Debunking the Myth of Europe's Wireless Supremacy

You hear them more and more: complaints that the U.S. trails Europe in wireless technology. Well, that may have been true three years ago. Now things are changing, and Europe -- thanks to the same protectionist policies that helped it grab the lead -- is falling hopelessly behind.

According to some pundits, Europe's wireless market is more advanced because European governments had the wisdom to choose and enforce a single digital wireless technology standard. This view was echoed in a Time magazine article entitled "Why your cell phone stinks" (Aug. 23, 1999). The article suggested that competing technology standards in the U.S. have resulted in an expensive but pointless marketing war, spreading confusion among consumers.

The undeniable success of Europe's Global System for Mobile communications (GSM) standard may indeed seem like a compelling argument for government-mandated standards. But GSM succeeded for three other reasons: It introduced much-needed competition among European mobile telephone operators; hastened the transition to digital technology; and enabled continentwide roaming. These benefits could have been achieved just as easily with competing technology standards.

Resisting the temptation to impose a single standard, the U.S. now has three:

GSM; Time Division Multiple Access, based on the same underlying technology as GSM; and Code Division Multiple Access (CDMA), a radically different technology invented by San Diego-based Qualcomm.

The U.S. market was slow to adopt digital wireless technology because the free market only abandons old technology when new technology demonstrates significant price/performance improvements. Led by CDMA, digital wireless technologies are now delivering greater capacity, better audio quality, longer battery life and new data services -- and the U.S. wireless market is converting to digital at breakneck speed.

Artificially insulated from competition, Europe's GSM industry reacted predictably. When CDMA was being developed, they said it wouldn't work. When CDMA service was introduced, they said it was too little, too late. Now that CDMA has acquired 50 million users in record time, the GSM industry claims to have invented it, despite the fact that there are no CDMA mobile telephone networks operating in Europe. Meanwhile, CDMA is spreading like wildfire across North and South America and Asia.

CDMA has proved superior for voice but has even greater advantages for data.

While most GSM operators offer short messaging and circuit-switched data at 9.6K bit/sec, Sprint PCS has rolled out Wireless Web service (handsets with microbrowsers) and circuit-switched data at 14.4K bit/sec. Korea has launched 64K-bit/sec CDMA data service, and Japan is doing the same. Even Europe's GSM industry agrees CDMA is the best way to achieve higher speeds. They should know: their networks are running out of capacity.

(Brodsky is president of Datacomm Research Co. in Chesterfield, Missouri. He can be reached at ibrodsky@datacommresearch.com.)

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