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Will CDMA Survive?

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VoicenData Bureau
New Update

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.

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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.

Players' Opinion



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.

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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."

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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.

Some of the visible growth drivers include low voice and

data tariff, as compared to GSM. Handset cost is also cheaper and this is a huge

differentiator when it comes to developing countries like India, where buyers

are price-conscious, especially those in villages. CDMA networks seem to have

done fairly well in terms of users' adoption in these markets.

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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."

Game Changer



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.

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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
  • Have a level playing field
  • Spectrum allocation policy
  • Make equal amount of spectrum available
  • Band for CDMA players in either of 450, 800, or 1900 Mhz bands, so

    that that the CDMA players can bid for this spectrum on an equal footing

    with GSM players
  • Auction for both CDMA and GSM players must happen simultaneously


CDMA Operator Concerns

  • Shortage of spectrum
  • Lack of clarity in spectrum allocation
  • Declining ARPUs
  • Limited choice of instruments
  • High price of equipments

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"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.

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"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.

Rude Shocks



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.

Upcoming Trends



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.

Arpita Prem



arpitap@cybermedia.co.in

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