Transportation Deployment Casebook/Cellular Telephone

Birth of Wireless Communication
In the latter half of the 19th century, two major innovations in communication technology occurred. The first, made in 1876, was the invention of the wire-based telephone by Alexander Graham Bell. Near instantaneous voice communication over long distances became possible, but only between points on a fixed infrastructure. Roughly one decade later in 1887, "German scientist Heinrich Hertz deduced the existence of wireless waves". Signal transmission through the air became a possibility.

In the late 19th and early 20th century, the young scientist Guglielmo Marconi began putting the two together. By 1986 he had patented a system for short-range wireless communication using telegraph signals. In 1901 he successfully transmitted a Morse code signal across the Atlantic ocean using wireless radio signals proving the possibilities for long-range wireless communication. At roughly the same time, Reginald Fessenden was adding audio to wireless transmissions for the first time.

Initially, these systems were adopted by maritime and aviation modes to overcome the difficulty of communicating between ship or plane and ground. Into the early decades of the 20th century the military and police of the United States also caught on to wireless communication. Motorola introduced the Handie-Talkie and Walkie-Talkie to provide real-time communication on the battlefield. In the years after Lee de Forest first communicated with an automobile (1906), Police cars were also kitted with one- or two-way radios to communicate with their dispatch officers and more efficiently protect and serve.

However, these early wireless communications devices were large, bulky, and expensive which kept them out of the hands of the general public. In 1947, the famed Bell Labs made a breakthrough that would change wireless technology forever. The transistor, a simple amplifier/switch component vital to modern electronics, greatly improved the portability and reliability of wireless communication against the older vacuum tube technology.

Through the early 1970s, wireless communication was primarily limited to the wealthy (who could afford car phones and the expensive subscription fees for operation) and amateur users within the Citizen Band (CB). Ham radio was extremely popular due to the relatively low cost of entry in both training and equipment. CB became a part of popular culture through both film and song.

Wireless Telephones
Wireless communication was severely limited in terms of concurrent users. "As late as 1981 [...] only twenty-four people in all of New York City could be on their mobile phones at once." To solve this issue, cellular technology was developed. Instead of using high-powered, tall transmitters, cellular uses many smaller, low-powered transmitters. In this way, the geographic region covered by the towers is split into smaller areas that can provide service for several 10s or 100s of individuals simultaneously.

The first real tests began in the late 1970s in Chicago and the Washington D.C./Baltimore areas. AT&T and Motorola were granted the operation of the systems to prove the potential of cellular phones. At the time, there was skepticism concerning the potential within the cell phone market. A 1980 study by AT&T estimated a national subscriber base of only 900,000 by the year 2000 leading AT&T executives to largely ignore wireless communication.

Others were more optimistic. In 1983 the Federal Communications Commission began opening wireless frequencies for businesses to operate cellular phone services. The entire nation was broken into segments based on city population and waves of 30 cities each were assigned to applicants by lottery. In the first round, 190 applications were submitted; the second round saw 353; the third and fourth had 567 and 5180 applications respectively. As investors and entrepreneurs saw the possibility of huge returns, more and more crowded in to get a share of the spectrum being raffled off.

The rounds were fraught with red tape and behind-the-scenes dealing. Of the many disparate applicants, coalitions and alliances began sprouting up to share and trade ownership of cities. By the end, several major companies emerged to consolidate the majority of the United States. Interestingly, the giant of land line communication - AT&T - obtained wireless spectrum but this was calved off to smaller companies when AT&T was forced to split due to an anti-trust suit.

The Mobile Phone Worldwide
The earliest days of establishing the cell phone network were perilous. Significant capital investments were required to reach across large rural areas. Hardware and software had to be developed, standardized, and deployed. Policies had to be created to govern the interaction of cell phone users across different provider networks (roaming), what sorts of information could be relayed (voice or text via short-message system), and so forth.

