The D-2 Story

D2 Most of us still remember in one way or another how the telecoms world looked like 25 years ago in Europe, North America and many other places around the world: State owned companies still controlled the voice telephony and data transmission market in many parts of the world and they had a monopoly for everything up to the last centimeter of the line, including the cable up to the actual telephone. Nobody but them touched any part of the network, there was no competition, and prices were in ranges that sound unbelievable compared to today. A lot has happened since then not only on the technology side that regularly spits out a new generation of equipment that is by orders of magnitude cheaper, faster, smaller, less power hungry, etc. But this is only one side of the medal. The other was privatization, i.e. the end of telecoms monopolies and regulation of telecom markets to ensure a fair and thriving competition between the former incumbents and those who've just entered the market.

A couple of weeks ago I wrote a post on this book on the inception and evolution of SMS which gives an interesting account not only on this topic but also how GSM as a whole was developed in the 1980s. While reading this book I remembered another book on the topic I read many years ago, “Die D-2 Story” (only available in German). Written in 1994, it gives an account of how the liberalization of the telecoms market in Germany started at the end of the 1980s by allowing and fostering a second GSM network operator next to the state owned incumbent. Reading the book is a sort of double history because Susanne Päch describes the events as seen in 1994. Now, over 15 years later, one can see what has changed since then and how the story continued, again from a technical and also a political point of view. Both histories, the one up to 1994 and the one afterwards are nothing but stunning. Here are some of the most outstanding events in those 25 years described in the book and also later on that I remember myself:

End of the 1980s: Germany decides to liberalize the telecoms market and start with mobile networks. The model for the process was the UK, where privatization started somewhat earlier.

A competition was launched to find the best private consortium. In the end, the winner was Mannesmann Mobilfunk (later bought by Vodafone), a consortium driven by the company of the same name but including many other companies. The book gives incredible details on the political situation and the developments inside the former incumbent, in the telecoms industry that developed the equipment and in the companies vying to win the second GSM license.

Getting from the state of the industry in the 1980s to today required many iterations. Even in 1994, when the book was written, the author could probably not have imagined how a fully liberalized telecoms market that we have today would look like. But I think that is not surprising. Just imagine how closed and nationalized the markets were prior to GSM. Here's an example: If you were one of those few thousand people who possessed an analog wireless telephone in the trunk of your car special actions had to be taken when crossing a national border. There may have been some exceptions, but by and large, the analog wireless phones could only be used in their country of origin. As radio waves don't stop at national borders some countries enforced deactivation by sealing the device and checking the seal on departure again. Others insisted that the owner attach a note at the device that it was forbidden by law to use the phone in their country. And yet others required the owner to pay a fee when they brought their phone in the trunk along. Those were the days… hardly imaginably today anymore when we already get upset if the phone needs a bit longer to find the network when it is first switched on in another country.

Prices both for fixed and mobile telephony slided significantly from then to now. Here's a recent post that looks at how prices have changed during the last 10 years.

While back in 1994, only mobile communication and microwave transmission to backhaul the traffic from the base station was liberalized, 1998 saw the liberalization of the complete telecoms market including voice and fixed line backhaul. Also by that time, four mobile network operators compete in the German market.

I could go on and on but suffice it to say that if you speak German and are interested in telecoms and its history, this book gives an incredibly interesting insight in those crucial years at the end of the 1980s to the first commercial availability of GSM by two network operators. As the book was written in 1994, it is no longer available from the publisher but you can easily find it on eBay and other sites that offer used books.

To close, here's a link that contains interesting information on the history of telecoms and wireless in Germany (again only in German) for a much longer period. Similar things like in Germany pretty much happened in all European countries in around the same time frame, give or take a couple of years. And yet, the differences made then still influence the markets today and the situation in the different countries is still diverse today. Compare Austria with France and then with the UK for example. Is anyone aware of similar books that describe the evolution of telecoms in other countries? I'd be highly interested to have a look!

Prepaid Tariffs Back in 1998

Here's a little comparison between prepaid tariffs in Germany back in 1998 compared to 2010. The comparison isn't quite easy as there are so many different tariffs and operators today that you can easily come up with something cheaper but with different strings attached. So this comparison just gives a general idea of how things have moved in a decade.

