 | Issue: | Latin America IV 1997 |
| Article no.: | 4 | |
| Topic: | Personal Communications Services in Latin America | |
| Author: | Ernst Petras | |
| Title: | International Sales Mobile Networks | |
| Organisation: | SIEMENS AG, Germany | |
| PDF size: | 20KB |
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Article abstract
Personal Communications Services (PCS) is the topic of business for existing as well as new operators in the region’s telecommunications world eager to enter the promising Latin American market. The success of GSM in Europe and the development of CDMA have created the opportunities for some countries to experiment with two different systems operating in the same environment. The year 1998 will be an interesting milestone for PCS in Latin America.
Full Article
PCS Definition Although there are many definitions of Personal Communications Services (PCS), the common accepted understanding is that PCS is a digital mobile telephone service with additional services that operates in the 1900 MHz band (1850-1910 MHz and 1930-1990 MHz). The phrase originated with the 1900 MHz band auctions in the USA. As Latin America becomes more digitalized, the 1900 MHz band will be used more frequently in some countries. PCS has become the subject of daily discussion in the region’s telecommunications world. It is a frightening word for the existing cellular operators, who are defending their rights as owners of the 800 MHz band, and fear competition. PCS is a fascinating word for new consortia or foreign telecommunication investors which are eager to enter the promising Latin American market. It is understandable that existing operators fear competition. However, clever planning operators, aware of Latin America developing as an open market, are discussing how they can participate in the PCS business. Many operators using the analog Advanced Mobile Phone Service (AMPS) systems have, partially through hard work, convinced their subscribers to adapt an integrated DAMPS system within the old AMPS network. Trying to integrate DAMPS within AMPS leads to some quality problems in parts of the system. For example, in some places the first generation systems are already saturated. However, the idea of obtaining frequencies in the 1900 MHz range and building up new networks with a more modern technology is not only technically viable, but makes good business sense. History of the Technology Historically, the reason why the first generation of mobile networks became AMPS systems was because it was a system running in the 800 MHz band, which was the most proven analogue technology in the US. In Europe, at that time, there were many different systems working in different frequency bands, resulting in a lack of a unique standard available to compete with the AMPS standard. In 1982, aware of the necessity of having a unique system, Europe began to develop the Global system for Mobile Communications (GSM) standard. After nearly 10 years of standardization and optimisation, GSM has matured and emerged as a worldwide success. Its growth, by the end of 1997, will have 70 million subscribers in 256 networks in 110 countries. The system is available in three different frequency bands (900 MHz, 1800 MHz and 1900 MHz). Its advantages lie in the wide variety of services, fraud protection and roaming possibilities. Also, the idea of personalising a large variety of handsets is very popular. Some companies in the US have worked on the Code Division Multiple Access (CDMA) system since the end of the 1980s. The basis was a patent of an algorithm developed in Europe at the beginning of the century. From the time it has taken the GSM system to develop (about 10 years), it is therefore not difficult to envisage that the more complicated CDMA will also take some time to mature. Although CDMA systems is entering into commercial service now, it has yet to have networks with large numbers of subscribers. It is normal for a new product like CDMA to take time and experience difficulty in acquiring market share. The initial proclamation of 50 times more capacity for CDMA became more modest as it was reduced to 30, then 10, and finally 5 times. Neutral experts finally came to the conclusion that there is no capacity advantage simply because everything reaches its physical limit. GSM and CDMA are now seen as two systems which compete in the PCS arena. Situation in Latin America A good example of PCS in Latin America is Chile, the first country to introduce it, with both CDMA and GSM networks operating in the same environment by CHILESAT and ENTEL respectively. It will be interesting to watch the progress of these PCS networks. In some countries, such as Argentina, Mexico and Peru, the PCS licensing process has already started. In the case of Argentina, the issue of two new PCS licenses was behind schedule, but is now close to completion. Two new operators are expected to compete in the Greater Metropolitan Area of Buenos Aires, with both systems. Siemens has already implemented a pilot GSM network in March 1996. Brazil, its big neighbour, is and always has been a special case. The PCS frequency band will not be opened before the year 2000 and at this moment, the 800 MHz band licence award is still in process. In Mexico the PCS licence award process is similar to that of the US. The country is divided into nine regions, and in each region, three PCS bands will be awarded through auction. Other Central American countries are also preparing for PCS auctions. We hope that these countries will be prudent enough to avoid limitations. If a regulator wants open competition, the technology decision must be left to the operator. PCS service in the 1900 MHz band will also be launched in Peru. For Venezuela, it is planned for 1999, and already, significant development has taken place. Some young engineers of the regulator authority CONATEL (Comision Nacional de Telecomunicaciones) started to analyse mobile systems about 4 years ago. They came across the GSM system in Europe and developed a GSM 900 system for Venezuela. This year, it began to serve the rural areas where no fixed services exist. The first GSM 900 network for commercial service in Latin America was launched in June 1997 in Maracaibo. As it uses 900 MHz, it begs the question whether it qualifies as a PCS system. The consideration here is that this version of a GSM network fits the PCS definition as it is a complete digital system with a broad spectrum of services. The advantage of’ the lower frequency system is that it is much more favourable for Wireless Local Loop (WLL) services because of the larger cell range. Conclusion Other countries will soon follow suit with the issue of PCS licenses as in the case of Paraguay and Colombia. The year 1998 will be an interesting milestone for PCS in Latin America. For the benefit of the operators, providers and of course, the subscribers, we hope for an open competition without limitations and exclusions.
