One of the most contentious battles being waged in the wireless infrastructure industry is the debate over CDMA and GSM. These two technologies have divided the wireless world into opposing camps. While GSM is clearly dominating the Indian market; CDMA is facing the rude shocks of declining ARPUs, shortage of spectrum, lack of clarity in spectrum allocation, regulatory discrimination, tough competition, and high prices.
GSM still has the upper hand. But industry players believe that CDMA has a lot of potential and the segment will flourish, provided operators are offered sufficient spectrum. They say it is the shortage of spectrum that caused leading operators in this space, like Reliance and Tata Teleservices, to embrace GSM too. It is also expected that the entry of technologies like 3G and WiMax will provide the required fillip to the CDMA market.
Today GSM is enjoying more than 80% market share with a subscriber base of around 335.5 mn. Whereas in June this year, CDMA crossed the milestone of 100 mn subscribers. According to the CDMA Development Group, the CDMA market is expected to add another 100 mn subscribers in the next two to three years. With a significant installed base, CDMA offers an attractive upgrade market and many OEMs are introducing feature-rich, high-end devices to tap this opportunity.
In August 2009, Samsung launched its first open market handset (OMH)-Mpower 699-in the Indian market. Almost all OEMs have plans lined up and more than half a dozen CDMA OMHs will hit the Indian market over the next six months.
According to Rajeev Batra, CIO, Sistema Shyam TeleServices, "The underlying strength of CDMA lies in superior data capabilities. Voice quality is definitely better. Besides, great coverage at lower costs, seamless packet data, greater capacity, and improved security are some of the growth drivers of CDMA space in India."
Commenting on the same, BV Raman, country head, CDMA Development Group says "On the voice side, superior quality of network and low congestion, compared to other choked GSM networks will drive growth of CDMA subscribers in the urban areas. In rural areas, superior network coverage and low costs would drive CDMA customers' acquisition."
The underlying strength of CDMA lies in superior data capabilities. Voice clarity, seamless packet data, greater capacity, and improved security are few growth drivers of CDMA
Rajeev Batra, CIO, Sistema Shyam TeleServices
A rationalized and level playing field on the spectrum allocation front-by the release of spectrum in 450, 800, or 1900 Mhz-will help
BV Raman, country head, CDMA Development Group
After bringing in affordability in voice tariffs and handset price, CDMA will drive affordability in the broadband and mobile broadband space
Bimal Dayal, VP & country manager, business development, Qualcomm, India & South Asia
"On the data front, all three CDMA operators have already launched high speed Internet access, using EVDO Rev A. This has seen phenomenal acquisition across the country for Reliance Netconnect Broadband Plus and the photon plus offerings. Sistema Shyam TeleServices too has launched EVDO Rev A. The competition from GSM has no matching offer and the CDMA operators have the head start," adds Raman.
Talking about growth boosters, Bimal Dayal, VP and country manager, business development, Qualcomm India and South Asia says, "The CDMA market will continue to expand with the entry of new players, as well as expansion of the existing ones. All CDMA operators have launched EVDO based mobile broadband service, and support the open market handset program that will offer choice and flexibility to change and upgrade handsets."
Globally, migration from 2G to 3G is well underway, and India is expected to follow a similar path. As 3G technology is CDMA, it also expected that the introduction of new age technologies like 3G and WiMax could be a game changer and shall provide the much required impetus to the CDMA market. "Primarily, CDMA has high speed data download capabilities, video call capabilities, etc, and these shall result into a paradigm shift when it comes to the communications scenario in the country," says Prem Kumar, CEO, India operations, Meridian Mobile.
Fly Mobile, with offering for CDMA technology, is excited about the 3G introduction. The company has come up with 3G CDMA (EVDO) phone-cum-pocket PC, called Ivory, which is available through MTS. The company has aggressive plans to launch more products based on EVDO Rev A standard.
