Tuesday, September 26, 2006

GSM is Dead; Long Live GSM

My trips abroad usually involve a little side venture to the Vodafone store to get a SIM card for my GSM phone.  I find it convenient (and geeky) to have a phone when I'm over there.  I did so last week while in the UK.

One of the things that surprised me was how few people were using WCDMA handsets.  I figured by now it would be in the hands of a lot of consumers.  More surprising is how few were being offered at the stores (with the notable exception of Three of course).  I checked out Orange and Vodafone company stores, as well as Cell Phone Warehouse and Phones 4u in Edinburgh.  Few had 3G phones out on the shelves, or had signage related to 3G plans.  Only Three was actively advertising anything about it.

Same thing is true here with our GSM providers.  T-Mo doesn't even have 3GSM/WCDMA deployed.  Cingular has it deployed but has like one handset. They actually lie on their site and say that EDGE is 3G.  Not even GSMWorld makes that claim about EDGE.

Meanwhile, on this side of the Atlantic, take a look at two of the main providers:  Sprint and Verizon.  They've made massive rollouts of EV-DO service (see: Sprint, Verizon) and almost all of the phones priced $50 or above on Verizon are EV-DO enabled (Sprint has less phones with EV-DO--3 by my count).  Both have PDA services that use EV-DO (Sprint: a couple Treos, Verizon: a bunch more). 

Which brings me to my next observation... I hardly saw any recent Blackberries (only saw older models) or any Treos in the UK.  The only data services I saw people using were PIX and TXT messaging.

Getting down to the point of this post, it's shocking that the GSM customer base has still not migrated to higher standards like WCDMA or HSDPA in one of the world's most lucrative mobile markets (the UK).  Where are the deals on cool 3G technology, like we have here in the US?  Why didn't I see Vodafone pushing Vodafone live?  The only advertising I saw for any 3G service was being able to check your Hotmail on Three.

What it speaks to is the relative lucrativeness of the technology.  The United States' CDMA mobile providers seem to be proving that the Qualcomm technology path has a much, much faster rate of high speed services growth than the GSM technology path.  Looking at the GSM Association statistics, 11% of CDMA users are now on EV-DO, only 4% of GSM users are on any form of W-CDMA (most of which are in Japan, I think).  On the EV-DO side, a huge number of those are in the United States, the most lucrative mobile market in the world, thanks to the consumer push of Verizon and their VCAST services, and Sprint's mobile data push.

Final thought.... Vodafone, a stock I own and have now owned twice over the last five years, should not sell that Verizon Wireless stake they have under any circumstances.  It's easily proving to be their most valuable growth asset in a huge lineup of assets they acquired in the 90s.  I guess as a shareholder, I should be indifferent.  I own part of that network through Vodafone's stock, and whatever they do with it, I will end up owning part of it or getting a cash payout.

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