Potential Impacts of General Packed Radio Service on European Telecommunication Companies and their Customers

Table of Contents

Abbreviations

1 Introduction
1.1 GPRS, the first Step towards unlimited Communication?
1.2 Procedure and Analysis Objectives

2 What is General Packed Radio Service?

3 Positive and Negative Impacts of GPRS
3.1 Potential Impacts on End Users
3.1.1 Positive Impacts
3.1.2 Negative Impacts
3.2 Potential Impacts on Mobile Operators
3.2.1 Positive Impacts
3.2.2 Negative Impacts
3.3 Potential Impacts on Handset Producers and Network Suppliers
3.3.1 Positive Impacts
3.3.2 Negative Impacts

4 Evaluation of Strengths and Weaknesses of GPRS
4.1 Strengths of GPRS
4.2 Weaknesses of GPRS

5 Possible Solutions to Overcome the Shortcomings of GPRS
5.1 Inconvenient Mobile Devices for Wireless Applications
5.2 Fixed Networks Superiority and Threat of WLANs
5.3 Lack of Interest in GPRS Compared to UMTS
5.4 Outdated WAP Standard

6 Conclusion
6.1 Summary
6.2 Outlook

7 References

8 Bibliography

Abbreviations

Abbildung in dieser Leseprobe nicht enthalten

1 Introduction

1.1 GPRS, the first Step towards unlimited Communication?

“46.8 percent of Europeans owned a mobile phone in 2000” (Hobley, 2001, p. 6). Since this high penetration was achieved in a relatively short time period, nearly all telecommunication companies showed huge growth rates. This applied for mobile operators, telecommunication network suppliers as well as for mobile phone producers and went in line with skyrocketing share prices.

Since mobile phone penetration was already very high, telecom companies’ growth rates shrank dramatically over the last year and share prices fell according to that. Consequently, telecom companies had to invent new gadgets to encourage people to buy new mobile phones and sign new contracts with mobile operators. Therefore, research concentrated on greater bandwidth in order to widen the functionality of mobile phones and to increase usage time.

Telecom companies have the vision that sooner or later everybody will use a mobile phone not only to call other people, but also to access the Internet from everywhere and at any time. These “multimedia entertainment and information terminals” (Berton, 2001, p. 18) would lead to increased data traffic and, therefore, higher revenues for mobile operators. Furthermore, constant improvements of infrastructure and mobile devices would ensure further sales for network suppliers and mobile phone manufacturers. General Packed Radio Service (GPRS) is considered to be the first step in that direction, which will be followed by Universal Mobile Telecommunications System (UMTS).

1.2 Procedure and Analysis Objectives

After a short explanation of GPRS, this report will analyse the impacts this technology could have on telecommunication companies and their customers. This includes taking a closer look at mobile phone producers, network suppliers, mobile operators, and end users. Many big companies like Nokia and Ericsson are both handset producers and network suppliers. Therefore, handset producers and network suppliers will be dealt with together in one section. The report will concentrate on the European telecommunication market because Europe is leading in wireless communications (Pringle, 2001a, p. 11), which is due to the worldwide adoption of the Global System for Mobile Telecommunications (GSM) standard. With Nokia, Ericsson, and Siemens, three of the world’s largest four handset producers are located in Europe. Furthermore, three of the eight biggest mobile operators are situated in Europe and 34 percent of all mobile phones are used in Western Europe (Pringle, 2001a, p. 14).

After analysing the impacts of GPRS, the report will evaluate the strengths and weaknesses of this technology and point out possible solutions to overcome the shortcomings.

2 What is General Packed Radio Service?

Basically, GPRS is not a completely new technology. It is rather an enhancement of the GSM technology. GPRS is especially suitable for file transfer and Web browsing because it “enables continuous flows of” Internet Protocol (IP) “data packets over the system” (Computer Language Company, n.d., para. 1). Berton points out that “GPRS software splits data into separate “packets” before they are transmitted and then reassembles the packets at the receiving end” (2001, p. 19). In contrast to the GSM system, where data has to take a specified route from the sender to the receiver, GPRS packets can take any available route. Obviously, this leads to more efficient use of network capacity because the system does not have to allocate a specific radio signal to a specific user for a certain time. Instead, all available radio resources can be shared between different users. This leads to a theoretical maximum speed of 170 kilobits per second (kbps). (Berton, 2001, p. 19) In Europe, the first GPRS services were started in the U.K. and in Germany in the middle of 2000. Due to instable systems and a lack of handsets the broad 2 launch of GPRS services had to be postponed. Therefore, GPRS became widely available in Europe in the middle of 2001.