Commenting on the 3G and CDMA Raman says, "CDMA 1X Networks being operated by all three private CDMA players are already 3G capable. With the launch of EVDO service, we have already moved to higher end of 3G. We just want an equal amount of spectrum made available to the CDMA players for offering world class service in 3G."
Entry of 3G and WiMax will enhance the focus on offering out more and more content like TV programs and other futuristic data applications to customers, and lead to data proliferation. 3G technologies are CDMA based, which means that the position of CDMA in India will be strengthened.
|CDMA Operator Demands|
CDMA Operator Concerns
"3G will be a mainstream service in India, and Qualcomm is working with its ecosystem partners to bring affordable 3G devices to the market. 3G will enable us to introduce new devices and services, that will bring in computing and Internet experience to devices that are primarily used for communication today. 3G USB dongles and data cards will open up a new consumer segment," says Dayal.
"There is limited space for WiMax in India when existing mobile players are well positioned to offer mobile broadband through EVDO or HSPA. Besides, unlike 3G, WiMax market is neither mature nor proven," he further adds.
Qualcomm is working to ensure that the benefits of 3G CDMA are realized by both urban and rural markets in India in order to bridge the current digital divide in voice and broadband teledensity. The company is working with OEMs to have 3G handsets across all tiers from entry level 3G handsets, smartphones, to high-end 3G handsets.
"Demand for low cost computing and Internet connectivity in India and across the world have only begun to be addressed. There is still room for innovation in this emerging market and we are very excited about the prospects in India," says Dayal.
But the path for CDMA to strengthen its position in the Indian market and compete with GSM technology is not an easy task. The biggest challenge this segment is facing is that of spectrum shortage. There is no clear roadmap available for CDMA spectrum.
Talking about the spectrum challenge Raman says, "The main challenge from our perspective as a CDMA Industry Association is to ensure regulatory parity with competing technologies. A rationalized and level playing field on the spectrum allocation front-by the release of spectrum in 450, 800, or 1900 Mhz-will help. This will show some forward growth path to the operators, who have invested in the technology."
Another major bottleneck is that of declining ARPUs, which are putting pressure on profitability. Telecom in India is highly competitive landscape, which has made product differentiation challenging.
Since the technology is new and shall take some time to become more broad based, the prices may seem to be high as of now.
One of the most evident trends is that users, for whom high speed data transfer matters as and when they are on the move, shall switch to 3G CDMA networks. The demand for it is slated to grow exponentially. Another major trend in the offing is the introduction of handsets that can be used on CDMA as well as GSM network. This shall offer immense flexibility to end users.
"On the standards front, CDMA as a technology is well equipped to migrate seamlessly to LTE,when the time comes. Leading CDMA players around the world would be the first to launch LTE based services ahead of anybody else. In India, wireless broadband will propagate and bridge the digital divide going forward," says Raman.
"Also, with mobile number portability coming in, we expect some churn of high end GSM users moving to a single voice and data solution, from the CDMA operators," he further adds.
The open market handset initiative, which has been launched in India, will create a robust value chain that will effect the entire CDMA mobile ecosystem and result in more freedom for subscribers. Open market handset initiative will increase CDMA handsets variety, improve device time-to-market, expand distribution channels, and reduce inventory risks.
Talking about the trends Dayal says, "After bringing in affordability in voice tariffs and handset price, CDMA will drive affordability in the broadband and mobile broadband space. CDMA will evolve to technologies like 1X Advanced, which significantly improves network coverage and capacity, and to 3G technologies like WCDMA and EVDO, which will trigger the growth of mobile broadband in India."
Major players in the CDMA ecosystem believe that the future of CDMA in India is very bright and data would be the main differentiator in the near future. Several moves recently like open market handsets initiatives, initiatives on roaming like the formation of international roaming hub, and forward path to LTE are making the picture little clear and favorable.
Even as the CDMA lobby seems to be optimistic about its future in India, looking at the current scenario, it appears that CDMA has still a long way to go.