The GSM mobile is 20 years old this month…a good time to review its impact on mobile innovation

The GSM mobile is 20 years old this month…a good time to review its impact on mobile innovation

It is 20 years ago (May 1992) that the very first GSM mobile phone got its official approval certificate. The mobile revolution seems to have happened in a blink of the eye.

The arrival of the GSM international standard ushered-in the transformation of the mobile phone. It changed from a bulky expensive item for the few into a slim low price item for everyone. This outcome was achieved through 20 years of dazzling innovation …making the 20th anniversary of the original humble GSM mobile phone something to celebrate. In what way did GSM contribute to this success? Has GSM still got a future?

At the time GSM was created there was a strong belief by many economists that competition between mobile network technologies was essential to promote innovation. This belief influenced US policy makers in the early 90’s to allow incompatible digital mobile networks to emerge in the USA. Europe put itself on a different path. GSM was imposed as an open international standard that Europe was willing to share with the rest of the world. For the best part of a decade GSM mobiles consistently outpaced innovation on the rival US mobile technologies…whether that innovation was measured in mobile size, battery consumption, choice of handset styles or price. More recently the ground-breaking Apple i-Phone appeared first as a GSM mobile.

So why did these free market economists get things so wrong?

As suppliers were unable to differentiate their mobiles in how they connected to networks – innovation was channeled in more productive directions. There were three broad phases of this fruitful innovation. The first was about shrinking the size of the mobile phone, its weight and battery life. The second was the “feature phone”. Products were differentiated by adding unrelated but very useful functions such as an MP3 player, FM radio, SatNav, better cameras and so on. Creative energy was also channelled into design and styling. The third phase has been the smartphone – where the phone functionality has been up-staged by a powerful mobile computing platform with a software Operating System able to host unlimited down-loads of useful software applications.Some of the conditions that led to the success of GSM have survived but others have changed.

On the positive side GSM has left a legacy of cooperation between competitors for new common mobile network standards. This culture of cooperation has survived through all the birth pains of 3G to the current arrival of a common 4G (or LTE) technology. So we can feel pleased that the world is still on track in this regard.

Where things have changed since 1992 is how quickly these new mobile networks get rolled-out. GSM services were rolled out in a highly co-ordinated way across Europe to the benefit of consumers and the entire industrial eco-system. The subsequent upgrade of GSM to incorporate GPRS was also rapidly supported across the world. But we now live in a considerably less coherent world. Things started to get more patchy when the GSM data up grade technology called EDGE came along. It clashed with the arrival of 3G networks. The roll-out of 4th generation (LTE ) mobile networks has been even more disjointed. This has led to a growing disconnect between what is inside our mobile phones and what a local mobile network happens to support.

Where compatibility may become more of an issue is with smartphone Operating Systems. The world is dividing into at least two camps…Apple and Android. Microsoft/Nokia would like to make it three worlds. Perhaps China may create a fourth. As consumers build up sizable personal investments in their software applications…they will become progressively less willing to jump between mobile software environments. The total openness of the GSM innovation environment is getting displaced by a more fragmented one that seems likely to be characterised by a growing degree of customer lock-in…with significant competition imbalances across these competing OS worlds

What of the future of GSM itself?

GSM continues to be a perfectly viable platform to delivery telephone calls and SMS messages. But GSM has been left far behind for delivering very high speed data. At this point of maturity the phasing out of GSM would normally be under consideration. Slimming down rather than phasing out is a much more likely outcome for a number of reasons.

First, production of GSM mobiles is still on a rising curve in many emerging markets. Second, as mentioned above, the roll out of all the later mobile technology networks across the world is now far less coherent and pervasive. This leaves GSM as the only technology that guarantees a mobile connection anywhere in the world and even within many countries…a sort of Glue for Service Mobility…perhaps the new meaning for the acronym GSM.

Third, is the growing impact of WiFi on mobiles and particularly for super-fast data speeds. This leads some to speculate whether GSM plus WiFi (plus mobile storage) may come to offer a better value package for low end smart phones. In this way GSM may continue to play its part in facilitating mobile innovation well into the future .

 

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