbps or more. Given the relative ease with which these links can be deployed, long waiting lists for telephones are a thing of the past and line installation is now guaranteed anywhere in the service area within two to 30 days. In Indonesia, a 350,000-line GSM network is supported by an extensive array of microwave radio backbones throughout the country and in the urban areas of the capital, Jakarta, where it interfaces with a small fibre-optic network. For Salieh Gunawan, cellular director at Satelindo, the rationale behind such a policy was clear: A microwave network was the most logical route because "time is the most important commodity." He emphasised that in order to achieve customer take-up, the speed of network rollout is crucial. Alcatel has supplied some 400 links in Java, up from initial levels of 60 links in the first year of network deployment. With deployment still ramping up, 1997 is seeing more links at the rate of 30 per month. An even more emphatic change may occur in the broadband access area, said de Vitry. New operators are likely to appear, specialising in new services such as Internet access or data networks that could spell another new era for microwave radio. "Today, there isn't a good technical answer for delivering these services, but laying out fibre to every individual is not an option for tomorrow, or even for the next 10 years. I'm convinced that broadband network access is a key trend of our industry and a new wave of growth."

Next-Generation Cellular

Amidst all this activity on the wireless services front, European cellular manufacturers are already well advanced in their plans to introduce a third-generation cellular system to take over from GSM over the next decade. Keen to repeat the GSM success story, they are now racing against CDMA developers in the US who are out to convince the world that IS-95 is the route to the future. European manufacturers developing a new high speed cellular system also are keen to repeat the GSM success story, but a rival US group is catching up. However, significantly, there seems to be a unanimous agreement that a third-generation system should be based on wideband CDMA (W-CDMA) technology. Despite the widespread acceptance of GSM, even the staunchest TDMA supporters agree on the issue of the suitability of W-CDMA. "CDMA becomes a better technology when it is wideband," said Jan Uddenfeldt, vice president of research and technology at Ericsson Radio Systems. "Overall, W-CDMA seems more suited for data services." Current CDMA cellular systems operate to the IS-95 standard, which is based on a relatively narrowband system. Nokia and Ericsson, which together account for the sizable chunk of the GSM/TDMA equipment market, lead the European group of developers. The second group developing a wideband CDMA system, consisting of leading American cellular vendors Motorola and QUALCOMM, as well as Lucent Technologies and Nortel, is backed by the CDMA Development Group, a trade association that so far has been lobbying operators around the world to opt for IS-95.Much like the second-generation world where Digital Advanced Mobile Phone Service and GSM have been established as two dominant standards, operators around the world are also expected to have a choice of two systems. This time the difference is that both would be based on W-CDMA — a feature that puts operators concerned with interoperability and global roaming slightly at ease. The W-CDMA system developed by either or both of the groups is widely expected to meet or exceed the International Telecommunication Union (ITU) requirements for IMT-2000 and the European Telecommunication Standards Institute (ETSI)-specified Universal Mobile Telecom System (UMTS) for high speed data transport to a single subscriber. These requirements include wireless data rates of 144 kbps at mobile speeds, 384 kbps at pedestrian speeds and 2 Mbps in a stationary environment. The European group is working towards defining a UMTS standard with the ETSI. Both Ericsson and Nokia hope to leverage their market positions to establish UMTS as the W-CDMA standard and urge GSM operators to adopt it. Likewise, American vendors will lobby IS-95 operators to opt for IMT-2000. However, except for QUALCOMM, the other three vendors in this group have said they would develop equipment for both standards when they are available. 

Third-Generation Blues

After approximately seven years of vigorously supporting TDMA-based systems, companies like Nokia and Ericsson, which do not support IS-95, have climbed down from their CDMA stands. "Many of the vendors who tout W-CDMA are, in the same breath, trying to convince operators around the world that TDMA-based systems are the technology of the future," said Perry la Forge of the CDG. "I presume that these vendors believe their customers do not keep up with industry developments." The CDG believes that operators now rolling out IS-95 would be at an advantage over those with GSM/TDMA networks when it comes to W-CDMA deployment. In fact, la Forge believes that IS-95 is already "the only integrated, wideband digital standard in commercial use around the world" and that moving to a third generation would be a "smooth evolution." According to Ericsson's Uddenfeldt, "IS-95 is designed primarily for voice communications and has only limited data capabilities today." Industry observers believe that the dramatic upward revisions of the forecast digital cellular market and the concurrent demand for multimedia services over mobile networks have led vendors to realise that existing systems would probably not be adequate to cope with either expected capacities or the necessary high data rates. The total cellular market is expected to be in the vicinity of 600 million users worldwide by the turn of the century and operators are already resorting to new techniques of spectrum usage to increase capacity on their networks. For instance, by 2007, five European countries, including France, Germany, Italy, Sweden and the UK, are expected to exhibit GSM penetrations of more than 90 percent. Besides allocating spectrum, developing a new system that will eventually deliver high speed multimedia applications involves balancing several important factors, including creating new radio access methods, developing network architecture and introducing the necessary terminal equipment. According to industry sources, W-CDMA based on UMTS will permit multimedia services over a system optimised for packet data. It will be built on a new air interface and existing GSM networks but with different access methodology. "Essentially, UMTS is a new radio access technology," said Uddenfeldt. "A new interface will be defined to connect to GSM networks." This means that much of the core GSM infrastructure could be reused. In the case of the CDG-backed effort, US-based vendors argue that their W-CDMA development is aimed at a higher level of backward compatibility and may allow the reuse of a great deal more than core networks. However, the US group is a step behind the Europeans who started rolling out a prototype W-CDMA.