Overview

Wireless telephone wholesale costs have dropped by approximately 20% per year over the past 7 to 10 years . While the technology and mass production cost reductions for wireless telephones and systems are mature, new 3rd generation digital wireless telephones and systems are more complex. 3rd generation system equipment uses the same basic infrastructure as 2nd generation systems.

The economic goal of a wireless network system is to effectively serve many customers at the lowest possible cost. The ability to serve customers is determined by the capacity of the wireless system. Two key factors are used in determining the capacity of the system: the size of the cell sites and the spectral efficiency of the radio channels. When using any radio access technology, system capacity is increased by the addition of smaller cell site coverage areas, which allows more radio channels to be reused in a geographic area. If the number of cell sites remains constant, the efficiency of the radio access technology (e.g., the number of users that can share a single radio channel) determines the system capacity.

Wireless service providers usually strive to balance the system capacity with the needs of the customers. Running systems over their maximum capacity results in blocked calls to the customer, while running systems that have excess capacity results in the purchase of system equipment that is not required, which increases cost. Any wireless system (including analog cellular) can be designed for very high capacity through the use of very small...