CDMA: Will This C Change India?

A 1,000-line CDMA exchange was set up in Bhikaji Cama Place in 1997 as a
pilot. Its successful operation prepared the necessary ground for the launch of
CDMA services in India. An incremental growth saw the base of CDMA subscribers
reach 0.76 million by 2001—02.

The current fiscal promises to bring in a dramatic growth for CDMA–a
whopping 552 percent rise in numbers is likely to lead to 2.4 million

lines (VOICE&DATA estimates). In fiscal 2003—04, India is expected to
have 8.7 million subscribers. CDMA is surely coming out of the shadows of GSM
and the incumbent technology a tough fight.

And what’s going to be the outcome?

Will the developments lead to the CDMAization of India? Or will CDMA act as
a catalyst for the overall growth of mobile services in the country?

CDMA, as a technology alone can’t improve the delivery of mobile services,
but a set of determined players, along with a supportive policy, can.

Data Applications Possible with CDMA Daily Downloads: ringers, characters, images, and horoscopes Real-time Stock Quotes: of different stock exchanges Text Communications: chat, instant messaging, SMS, e-mail, message board, and member search Sending Photos Over-the-Air: MMS messages  Position Location Services: navigation assistance, and friend finder Games and Entertainment: magazine and comic book store All these services are already being offered in South Korea and Japan

So let’s revise the question: Will the new CDMA players, Reliance and Tata
(as also the incumbents BSNL and MTNL) change India? And to do that, are they
determined enough to float full-featured CDMA services over their networks
across India?

And let’s evaluate the offerings against the three Cs–coverage, cost and
content.

Coverage

Reliance Infocomm announced the big-time launch of its CDMA network on 27
December 2002. The service is going to be targeted at all populations–urban,
semi-urban, and rural. According to Mukesh Ambani, the service will initially be
available in 637 town and cities but will eventually cover 2,000 towns and
cities and around 640,000 villages. The company is planning to add a cumulative
base of around 5 million subscribers every year in the 18 circles where the
company can operate as a fixed service provider (FSP).

Tata Teleservices also has ambitious plans. It plans to capture 6 million (wireline
and wireless) customers by 2006 and 12 million by 2011. And a majority of its
customers will come from CDMA. The company started its WLL (M) service in Andhra
Pradesh with an IS-95 system but recently upgraded it to CDMA 2000 1x that
supports speeds of up to 144 kbps.

The
company has already launched WLL (M) services in new circles of Karnataka, Tamil
Nadu, Gujarat, and Delhi. Even in Maharashtra, where it has acquired Hughes
Tele.com, the company is planning to launch services in the next fiscal.

BSNL and MTNL too have grand CDMA plans. During the Tenth Five-year Plan
period, BSNL intends to add anywhere between 6.2 million to 10.3 million WLL (M)
connections across the country. MTNL is planning to add more than 110,000 lines
every year in the same time frame.

Smaller CDMA plans of players like Shyam, HFCL, and Bharti are also there.
Soon, a service that was earlier being provided in pockets of Rajasthan, Punjab,
and Andhra Pradesh, only by private operators, will be available in all circles
in the country, excepting J&K, A&N, and the Northeast. So, now the net
addition will increase from 0.11 million every year to 0.36 million every month.
However on a comparative scale, GSM is adding around 0.75 million subscribers
every month. So, CDMA players will have to work a lot harder on the number
front.

Reduced TCO

For the subscriber, the total cost of ownership (TCO) has fallen
significantly in the recent past. Tata Teleservices had earlier brought it down
from Rs 13,445 to Rs 8,049 (Rs 6,999 for the handset and Rs 1,050 for activation
charges). The monthly rental remains an additional Rs 600. Reliance has further
pulled the TCO down to around Rs 3,000–Rs 5,000 less than that offered by Tata
Teleservices–provided one opts for a lock-in period of three years. Otherwise,
the TCO comes to around Rs 6,600.

In case of cellular services, the TCO works out to be Rs 5,499 (Rs 3,000 for
the handset, Rs 1,500 as security deposit, and Rs 999 as activation charge). It
is expected that prices will further come down as and when the services
progress. The handset price, currently hovering around Rs 6,000, will reduce by
Rs 500—1,000 every year due to the change in duty structure, increase in
demand, and increase in competition.

With CDMA, one also has the benefit of availing high-speed services like
video clips, streaming video, MP3 services, and Internet browsing at 144 kbps.
One can also download 200 games, buy and sell stock, do m-shopping and m-banking
with the click of a button. If one opts for a similar service in GPRS, one has
to pay a minimum of Rs 9,000 for the handset. This is three times of what
Reliance is charging for the CDMA handsets and 1.28 times of what Tata
Teleservices is offering. Moreover, GPRS can provide a speed of only 20 kbps
whereas CDMA offers speeds up to 144 kbps.

Content

Reliance Infocomm, under the Dhirubhai Ambani Developer Program (DADP), is
trying to build a platform where ideas can be converted into applications. It
aims to bring 100,000 developers under the umbrella of this program. To begin
with, a total of 1,000 developers have enrolled with Reliance Infocomm as part
of the program.

Even Qualcomm India is actively promoting its BREW platform among the
developer community in India. The program aims at harnessing the potential of
small but talented developers located in smaller towns and cities. They get paid
for the content if any carrier in any part of the world is utilizing it.
Qualcomm has taken the cue from the failure of WAP services. WAP was a good
technology but there was no model to give revenue back to the developer of the
content, and therefore, one didn’t see sufficient amount of content
development taking place.

It’s only a matter of time that applications like SMS will be allowed on
CDMA. In fact, even cellular service providers had to take permission from TRAI
when they first planned to give SMS to their subscribers.

On the ongoing dispute between WLL (M) and GSM, the Supreme Court has
referred the matter to the telecom tribunal for reconsideration, with special
emphasis on the question of level-playing field. It seems in this war of GSM and
CDMA, GSM service providers will manage to get some concessions and hence be
able to compete better with Reliance’s CDMA pricing. However, when it comes to
high-speed content, CDMA will continue to have a distinct edge.

CDMA, as a technology, has all the success ingredients. And with players like
Reliance, Tata, BSNL, and MTNL adopting it in a big way, it looks all set to
become a powerful vehicle of change as far as the Indian mobile landscape is
concerned.

Countrywide rollouts of affordable CDMA services can very well push
teledensity in the country beyond NTP’99 targets. Cheaper pricing of CDMA
services will put pressure on GSM players, and eventually on the fixed-line
operators. This will make telecom services more affordable for the common man.

Call that the beginning of the change!

Pravin Prashant