Classroom Companion: Business

15.3 · Market Implications of Standards

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available for any supplier of equipment or services, also those who did not take 
part in the standardization process. The suppliers may then develop products and 
services based on this standard and compete for market shares. The benefit for 
the manufactures and the service suppliers is that the cost to develop the standard 
is small for each partner and that the total market becomes larger. This was the 
successful approach taken by GSM and later by 3GPP in developing the mobile 
standards.
There are also several examples where regional standards have been developed, 
forming technological cartels. Europe and the USA have often adopted different 
telecommunications standards, for example, the basic encoding of voice signals in 
the digital telephone network (PCM). These technological incompatibilities were 
solved by interworking units at the borders converting the formats, thereby satisfy-
ing the all-important requirement of interoperability.
Except for a few instances, GSM was not implemented in the USA, so that 
roaming between Europe and the USA using the same mobile phone was not pos-
sible. To respond to this inconvenience, several mobile phone retailers saw the 
opportunity to establish a new business, among others at airports, by leasing 
mobile phones to travelers to Europe.
There were also two incompatible standards for 3G systems: UMTS (specified 
by 3GPP) in Europe and CDMA2000 (standardized by ITU) in North America 
and several countries in Asia; CDMA2000 was also offered by several European 
mobile operators in parallel to UMTS to enhance global roaming. The first true 
global standard for public mobile networks was 4G specified by 3GPP and endorsed 
by ITU as a global standard.