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Mobil phones linked by radiowaves are now a way of life. The clear trend
for the future is away from wires, even where wire connections are available.
Many people already use first generation cordless phones, or ‘radio tails’,
that allow them to wander around the house or office. Others have cellular
telephones, or cellphones, that enable them to make and receive calls anywhere
in the country. Second generation cordless telephones (CT2s) appeared last
year. Though they cannot receive calls, they are much cheaper than cellphones
and allow people to make calls from within 100 metres of one of a number
of public base stations, or telepoints, dotted around Britain’s major cities.
The range of services is diverse.

Britain has two competing cellphone systems: Vodafone, run by Racal,
and Cellnet, in which British Telecom is the major shareholder. The CT2
services are provided by three groups, led by BT, Ferranti and Mercury,
which is owned by the British company Cable and Wireless. They have struggled
for nearly a year to attract less than 10,000 subscribers apiece but this
seems unlikely to dissuade a fourth consortium from joining the competition
next year. This, the BYPS service, run by Shell, Barclays and Philips, promises
its CT2 subscribers the future option of calls from telepoints in foreign
cities.

A pan-European extension of the cellphone services is also due next
year. By the mid 1990s, Motorola, the American electronics firm, promises
to have developed an international cellphone service. This will use low
orbiting satellites to let anyone, anywhere in the world, make and receive
calls. In Britain in 1992, three separate consortia will challenge the existing
CT2 and cellphone services with competing Personal Communication Network
services, each of which will offer more lines from smaller phones. The three
consortia all hope that their PCN services, which are technologically compatible
with each other, will form the basis of an international standard for this
type of telecommunications.

PCN is an exception. Although many of the current and promised services
have basic technologies in common, they are in general incompatible. The
only common theme, and saving grace, is the ability of incompatible services
to link with existing public telephone systems, which then act as a bridge
between mobiles. But now the bridges are being liberalised, too. In November
the British government will review the duopoly that for the last seven years
has permitted only Mercury to compete with BT in providing basic telephone
services. After the review, the Department of Trade and Industry is expected
to allow at least one other private company, probably Racal, to install
its own ‘fixed link’ cable, microwave and satellite circuits.

So many new communication technologies and services are now on offer
or promised, that there is a very real risk of confusing potential customers
and discouraging them from investing in the latest equipment. Apart from
CT2, the demand for all new variants of the telephone has far outstripped
every sales prediction. There has been only one flop, BT’s Prestel viewdata
system, which failed to attract domestic consumers with its offer of the
chance to call up a general information database and to bank and shop from
a terminal at home. Now the telecommunications industry is facing up to
the probability that the good times will not last for ever, and that there
will be further, far more costly, failures in the future.

John Carrington, who ran BT’s mobile telephone system before moving
to Mercury to set up a competing service, recalls what it was like 10 years
ago. ‘There was no automatic mobile telephone system. You had to place a
call from a car via an operator and then say ‘over’ whenever you spoke.
Direct dialling did not arrive until 1981. There were soon 3000 subscribers
and a waiting list. Now there are a million cellphone subscribers with over
30,000 a month signing on.’

Ten years ago, radio phones worked in the VHF band, using powerful transmitters
to cover wide areas. Only a few frequencies were available to serve a large
number of people and the service was frequently congested. It was often
quicker to find a traditional callbox. Modern cellular systems use the much
higher UHF band, at around 900 megahertz, which is above TV frequencies.
Lower-power transmitters, which radiate signals over shorter distances,
enabled the country to be divided into regions, or cells, each with its
own transmitter. This means that the same frequencies can be used over and
over agin in cells that do not abut. It is like colouring countries on a
map of the world: only a few colours are needed to distinguish between a
large number of countries.

The difficult part is to switch a phone call between different radio
frequencies as the mobile unit moves in and out of the range of different
fixed transmitters. The theory for this ‘hand off’ switching was first proposed
by Bell Laboratories in the US in 1947, but the necessary computer power
was not available for more than two decades. Also, cellular radio required
microchips that could operate at the low voltages at which small mobile
phones must operate and that could stop the UHF frequencies from drifting
off-tune.

The size of a cell’s area depends on the number of users; the more there
are, the smaller the cells must be. The more cells, the more often the same
frequencies can be used. This gives more people the chance of making calls
at the same time in the same area, which may comprise many cells. Rural
cells can be 30 kilometres across; city cells may be 2 kilometres across.
The smallest cells are in Hong Kong and at London’s Oxford Circus, in the
centre of the capital, where the radius of the cell is just 500 metres.

