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Moreover, in the early days of a digital cellular system, its coverage will not be as
widespread as the existing analog system. This could be a major delaying factor for
those users wishing to adopt digital technology.
Another factor in the dynamics equation is the appearance of new operators building
, and operating a competing network infrastructure. A new operator would have to install
a digital network from scratch. Initially, there would be no disadvantage in this respect
as other licensed digital operators would also have to install their networks. However,
there would still be competition from the existing analog system operators (some or all
of whom might also be digital operators).
As yet, there has been no significant downward pressure on air-time charges on the
analog networks. Faced with attempts from the new digital operators to establish their
place in the market, there could well be room for analog operators to cut tariffs on their
networks to a level at which the digital operators, with their heavy investment costs and
initially smaller subscriber base, would find it extremely difficult to compete. It could
be possible, therefore, without some form of regulation, for current operators (which will
themselves move to digital) to inhibit competition in new networks at an early stage.
Digital cellular radio could also experience competition from other emerging
technologies—a problem that analog systems did not experience. In particular, the
emergence of CT2 cordless telephones, together with the deployment of "phone-point" or
"zone-phone" public cordless services, could impinge on users who are unsure as to
whether they really need the level of flexibility that cellular radio offers. It is too early
in the development of CT2 to analyze its impact. At present, Dataquest believes that
CT2 and cellular technologies will be initially largely complementary rather than
competitive.
Although all of the foregoing factors will affect the development of digital cellular
networks, probably the most significant will be the quality of service provided by the
analog networks in three years' time. Already during peak hours in the densely populated
(in cellular terms) Southeast England, there are signs that the networks cannot cope and
users are complaining of poor transmission quality, dropped calls, and interference from
other calls in progress.
With an increasing number of users subscribing to the service and the frequency
spectrum becoming fully utilized, network operators will find it increasingly difficult to
overcome these problems. If this scenario does occur when digital systems become
available, it is possible that discontented users will switch to the new system. However,
this mechanism could be self-limiting, because as the number of subscribers on the
analog network decreases, the quality of service will begin to improve, removing the
need to switch networks.
ESAM Newsletter © 1989 Dataquest Incorporated July