3 Positive and Negative Impacts of GPRS

3.1 Potential Impacts on End Users

3.1.1 Positive Impacts

GPRS offers much more bandwidth than ordinary GSM systems. The theoretical maximum speed of GPRS systems is 170 kbps compared to GSM’s maximum speed of 9.6 kbps. Therefore, GPRS provides new possibilities to users. They are now able to take advantage of faster download times for Wireless Application Protocol (WAP) pages and to receive coloured WAP pages with graphics and animation. Surfing the wireless Internet with a normal GSM phone is quite frustrating because “if the phone loses its connection to the network for any reason, the user has to dial up a new connection and start all over again”, which can take a lot of time (Berton, 2001, p. 19). However, “with GPRS, surfers can pick up immediately where they left off the last session” (Berton, 2001, p. 19). Furthermore, billing will be fairer because users will be charged for the amount of downloaded data instead of calling time. Therefore, wireless Internet services like checking news and weather forecasts, banking, checking share prices, and playing online games, will become cheaper, more useful, and more convenient with GPRS.

Besides telephone calls and wireless Internet, the higher bandwidth of GPRS lays the foundations for many new mobile applications like positioning and location-based services. Here, the user’s position is located via the cellular network. Depending on the user’s position the system provides useful information like the location of the nearest gas station. Furthermore, by displaying maps and highlighting routes, such systems can also be used for navigation without buying expensive navigation systems, often used in cars. Moreover, with GPRS phones, sales- or “servicepeople on duty can access their company inventory to check whether or not a spare part is available and 3 directly inform customers about the situation” (Heijden & Taylor, 2000, p. 8). Further applications for GPRS cover mobile electronic commerce as well as notification systems, where the user gets a message on certain events (Heijden & Taylor, 2000, p. 8). Most of these applications can also be used with normal WAP-enabled phones but with GPRS they will be user-friendlier due to greater bandwidth and the ability to transmit graphics, colours, and animation.

3.1.2 Negative Impacts

Although wireless Internet surfing becomes more convenient with GPRS, it is still not very user-friendly. This is simply due to the fact that mobile phones have so small screens. Therefore, only a couple of lines fit on one screen, which makes reading an article a very tiring task. Most of the new applications mentioned above will be hard to use because of small handset screens and small buttons on the keypad.

Another negative impact for some people is the possibility that GPRS or UMTS could become standard. Then, even users, who only want to use the mobile phone to call other people, would have to pay for these more expensive technologies, although they have no real use for them.

Furthermore, information overflow will become even greater, if everybody has a mobile multimedia entertainment and information terminal. Companies are likely to use this new medium for advertising, which could lead to people getting lots of advertising messages over their mobile phones.

3.2 Potential Impacts on Mobile Operators

3.2.1 Positive Impacts

When WAP technology came up, it offered lots of new revenue possibilities for mobile operators. Unfortunately, hardly anyone uses WAP services because they are very complicated and not user-friendly at all. If GPRS proves to be a success, it could revive WAP and help operators to differentiate themselves from others and to gain competitive advantage. By providing unique services, like location-based services, they can not only increase customer loyalty but also gain extra revenues from these services. They can charge their customers extra fees for the service and at the same time they can earn money from partners, whose products or services are advertised in the services. Above all, customers will have to pay for the data traffic as well.

Another positive impact on operators is the fact that they do not have to install a completely new infrastructure to provide the service. “They only need to add a couple of new infrastructure nodes and make a software upgrade to some parts of the network” (Berton, 2001, p. 19). Moreover, WAP services are already installed and ready for use, and with GPRS they are likely to be used after all.

Furthermore, GPRS can improve and ease cooperation between different operators. As Hjelm explains, “the GPRS router and packet assembler/disassembler also work together with the components of the system that handles the user information, so that billing and roaming will work between service providers that have agreements to cooperate” (2000, p. 287).

Above all, GPRS is a test for UMTS. Operators are gaining experience with mobile data services quite similar to UMTS services and customers are getting used to the new possibilities third generation (3G) systems can offer. Consequently, GPRS can be seen as a bridge between GMS systems and UMTS systems that could bring back users’ acceptance of mobile data services.

3.2.2 Negative Impacts

Mobile operators have to deliver enough content, applications, and services in order to make people use GPRS. If they do not do so, they will not be able to bring back the customers’ lost faith in data services, which has been damaged by poor WAP services.

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