Demand breeds congestion

Cellnet and Vodafone launched themselves in Britain in January 1985,
a year after Chicago had started the first commercial service. The American
system is called the Advanced Mobile Phone Service, or AMPS; Britain adopted
a variant of AMPS, which it termed the Total Access Communications System,
or TACS. Although digital codes control the switching of calls, speech is
transmitted as an analogue waveform. Unlike the ‘over and out’ of the VHF
systems, UHF cellular radio is genuine two-way, or full duplex, technology
– it uses two channels so that the user can speak and listen at the same
time, as with an ordinary telephone.

Cellular radio has been a victim of its own success. In March 1990,
Vodafone connected its 500,000th subscriber and was carrying 25 million
calls a week; Cellnet refuses to say how many customers it has. Despite
the high charges – up to 40 p a minute compared with less than 4 p a minute
for a conventional local call at standard rate – so many people want to
use cellphones that predictions of unlimited capacity soon proved grossly
optimistic. The cellular airwaves are often congested. In September 1986,
the DTI began to provide the cellphone services with extra radio frequencies,
the Extended TACS band, which was previously reserved for military use.
Also, both services continue to shrink their city cells so that they can
re-use their frequencies more often. But subscribers still complain of congestion;
Cellnet has come in for more criticism even though it has fewer customers
and currently spends as much as 4 million Pounds (pds) a week on increasing
the capacity of its service.

By 1992, when the two services expect to have around one million subscribers
apiece, they look likely to run out of capacity: neither one of them will
be able to reduce the size of their cells any more – the minimimum radius
is around 500 metres. The answer is a second generation cellphone, known
as Groupe Special Mobile (GSM). Under Britain’s agreement with the International
Telecommunications Union, both Cellnet and Vodafone are pledged to provide
a GSM service in major British cities by 1991; it will run alongside their
TACS services. The new service will also be pan European.

The second generation cellphones are far more advanced than those used
by TACS. They convert speech into digital code and compress it to reduce
the number of bits of information transmitted every second; they do the
reverse when they receive calls. With the first generation cellphones, only
the control signals are in digital code. To increase the system’s capacity,
each radio frequency channel carries several different calls at the same
time, with their codes labelled and interleaved. This is possible because
speech contains a lot of spaces between words. The technique was developed
for international satellite links. But GSM is still unproven and expensive
– and its technical specification runs to 5000 pages. Microchips powerful
enough to do the job and small enough to fit into pocket handsets will not
be ready until 1992 – a year after the service is due to be launched. In
the meantime, the handsets will have to be bulkier than existing cellphones.
Most worrying for the cellphone service operators is that GSM can be successful
only if it steals frequencies currently allocated to TACS: without these
extra frequencies, the service will not have sufficient capacity.

In 1979 the World Administrative Radio Conference of the International
Telecommunications Union allocated a 25-megahertz chunk of radio spectrum
in the 900-megahertz gand for cellular radio in Europe. This is equivalent
to 1000 voice channels. The Conference Europeenne des Administrations des
Postes et des Telecommunications (CEPT) then allocated 15 megahertz of this
chunk, or 600 channels, for national analogue services and held 10 megahertz,
the other 400 channels, in reserve for a digital pan-European service, GSM.

Costing a European link

In Britain, Cellnet and Vodafone have equal shares of all frequencies,
which leaves them each with only 5 megahertz, or 200 channels, for their
GSM services. With digital compression and interleaving, 200 channels should
be able to cope with a quarter of a million subscribers. But once these
channels are congested, GSM can expand only if it uses TACS frequencies.
As a result, users of existing cellphones may be asked to migrate to the
more expensive GSM pan European service – those that do not will be stuck
with a service that becomes gradually more congested – and new subscribers
may be told to join GSM, even if they have no intention of using their cellphones
outside Britain.

Cellnet admitted recently that it is spending only 35 million pds on
adding GSM transmitters and computer switches to a few of its existing base
stations. Stafford Taylor, the company’s managing director, doubts that
the planned launch of GSM will go ahead next June. He is sceptical about
whether manufacturers will be able to supply GSM phones in time and he is
not convinced that the service will be good enough. ‘There won’t be anywhere
near the extensive cover offered by existing services and the equipment
will not be as lightweight,’ he says. ‘The key question is, what does the
customer need of a cellphone service?’

There is in fact one very real advantage of GSM over TACS, although
neither Cellnet nor Vodafone like to talk about it. Because TACS speech
is analogue it can be overheard by anyone who buys one of the ‘scanner’
radios that are now widely sold for 200 pds or less. GSM speech, in compressed
digital code, will be heard on a scanner radio only as a meaningless metallic
buzz. But to make too much of this advantage would draw attention to the
fact that eavesdropping on today’s cellular system is cheap, easy and now
being painted as a hobby by the popular press.

