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Standards in wireless telephone networks

Author

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  • Gandal, Neil
  • Salant, David
  • Waverman, Leonard

Abstract

Since 1994, Europe and North America have taken divergent approaches to managing spectrum for wireless voice and data services, the so-called 2G and 3G bands. (There are several so-called generations in mobile--first generation (1G) is analogue service, second generation (2G) is digital, while third generation (3G) refers to higher bandwidth packet switched networks; 2.5G refers to upgrading a 2G network to permit near 3G data rates.) The European Community has mandated a harmonized standard, GSM, in the 2G bands, and has adopted Wideband CDMA (WCDMA) in the 3G bands. In contrast, the North American approach has been to allow the market to decide, that is, operators have been free to choose among the recognized four digital wireless standards for 2G: CDMA/IS-95, GSM, TDMA and iDEN. The issue of market-based versus mandated standards has been addressed in many other industries. In most settings where network effects are present, compatibility across platforms (i.e., standardization) has been a key determinant of the success or failure of a particular technology. In the case of wireless telecommunications, however, interconnection and the availability of the relevant infrastructure can be a substitute for compatibility. An individual subscribing to any one of the wireless technologies in the US can easily make calls to and receive calls from subscribers to any one of the other standards (or to and from the wire-line POTS network) as long as there is (i) interconnection between networks and (ii) the relevant infrastructure is in place. In the US (and several other developed countries), interconnection has been achieved by standard interconnection protocols. In this paper, we discuss the tradeoff between mandated standards and market-driven standards in the wireless telecommunications industry. We discuss the theoretical advantages of each approach, and provide institutional background on the developments of 1G-2G and discuss the implications of our results for the current debate about 3G standards.

Suggested Citation

  • Gandal, Neil & Salant, David & Waverman, Leonard, 0. "Standards in wireless telephone networks," Telecommunications Policy, Elsevier, vol. 27(5-6), pages 325-332, June.
    • Handle: RePEc:eee:telpol:v:27:y::i:5-6:p:325-332
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    Cited by:

    1. Hussinger, Katrin & Schwiebacher, Franz, 2013. "The value of disclosing IPR to open standard setting organizations," ZEW Discussion Papers 13-060, ZEW - Leibniz Centre for European Economic Research.
    2. Luís Cabral & Cristian Dezső, 2008. "Technology Adoption with Multiple Alternative Designs and the Option to Wait," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 17(2), pages 413-441, June.
    3. Erik Bohlin & Gary Madden & Aaron Morey, 2010. "An Econometric Analysis of 3G Auction Spectrum Valuations," RSCAS Working Papers 2010/55, European University Institute.
    4. Dang, Jianwei & Kang, Byeongwoo & Ding, Ke, 2019. "International protection of standard essential patents," Technological Forecasting and Social Change, Elsevier, vol. 139(C), pages 75-86.
    5. Martin Cave & Christos Genakos & Tommaso Valletti, 2019. "The European Framework for Regulating Telecommunications: A 25-year Appraisal," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 55(1), pages 47-62, August.
    6. Lemstra, Wolter, 2018. "Leadership with 5G in Europe: Two contrasting images of the future, with policy and regulatory implications," Telecommunications Policy, Elsevier, vol. 42(8), pages 587-611.
    7. Suleymanova Irina & Wey Christian, 2011. "Bertrand Competition in Markets with Network Effects and Switching Costs," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 11(1), pages 1-58, September.
    8. Lee, Sangwon & Marcu, Mircea & Lee, Seonmi, 2011. "An empirical analysis of fixed and mobile broadband diffusion," Information Economics and Policy, Elsevier, vol. 23(3), pages 227-233.
    9. Wiegmann, Paul Moritz & de Vries, Henk J. & Blind, Knut, 2017. "Multi-mode standardisation: A critical review and a research agenda," Research Policy, Elsevier, vol. 46(8), pages 1370-1386.
    10. Heli Koski & Tobias Kretschmer, 2007. "Innovation and Dominant Design in Mobile Telephony," Industry and Innovation, Taylor & Francis Journals, vol. 14(3), pages 305-324.
    11. Cabral, Luís & Salant, David, 2014. "Evolving technologies and standards regulation," International Journal of Industrial Organization, Elsevier, vol. 36(C), pages 48-56.
    12. Gao, Xudong, 2014. "A latecomer's strategy to promote a technology standard: The case of Datang and TD-SCDMA," Research Policy, Elsevier, vol. 43(3), pages 597-607.
    13. Keser, Claudia & Suleymanova, Irina & Wey, Christian, 2012. "Technology adoption in markets with network effects: Theory and experimental evidence," Information Economics and Policy, Elsevier, vol. 24(3), pages 262-276.
    14. DANG, Jianwei & KANG, Byeongwoo & DING, Ke, 2016. "Landscape of standard essential patents : The case of East Asian countries," IIR Working Paper 16-12, Institute of Innovation Research, Hitotsubashi University.
    15. Casey, Thomas R. & Töyli, Juuso, 2012. "Mobile voice diffusion and service competition: A system dynamic analysis of regulatory policy," Telecommunications Policy, Elsevier, vol. 36(3), pages 162-174.
    16. Towhidul Islam & Nigel Meade, 2011. "Detecting the impact of market factors on sales takeoff times of analog cellular telephones," Marketing Letters, Springer, vol. 22(2), pages 197-212, June.
    17. Zaber, Moinul & Sirbu, Marvin, 2012. "Impact of spectrum management policy on the penetration of 3G technology," Telecommunications Policy, Elsevier, vol. 36(9), pages 762-782.
    18. Campbell-Kelly, Martin & Garcia-Swartz, Daniel & Lam, Richard & Yang, Yilei, 2015. "Economic and business perspectives on smartphones as multi-sided platforms," Telecommunications Policy, Elsevier, vol. 39(8), pages 717-734.
    19. Gao, Ping & Yu, Jiang & Lyytinen, Kalle, 2014. "Government in standardization in the catching-up context: Case of China's mobile system," Telecommunications Policy, Elsevier, vol. 38(2), pages 200-209.
    20. Mahmoud El-Jafari & Raneen Yousef & Ali Jamoos, 2020. "Consumer Behavior Towards Introducing 3g Mobile In Palestine: The Case Of Bethlehem Governorate," International Review of Management and Marketing, Econjournals, vol. 10(2), pages 68-79.
    21. Thomas W. Hazlett & Roberto E. Muñoz, 2009. "A welfare analysis of spectrum allocation policies," RAND Journal of Economics, RAND Corporation, vol. 40(3), pages 424-454, September.
    22. Zhang, Marina Yue, 2016. "Meso-level factors in technological transitions: The development of TD-SCDMA in China," Research Policy, Elsevier, vol. 45(2), pages 546-559.
    23. Thomas W. Hazlett, 2008. "Property Rights and Wireless License Values," Journal of Law and Economics, University of Chicago Press, vol. 51(3), pages 563-598, August.
    24. Lee, Won Sang & Sohn, So Young, 2018. "Effects of standardization on the evolution of information and communications technology," Technological Forecasting and Social Change, Elsevier, vol. 132(C), pages 308-317.

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