Analysis of GSM Market

  GSM has long been the most widely deployed and the most successful mobile network across the world. By the end of 2003, mobile subscribers worldwide had totaled 1.3 billion, outnumbering the 1.2 billion fixed telephone subscribers. Of the 1.3 billion mobile subscribes, there are 1 billion GSM subscribers, accounting for 77% of the total number of mobile subscribers. The GSM networks and their subscribers are still witnessing a large-scale expansion.

1 Success Story of GSM
In the past decade, mobile communication has become one of the world’s largest industries. In 1990, there were only 10 million mobile subscribers worldwide. In 1995, the number of mobile subscribers grew to 91 million (whereas fixed network subscribers totaled 689 000 000). By 2001, the number of mobile subscribers had achieved a tenfold increase to 946 000 000, and when the total number of mobile subscribers worldwide exceeded 1 billion, it was an achievement that had been made by the fixed network after 120 years’ of persistent efforts.

  Of the different mobile communications systems, GSM is reputed to be the most standard and promising mobile communications system throughout the world.

  Since its establishment as a European telecom standard in 1982, GSM, in recognition of its mature services and easy roaming, has undergone rapid development and obtained unanimous recognition from operators. Since its entry in 1991, GSM systems have been employed by over 600 operators, covering more than 200 countries worldwide. To date, GSM network has grown to be the world’s largest mobile network.

2 What Makes GSM a Success?
GSM is undoubtedly an outstanding success in the second generation of digital mobile communications. The following factors may have contributed to its enduring success.

2.1 Interconnection and Roaming
Roaming enables subscribers to move easily and freely around the globe with a unique mobile phone number, and to stay in touch with others uninterruptedly.

  The core idea of GSM is to provide seamless and standard connection capabilities for subscribers via a single standard regardless of the boundaries between countries. No doubt, the worldwide roaming capability is one of the factors that keep GSM alive and strong. Also, thanks to its wide range of applications, GSM enables worldwide interconnection and intercommunication, and thereby is booming all over the world.

  As the world’s largest mobile network, GSM makes subscribers’ roaming easy and safe, and guarantees operators’ benefits from roaming services. The roaming service costs a good deal, but for users (especially those users traveling across countries), the roaming function brings them great convenience.

2.2 Service Provision Capability and System Maturity
Through over 10 years of development, the GSM system standard has evolved from Phase I, Phase II to Phase II (+). After long-term market applications, the system stability and service diversity have been vastly improved.

  In the field of mobile communications, voice service has been the most fundamental and also the foremost service while broadband data service has yet to be backed by market demand, therefore, operators’ profits are primarily derived from the voice service. The GSM system is capable of delivering quality voice services, easy SMS, a broad range of flexible Intelligent Network (IN) services and high-speed data services via GPRS/EDGE (General Packet Radio Service /Enhanced Data Rates for Global Evolution), satisfying various service demands from the vast majority of subscribers around the world.

  GSM has now become the world’s most mature mobile communications system. A large number of operators are providing services over this system and most of the manufacturers have mature equipment. This means low investment and low risk. Meanwhile, the existing market has secured high returns for GSM operators.

2.3 GSM Mobile Terminal
In the GSM system, both system equipment and terminal equipment have substantially matured to meet various demands from subscribers. Price factor has become the primary weapon for competition among operators, giving rise to a dramatic decline in call fee and terminal price. Consequently, the number of subscribers will see a steady increase, so GSM will surely hold on to its vantage point. In addition, a wide range of GSM phones in terms of style, model, function and price can surely address the demands of various consumer groups.

  In the future, palmtops, laptops, dual-mode and even tri-mode cell phones are expected to have a variety of air interfaces, to satisfy the various communication demands from subscribers.

3 GSM Market Prospects

3.1 Estimates
Below is the data released by an authoritative organization:

• In 2004, one-sixth subscribers were using GSM phones.
• In 2004, the numbers of GSM subscribers worldwide were expected to exceed 1.5 billion and reach 2.3 billion in 2010.
• In 2004, 40-50 new GSM networks were put into operation worldwide.
• At least 85% of the next-generation wireless subscribers in the world will enjoy voice and data services delivered using GSM technology.
• By 2005, the direct profit from GSM worldwide is expected to reach US$ 500 billion.

3.2 GSM’s Prospects
As we know, WCDMA serves as the 3G technical standard that best suits the evolution of GSM system. On the one hand, it gives full play to the existing network resources, enables smooth service transition, lowers the investment in network transformation, and guarantees the benefits to customers. On the other hand, as the most popular technical standard in the manufacturing industry both at home and abroad, WCDMA boasts multi-vendor supply environment, thereby maximizing mass benefits and lowering purchasing costs. From a global perspective, 80% of the leading operators have adopted the WCDMA technology.

  The well-established GSM network in business operation has forged an unparalleled business edge for the development of WCDMA and GSM. GSM’s support for high-speed data services via EDGE technology and the increase in system capacity (by twofold) via HR (Half Rate) technology make the GSM system more dynamic and robust.

  Mr. Craig Ehrlich, Chairman of GSMA (GSM Association) addressed, "The Year 2004 will be a landmark in the development of the world’s mobile communications industry. In this year, the number of GSM subscribers worldwide is expected to reach 1 billion, and 3G services will be rolled out in many countries and regions around the world. GSMA encourages global telecom operators and enterprises along the 3G industrial chain to score mass economic benefits and increase their added values by making the best of the mature 3G technology, so as to maximize the value for 3G subscribers."

  At the IIR (Institute of International Research) 3G global summit held in Beijing in 2004, Alan Hadden, President of GSA delivered a speech at the GSM development forum, saying EDGE is a spontaneous evolution for all GSM operators. EDGE outperforms GPRS in that it increases the capacity by 3-4 times and raises the data rate by threefold.

  Therefore, GSM will enjoy long-term prosperity as before in the coming years.

Manuscript received: 2004-12-10