The security card is more likely to be played as a way of promoting
the second generation cordless telephone service, which has been a commercial
flop since its launch last year. First generation cordless telephones (CT1s),
widely used to let householders roam round the home and garden while talking,
are even less secure than cellphones. The owner connects a radio base station
to their telephone line and then communicates with it by a portable handset.
Like today’s cellphones, CT1s transmit analogue speech. Although the manufacturers
have done little to warn the public, the frequencies allocated by the DTI
for CT1 services are at the end of the Medium Wave broadcasting band, just
past Radio Luxembourg – private CT1 calls can often be heard on a domestic
radio.

Second generation cordless telephones work digitally and, in practice,
are immune from eavesdropping. The use of digital speech also lets owners
of CT2s make calls from public telepoints, as well as from their home base
stations. A special digital code enables telepoints to identify a particular
handset and to bill callers. The idea was conceived in the mid 1980s when
many telephone boxes were out of action. The trouble is that the consortia
operating CT2 services use their own different standards, which are incompatible.

Unlike first generation cordless telephones, which use two separate
radio channels for each half a conversation, CT2s make do with a single
channel. There is no need to say ‘over,’ however. The digital code representing
each half of the conversation is chopped into small packets that are squashed
in time and passed alternately down the radio channel in opposite directions.
The squashed packets of this rapidly switched data stream are stretched
again at each end of the link to create the illusion of seamless speach.
The technique is known as ‘ping-pong’. In April 1987 the DTI allocated a
4-megahertz chunk of the UHF radio spectrum, between 864 and 868 megahertz,
for CT2 services. This chunk can carry 40 100-kilohertz radio channels simultaneously.
The department, however, left individual manufacturers free to devise their
own ways of squeezing two ping-pong channels of speech into one radio channel.
In January last year, it awarded four telepoint licences to rival consortia
that had developed different and incompatible coding systems. The rivals
are Ferranti; the BYPS consortium; British Telecom, STC, French Telecom
and Nynex; and Motorola, Shaye and Mercury.

Waking up to the fact that this made foreign sales of Britain’s innovative
CT2 technology impossible, the DTI called for a single standard for the
ping-pong coding pattern, which it named the Common Air Interface. In March,
the department decreed that the four British telepoint licencees must provide
a CAI service by the beginning of next year. This has not resolved the problem,
however, as the consortia and their main suppliers of handsets have reacted
differently to the directive.

The BYPS consortium opted to wait until CAI handsets and base stations
are ready before bringing its CT2 service into operation. GPT, the British
manufacturer formed from the merger of the GEC and Plessey telecommunications
divisions, decided to make only CAI hardware. The other three licensees
pressed ahead with the plans and started to sell CT2 units (pocket handset
and home base station) for around 400 pds – 200 pds for each section – which
is around twice the original target price. Two CT2 services, Mercury’s Callpoint
and BT’s Phonepoint, use the same technology from Shaye Communications –
but a subscriber of one service does not have access to the other’s telepoints.
Ferranti has developed its own technology for its service, Zonephone, which
is incompatible with that used by the others. Instead of having a secure
cordless telephone for use at home and at any one of a network of public
base stations, owners of CT2 handsets must now find the right one of three
telepoints. Some locations, such as Post Offices, have installed three different
telepoints, each with its own identifying sign. It is hard to imagine a
better way of guaranteeing commercial failure. From January, to meet the
DTI decree, CAI equipment must be in place. Every telepoint will then provide
users with a choice of service: one to CAI standard for owners of new handsets,
and another to a proprietory standard for owners of existing handsets. BYPS’s
telepoints, still without a proprietary name, will provide only a CAI standard
service.

Joint approach to standards

CAI compatability and an ‘international’ dimension may save the CT2
service from becoming the first mobile telecommunications technology to
fail commercially. STC, BT, Ferranti, Shaye, Orbitel, Mercury and GPT have
pooled their patents on CAI technology and agreed to waive royalties on
them in any country that adopts the CAI standard. In the US, Bell Atlantic
Mobile Systems will soon begin trials with CAI equipment, made by GPT. In
March, telephone operators from Britain, France, West Germany, Sapin, Belgium,
Finland and Portugal signed a Memorandum of Understanding that puts CAI
well on the way to becoming a European standard. The MOU commits signatories
to providing a CAI service in all major cities by 1993.

