4.1 Mobile Standards Background

The importance of standardisation to the mobile industry is probably best illustrated by the impact of the work on the second generation mobile systems, in particular the GSM (Global System for Mobile Communications) standard. The work was started in the mid-1980s, at about the same time as the launch of commercial first generation cellular networks. A variety of different first generation systems were deployed across Europe and the rest of the world. Network infrastructure and mobile terminals were relatively expensive and market adoption was mainly limited to business users. The objective of GSM standardisation was to create a new pan-European system, where users could continue to get service when roaming across country borders. Economies of scale of larger production volumes were expected to reduce prices.

The impact of the GSM standards work is now clear to see. GSM is effectively a de facto world standard, claiming around 60% of the total mobile telephone population, and with coverage in all the continents. GSM terminals and network costs have reduced to such low levels that consumer pre-pay packages can be retailed at 50 or less, and the consumer market has developed such that the penetration of mobile telephones exceeds 50% of the population in many countries.

The mobile communications industry has grown to the point where GSM manufacturers, such as Ericsson, Nokia and Motorola, and global operators, such as Vodafone, are now among the top companies in financial market capitalisation.

The...