Meanwhile international companies were also developing and deploying mobile phone technology. Motorola, Nokia, Siemens, and others were getting into emerging markets throughout Europe. Nokia in particular became a juggernaut of global cellular electronics, with products sold in 140 countries by more than 55,000 worldwide employees. As the cell phone, both analog and eventually digital, reached out across the world, other technological advances also arrived to help push mobile communication even further. The commercialized Internet emerged through the 1990s (along with the Dot-Com boom and bust) and radically changed the way business and society view communication.

The phones themselves also improved. Smaller, lighter, longer lived phones became mass produced and extremely inexpensive. It became easier for some extreme rural areas to get cellular service than clean water. The current iteration of the cell phone, the smartphone, connects us through voice, video, text, web, and on and on. Our pocket devices are no longer just mobile phones; they are fully fledged computers with access to a wide variety of communications avenues.

Because of this flexibility, mobile phones can be used to spur growth where it was previously impossible. In rural areas of India, for example, micro-loan banks began opening through the mid 1990s and into the 2000s. These banks communicate by cell phone in order to reach low-infrastructure villages. The villagers could also become more connected by using mobile phones, opening their community up for larger business opportunities that would have otherwise been lost to geography.

Land Line Telephone
Through the 20th century, the land line telephone became ubiquitous in the United States. Short and long distance services were available nationwide through AT&T and telephone use became commonplace. Land lines have the advantage over wireless in speed and signal quality. By using wire (previously copper and more recently fiber optic cable), signals can be carefully controlled so that loss is minimized and bandwidth is carefully allocated.

However, cell phones allow the extremely important feature of mobility. The entire allure of mobile and cellular phone technology is the ability to connect with anyone from anywhere. As technology improves and cell phones become more sophisticated, lighter, cheaper, faster, and longer-lasting, it is likely that most land-line telephones will be replaced.

Satellite Phone
Satellite telephone systems offer a close competitor to conventional cell phones in terms of mobility. Instead of relying on cell towers for communication, a satellite phone communicates directly with a transceiver in orbit. Demonstrated in 1962 by AT&T, satellites have long been used to send information across the world for telephone, television, and now internet services. However, due to the extremely high cost of placing a satellite into orbit, person-to-person direct communications via satellite phone are prohibitively expensive for everyday consumer use. They do find use for extreme environments or natural disaster sites where traditional mobile phones would be ineffective.

Quantitative Analysis
To model the rise of the cell phone in the United States, annual subscription numbers were found for the years from 1985 to 2010. Note that the data source did not include data for 2007 so that year was excluded from the fit. The raw data shows the start of what could be an S-type curve with some carrying capacity at or above 300M annual subscribers. Using regression tools, best-fit carrying capacity and curve parameters were found. Using those values, the modeled subscriber growth curve was generated and is shown in the figure.

The best-fit parameters have a carrying capacity of 320M annual subscribers. This is only a slight increase over the current number of subscribers, suggesting that the US cell phone market is nearing or at saturation. The model curve is slightly slower in growth during the 1990s than the actual values but exceeds actual growth in the later 2000s.

However, based on growth estimates for the United States population, this carrying capacity could be too low. Over the past 50–60 years, the population growth of the United States has been roughly linear and even with a slowing growth the US population will likely grow over 350M in the coming 30–40 years. A figure shown here gives one possible estimate of US population growth through 2050.

Based on this growth, it is conceivable that the total number of cell phone subscribers in the United States would approach something in the neighborhood of 450M. This would mean an average of between 1 and 1.3 cell phone subscriptions per person across the entire US. (Users with multiple subscriptions could push the total subscriptions above the population.) Using the 450M subscriber capacity, a second model was generated.

It could be that the S-curve model being used does not represent the growth of the cell phone market. The initial growth up to the year 2000 does seem to fit the S-curve, but from roughly 2002 to 2010 the growth year to year has been more or less linear. A better model may use three parts: an S-curve fit through 1999-2000, a linear fit from 2000 to sometime in the 2010s, and an S-curve in the 2010s to 2020s and beyond to model the slowing and end of growth in the market. In this way, the steady growth through the 2000s would be better captured, but the early increase and eventual slowing of subscriptions would be captured by the S-curves.