There will always be one thing lacking from CT2, however: the ability
to receive calls like a cellphone. This is a gap that another service, known
as Personal Communications Network (PCN), is expected to fill. The PCN plan
came out of a DTI discussion document, Phones on the Move – personal communications
in the 1990s, published in January 1989. In this document, Lord Young, the
former Trade and Industry Secretary, foresaw a time when Britain’s 20 million
telephone subscribers, currently relying on wires, would be able to use
radio tails to gain access to the country’s main telecommunications networks.
Young also forsaw an ‘office in the pocket’, with radio tails sending computer
text and facsimiles, and pocket phones with personal telephone numbers making
office switchboards redundant. In December last year, the DTI awarded PCN
licences to three consortia: to Mercury, Motorola and Telefonica; to British
Aerospace, Matra, Millicom, Pacific Telesis and Sony; and to Unitel, which
links STC, US West, Thorn EMI and the West German Bundespost. British Telecom
and Racal were barred from applying; PCN will compete with their cellphone
services, Cellnet and Vodaphone.

Like the CT2 and GSM services, PCN will use digital transmission. Unlike
them, however, it will do so at the much higher frequencies of the microwave
bands, between 1.7 and 2.3 gigahertz, which is just below the frequency
used to generate heat in a microwave oven. These large bands of frequencies
have not been exploited before because the microchips needed for communication
at such high frequencies have not been available.

The new network will adopt the cellular principle of the cellphone service
but its cells will be much smaller and its transmission powers lower. With
digital design, this will reduce the size of the electronics and of the
batteries for a PCN receiver. The receiver will also have a small liquid
crystal screen to display paging and facsimile messages, and it will bleep
or vibrate to alert the user. A PCN network is likely to need ten times
the number of cells and base stations required for TACS coverage of the
same area – 8000 for Britain instead of the 800 Cellnet will have by early
next year. To provide the comprehensive coverage that will attract and keep
customers, the three operators will need to share facilities. Subscribers
to one PCN service will need to be able to make and take calls irrespective
of which of the three services own the local base station. The PCN operators
may even have to share transmitter sites with their cellular rivals – property
owners have long since learned that there are rich pickings to be made from
hiring out roof space for cellphone base stations.

The PCN consortia must each invest 1 billion pds on building a network
of base stations; they will have spend 200 million pds before signing on
a single subscriber. It is an immense gamble. Much of the PCN technology
is still unproven. Tests are only now under way to establish whether the
microwave frequencies used will work reliably in moving cars, and will run
round buildings and pass through glass windows.

Some people in the industry remain sceptical. ‘I am willing to lay a
bet that the delays on PCN will be far longer than the delays on CT2/CAI,’
says Tim Lowry, director of mobile systems for the manufacturer GPT, which
is involved in the development of the CTA service. But John Carrington,
of Mercury’s PCN consortium, says that the first PCN service should be ready
by 1992 – just in time to pick up cellphone users disgruntled by congestion
of the analogue cellular services and the enforced switch to expensive pan-European
digital services. ‘We are going to put in a big capacity right from the
start,’ he says.

Motorola has another vision of the future of personal communications
– a cellphone service based on satellites, known as Iridium. Though the
scale is grand, the company says all the technology is proven. It has worked
on planning the service since 1987. Like GSM and PCN, Iridium is a digital
system. Like terrestrial cellphone systems, it divides the area of coverage
into discrete cells and uses protable phones to send out a constant stream
of identification signals that tell the main transmitters where the phones
are. But instead of fixed terrestrial transmitters, Iridium relies on low-orbiting
satellites to provide a link between portable handsets and gateways into
the public telephone network.

There will be 77 satellites, continually orbiting the Earth on seven
paths, with eleven satellites equally spaced along each orbit at a height
of 665 kilometres. Every point on Earth will be contactable at any time.

Each satellite has antennas tuned to transmit and receive signals in
very narrow beams. These beams define cells on the ground, each around 560
kilometres in diameter. The tight focussing helps the satellite to receive
weak signals from portable phones in the ground cells. The phones operate
at a frequency of around 1.6 gigahertz, which is similar to that of PCN,
and at a power of only 600 milliwatts, which is similar to that of a conventional
cellphone. Their antennas are less than 10 centimetres long.

Motorola plans to launch two satellites in 1992 to prove the concept
and to have the full service in operation four years later. To reduce the
cost of the service to subscribers, Motorola will not charge as much for
national calls as it will for international calls.

The idea of making and receiving calls anywhere in the world still thrills
– and the industry hopes the enthusiasm will not wear off. If it does wear
off, it could mean the end of the personal communications boom and burned
fingers for investors.