There we go, according to this (very old) article in a "Fokus" magazine back in 1998, prepaid prices in the D1 network were DM 1.99 (€ 1.00) during daytime and DM 0.99 (€ 0.50) after 8 p.m. In the same network today, service providers offer calls for € 0.09 a minute around the clock. In other words, it's 10 times cheaper today (compared to the former daytime tariff) than a decade ago and still 5 times cheaper when compared to the night time tariff. 

Equally amazing is the initial price of the SIM card. Back in 1998, the SIM card cost DM 149.- (€ 75,-) with € 25.- of credit on it. And that didn't include the phone. Today, you get a SIM card and a very basic phone for € 10.- with some credit already preloaded. Again, a significant magnitude cheaper then a decade ago.

Yes, I know, 9 cents a minute is by no way the cheapest offer on the European playing field anymore. Austria, for example, has prepaid tariffs for 4 cents a minute (example can be found here).

Entry Level Phones Today and 10 Years Ago

I'm a bit on a history trip at the moment because it's interesting to discover what has changed in a decade which might help a bit to estimate how things will develop in the future. Let's have a look at entry level phones today vs. 10 years ago.

The cheapest phones are now available for €29.- in the rummage table while what I would consider entry level phones from back then such as the Bosch 738 I had at the time cost in the order of 200 euros, had a two year contract with a basic monthly subscription fee attached and were bought after a lengthy discussion an form fill-out session in a shop. In other words, from a price point and sales experience point of view, the difference is quite significant.

From a feature point of view not much has changed compared to entry level phones 10 years ago. Still, entry level phones are very voice and SMS centric and the cheapest of them come without GPRS and basic Internet functionality. That comes for a couple of Euros extra, however. Also, most entry level phones are only GSM dual frequency capable. The main difference between then and now is size, weight and the color screen, although on entry level devices, resolution is quite poor. Nevertheless, back 10 years ago, such displays would have been stunning.

So how will entry level phones look like in 10 years from now? From a price point of view a few additional euros might be cut but then that's just about it and won't matter a lot. Also, what is there beyond the rummage table? Get a surprise phone in every 20th pack of cereal? So while in the past 10 years it was all about driving cost out of the entry level segment it seems to be this might gradually change into putting additional features in without increasing the price.

With that in mind I think it's quite reasonable to assume that (basic) Internet connectivity will go into such devices with (ultra) thin clients for fashionable services such as Instant Messaging, e-mail, Facebook and other social networking sites and in the future whatever replaces or complements it. Flash memory becomes cheaper by the day and at some point, a euro or two extra buys you enough storage capacity to keep your music library with you even with very inexpensive phones. Same goes for the camera and image storage.

What do you think?

Book Review: Who Invented SMS – Plus: A GSM History Background

One of the books on my reading list for summer vacation was 'Short Message Service (SMS): The
Creation of Personal Global Text Messaging
' by Friedhelm Hillebrand, as I always wanted to know how and who invented SMS. The book contains a very interesting and thorough answer, which I am not going to give you here as it would ruin the suspense, and in addition has some other very interesting details of how the whole GSM system was specified back in the 1980s.

So while I am not going to tell you who invented SMS, here are some insights/thoughts I had/got while reading the book:

  • SMS was specified in the mid 1980s. Incredible, that was 25 years ago! And like many other things in GSM, the impact the feature would have and its reach one day have were completely underestimated at the time.
  • In the 1980s, telecommunication was a national affair, there was no competition and the telecoms companies of different countries specified what they wanted and then handed that to the telecom manufacturers for implementation. While those companies sit in 3GPP and other standardisation fori today, telecoms standardization in the 1980s was a thing of the state owned carriers and telecoms manufacturers seemed to have the role of just implementing what they were given.
  • In standards meetings, there were no companies, there were countries. There are interesting pictures that show name tags on the desks with country names "Germany, France, Denmark", etc. 
  • GSM was a European club for pretty much the first 10 years of its existence. Only in the last third of the book do names of non-European countries show up.
  • Also in the last third of the book, input papers from telecoms manufacturers like Nokia and Motorolla are suddenly mentioned.

So all in all, this book is a very interesting read, not only if you want to know more about how SMS was created but also how GSM came into existence. Fully recommended!