1. Cell Phone Adoption in Germany and the United States

2. Background Why cell phones? 1. Exciting technology 2. Based on observations while traveling 3. Findings while testing at Microsoft 4. Desire for better technology and service 5. Attempt to understand U.S. market

3. Purpose/Question Are there differences in cell phone adoption between Germany and the United States? Does adoption in the U.S. lag behind Germany? Does adoption in the U.S. lag behind Germany?  What factors have caused differences in cell phone adoption in Germany and the U.S.? phone adoption in Germany and the U.S.?  What has been the role of government regulations in the in the adoption process? regulations in the in the adoption process?

4. Key Terms Adoption: The introduction and incorporation of cellular phone technologies and services. Government Regulations: Rules or laws imposed on the market regulating the development, distribution, or numbers of technologies and services available.

5. Overview Past, Present, Future 1. How did cellular phone technology develop?  Introduction of key milestones in cell phone  Introduction of key milestones in cell phone development in Europe and the United States development in Europe and the United States 2. What is the shape of the modern market?  Look at current technologies and standards  Look at current technologies and standards 3. Where is cell phone adoption going?  Outlook for future technological developments  Outlook for future technological developments

6. U.S. History Could the U.S. have led global development of cell phone technology?  1946 AT&T was developing cell phone technology and requested more bandwidth allocation from FCC (denied)  AT&T stopped experimenting with the technology  First ‘official’ cell phone call in the United States by Dr. Martin Cooper, an employee at Motorola who, in 1973, placed a phone call to AT&T Bell Labs while walking the streets of New York.  1971 – 1980s FCC starts de-regulating cell phone services and technologies

7. EU History - December 1950 Sture Lauhren makes first cell phone call -1969 Nordic Mobile Telephone Group established - 1982 Europeans establish ‘Group Special Mobile’ to develop GSM (GSM network = Global System for Mobile Communications. Today mostly used in Asia and Europe) - 1992 All major European operators start commercial use of GSM networks - 1998 European Parliament sets out rules for the implementation of UMTS (Universal Mobile Telecommunications System ) - Industry and governments are currently working on the implementation of 3G (Third Generation cell phone technologies)

8. Summary - U.S. deregulation of cell phone providers and technologies by FCC  Many different frequencies and networks used – no guidelines on standards  Phone service/coverage was not very good – prices too high - Early EU regulation of service providers and standardization both in Europe and worldwide  Better phone service, better prices

9. State of the Market How have past decisions affected cell phone adoption today? - Was deregulation effective in the U.S.?  What choices are available in the U.S. market? Number of cell phone carriers in the U.S.: 5 (Nextel, Sprint, T-Mobile, AT&T Wireless/Cingular, and Verizon Wireless) Number of cell phone manufacturers in the U.S.: 10 (Audiovox, Siemens, Nokia, Sanyo, Samsung, Siemens-Ericsson, Kyocera, LG, PalmOne, and Motorola)

10. State of the Market Cont. Number of cell phone carriers in Germany: 12 (T-Mobile Deutschland GmbH, o2 Gemany GmbH & Co. OHG, mobilcom AG, E-Plus Service Gmbh, Drilisch Alphatel AG, debitel AG, Talkline GmbH, Tangens GmbH, Tschibo Mobilfunk GmbH & Co. KG, Telco Services GmbH, Victorvox AG and Vodafone D2 GmbH. Number of cell phone manufacturers in Germany: 30 (Audiovox, Siemens, Nokia, Sanyo, Samsung, Siemens-Ericsson, Kyocera, LG, PalmOne, Motorola, AEG, Blaupunkt, Panasonic, Sendo, Trium Mitsubishi, Alcatel, Bosh, LGE, NEC, Philips, Sharp, Tchibo, Xelibri, Bang & Olufsen, Dancall, Maxon, Sagem, TelMe, Benefon, Hagenuk, o2 Germany, Sony, Toshiba, HTC)

11. User data Who actually uses cell phones? For what purpose? “Cell phones are less common in the United States-while widely available, market penetration is lower than elsewhere in the developed world.” From: http://en.wikipedia.org/wiki/Cell_phone http://en.wikipedia.org/wiki/Cell_phone Germany: 57.6 Million cell phone users (72 % of the population) United States: 150 Million cell phone users(66 % of the population)

12. Cultural Adoption Cell phones were initially intended for use in cars  Today cell phones are used by everyone  Teenagers and Baby Boomers the largest target  Cell phone adoption rate now highest among African Americans in the U.S.

13. Changes in Usage From being connected to the business world to being connected to everyone… - Phones in the U.S. are mainly used for calling – secondary purposes are checking email and internet internet - In Germany cell phones are a status symbol – mostly used for SMS, internet, email, and task scheduling task scheduling

14. Social Change Always connected, always available Cell phones allow people to be reached at all times  The fading division between the workplace and home  Directly connect to a particular person  Disappearing landline service  The dangers of preoccupation (e.g. calling and driving)

15. Future of the Market Cell phone companies in Europe and Asia have long enjoyed a profitable market. - As the target consumer age gets younger industry will increasingly explore advertising through phones - Phones will become more multi-functional devices - no longer limited to calls, internet, note taking, etc. - may be used for paying in stores and at vending machines - may store personal data, such as health information

16. Problems and Challenges With new inventions come new challenges… Possible problems:  Privacy is compromised as phones store more data.  How can advertising be controlled?  Will the landline phone industry collapse?  Are there health problems associated with cellular technology?

17. U.S. Market Outlook Will the U.S. cell phone industry adopt international cell phone standards (e.g. 3G)?  This would allow real international roaming  More customer choices in manufacturers  An increase in the number of service providers

18. Summary Government regulations shaped the U.S. and German markets  Responsible for the number of providers and manufacturers  U.S. deregulation fragmented the technology and service and reduced interoperability - low user interest, low interchangeability, and high prices  EU: All manufacturers work under one standard and can focus on developing new technologies  Service providers face higher competition, resulting in lower prices and better service  May explain early adoption of cell phones in Germany

19. Final Thoughts Will Americans demand more from the cell phone industry? Do you want to have better phones and cheaper service? Will the U.S. industry adopt 3G (Third Generation network standard)?