Cingular Wireless announced Tuesday morning that it will be undergoing an estimated $3 billion renovation of its current wireless network, now a patchwork of different and competing technologies, so it can offer its customers a phone network that will be 30 times faster. The prevailing standard for the technology switch will be GSM (Global System for Mobile Communications), which is now in an estimated 70 percent of the world's wireless phone networks.
The announced plans will finally unify the network that Cingular Wireless, a joint venture of BellSouth and SBC Communications, has been using to offer 22 million customers wireless service. The network uses two different wireless technologies. About 30 percent of its network uses GSM. The balance, about 70 percent, uses a technology known as TDMA (Time Division Multiple Access).
Tuesday's announcement is another sign of the growing dominance of GSM and its possible approach as the world's primary wireless telephone standard. By most accounts, a half-billion cell phone customers, mainly in Asia and Europe, use GSM networks to make calls.
While it has all but unified European cell phone networks, GSM has been slow to make any inroads in the United States, where cell phone networks based on Qualcomm's code division multiple access, or CDMA, have dominated. GSM networks do exist, but rank a distant second.
The result in the United States has been a mishmash of networks, and additional cost to wireless customers who either have to pay additional charges when they venture to an area of the country not covered by their carrier networks, or can't use their phones at all.
The patchwork of networks in the United States has also been blamed for the slow uptake of what carriers hope will make them billions in new revenue--sending short text messages between cell phones. In Europe, billions of messages are sent each day because carriers all use the same type of network. Even though these messages cost less to send than making a one minute phone call, recent surveys show that while messaging is on the rise in the United States, its use here is lagging Europe.
"With this decision, GSM will grow substantially," said J.T. Bergqvist, Nokia senior vice president. Nokia will be supplying Cingular with some of the gear needed to make the transition to GSM. "The world is really uniting around this technology."
GSM advocates say that the Cingular Wireless switch to GSM adds another 22 million into the GSM camp. And Cingular isn't alone in changing technology. Verizon Wireless, the largest carrier in the United States with 28 million subscribers, is also on the fence. It offers a CDMA network but is being pressured by its parent company, Vodafone, to switch to the GSM standard. Vodafone is among the world's largest wireless carriers and uses a GSM network.
Analysts and industry insiders say the Cingular announcement Tuesday coupled with a possible switch by Verizon could swing enough new customers into GSM-based networks to ensure it remains the dominant global standard.
"This is all about global carriers and their core technologies," said Bryan Prohm, a wireless industry analyst at market researcher Gartner. Prohm said most wireless carriers are likely to remain loyal to their existing transmission technology when upgrading to higher-speed systems in the future because of their familiarity with it.
"They are very wedded to the 'dance with who brung ya' philosophy," he said.
A Qualcomm representative would not comment. Perry LaForge, who heads the CDMA Developers Group and is a vocal supporter of CDMA technology, did not return a phone call seeking comment.
Cingular executives said Tuesday that Nokia, Siemens and Ericsson will be supplying Cingular with the hardware necessary to make the switch. Bill Clift, Cingular Wireless chief technology officer, estimates it will cost the company between $18 and $19 per customer to make the changes.
TDMA network gear comes from companies such as Lucent Technologies, which earlier this month entered into a five-year deal with Cingular to provide TDMA equipment. A Cingular spokesman, Ken Keatley, said that deal will not be affected by Tuesday's announcement.
Keatley said Cingular customers will likely not even notice the changes. Those using the TDMA portions of the network and phones that can only access a TDMA network won't likely lose any service. Cingular said Nokia, Ericsson and Siemens are developing network gear that lets handsets using either TDMA or GSM get service. Cingular also plans to continue selling TDMA handsets for the next few months.
The changeover should be completed by 2004. About half of the Cingular Wireless network will use the GSM technology by the 2002 holiday season.
The deal could be bad news for struggling Lucent Technologies, which in early October announced it had entered into a five-year deal with Cingular to provide TDMA network gear. Keatley said Tuesday's announcement will not affect that arrangement.
"It is our intention to continue that deal," he said.
The TDMA piece of the network has gotten Cingular in trouble with the Federal Communications Commission (FCC), which has asked U.S. carriers to come up with a timetable for when it will be selling wireless phones that can be located by police when they dial 911. Cingular has been in talks with the FCC's enforcement bureau after it missed a deadline to file plans to convert the TDMA network portion to the appropriate equipment.