What is GSM, and why is it important to enterprises?

By Jonathan Crowl

If you’ve found yourself searching for a new mobile phone provider — particularly a new service provider for a business or large organization — you may have run across the acronym “GSM.” What is GSM? It stands for Global System for Mobile Communication (originally Groupe Spécial Mobile), and it’s an important piece of technology for businesses to understand, especially if they’re looking to expand their operations internationally.

GSM is one of two primary types of technology used to power digital telecommunications networks. Code Division Multiple Access (CDMA) is the other type, and it is much more prominent in the United States than in other places around the world. In fact, GSM maintains 90 percent of the global market share for mobile data compression and transfer, the GSM Assocation reports, but CDMA is the technology that powers major U.S. carriers Verizon and Sprint, according to Digital Trends.

Though you can use either type of technology without a significant difference in the experience, the situation can grow more complex as you expand from a local company to a brand with international aspirations. As enterprise networks start to span the globe, the choice between GSM and CDMA becomes a bit more complicated.

What is GSM’s benefit to the enterprise?

When considering telecom expenses, any enterprise should look at how GSM and CDMA compare and then analyze projections for growth. GSM’s big weakness is that it struggles to scale upward as well as CDMA does, so larger networks will place a greater strain on GSM technology. If you’re a large enterprise or are planning to expand in the near future, GSM’s struggles to scale could be a motivation to switch over to CDMA while it’s cheaper to do so.

With that said, there’s an argument for GSM over CDMA if you’re expanding internationally. The main difference between the two technologies is how they compress and transfer data. Every time data passes between GSM to CDMA and vice versa, there’s extra work involved, which means there are extra potential costs. Because much of the world outside the United States uses GSM, international expansion is likely to bring in more of that technology. A company looking to keep telecom expenses under control might opt for the entire enterprise to be on the same type of communications system, and GSM is superior to CDMA when it comes to overseas expansion.

It’s worth looking into the projected costs of each system and weighing the pros and cons of GSM, CDMA or an enterprise network that features devices that use both technologies.

Looking ahead to a better alternative

GSM is the world standard for mobile communications at the moment, but that’s subject to change in the near future. GSM’s heir apparent is known as Long-Term Evolution technology, or LTE. This is widely seen as an upgraded form of GSM that uses similar technology but offers enhanced data compression that improves voice quality and enables faster data transfer speeds.

LTE is clearly superior to both GSM and CDMA, and it is readily available in some parts of the world. However, the expansion of this technology into every domestic and international market will take some time. If you’re an international company with a presence in multiple countries and more than one continent, you could be waiting years before LTE is available in all your company’s locations. In the meantime, GSM and/or CDMA will be your best options.

For individual buyers, the choice between GSM or CDMA doesn’t matter much — the technologies’ differences aren’t significant at that scale. However, it can have a notable impact for enterprise organizations, which underscores the need for gathering price quotes and analyzing options.