CDMA: As Data Comes to Fore…
CDMA will grow, but not enough to compare with the GSM subscriber base, till 2005
Sunday, January 12, 2003
Access to information anywhere, anytime is the success mantra in today’s competitive global business environment. Mobility is the keyword. Corporates and individuals alike are constantly finding out ways and means to remain in touch with the people, and have access to information that is vital to their survival in this highly competitive environment. To get ubiquitously networked with the desired levels of security as well as fast access to information is the need of the hour. In other words, they are looking for an ‘always on’ wireless Internet.
Now let’s take a trip back in time and evaluate how wireless networks have evolved so as to understand the major drivers of wireless technologies of the future and the evolution paths available. Looking at the technology maturity curve, one can find that analog wireless technologies like advanced mobile phone service (AMPS) used in the 1980s are on the decline. Likewise, 2G digital wireless technologies of the early 1990s, which used time division multiple access (TDMA) based digital technologies, are facing a similar trend. TDMA emerged as the North American standard for wireless communication and was widely used. Global Standard for Mobile Communications (GSM) evolved as a standard and was widely used since voice was the prime driver of networks at that point of time. Meanwhile, CDMA has evolved and grown very rapidly as a spectrally efficient technology.
Today, GSM has reached a stage of maturity as the global traffic trends indicate that the shift is from voice to data. GSM is an older technology and is used worldwide, while CDMA started being used as a wireless technology much later than GSM. Following the evolutionary path to 3G, both GSM and CDMA are evolving fast and their 3G versions. Universal Mobile Telecommunications System (UMTS) and CDMA 2000 (known as 1X) are being introduced slowly in many parts of the world.
According to EMC Cellular, today the total number of wireless subscribers is around 1,290 million and it will increase to 1,740 million by the year 2005. Besides, a breakup of the total figure indicates that GSM accounts for the 847 million, 1XRTT accounts for 197 million, TDMA accounts for 133 million and other technologies account for 113 million subscribers. EMC Cellular’s forecast figure for 2005 pegs GSM/GPRS users at 964 million, UMTS at 37 million, 1XRTT at 390 million, TDMA at 106 million and others at 221 million. Clearly, the 97 percent rise in the user base of 1XRTT suggests that the adoption of 1XRTT will be faster than any other wireless technology.
But when we look at the average revenue per user (ARPU) globally in wireless networks, they are constantly decreasing. This is primarily due to rising competition, which is pushing the price margins down. In India too, ARPU decreased on an average of 6.1 percent between December 2001 and March 2002 in the postpaid segment, and at 9 percent in the prepaid segment.
Another trend globally is that info appliances like smart phones, e-books, PDAs, and handhelds are finding increased adoption and are likely to surpass the shipments of PCs worldwide by this year. The major business driver for this shift is the increasing need for access to information, coupled with mobility. Therefore, operators are looking forward to creating customer value that produces better margin for their service.
Globally, operators like NTT DoCoMo have been able to address the declining ARPU by switching over to a business model that encompasses voice and several other applications as add-ons to the voice business. The business model for the future is likely to shift from a predominantly voice-based model to a more holistic model involving voice, data, advertising, e-commerce, and other services. The upcoming next-generation wireless technologies will provide platforms for operators to leverage the existing revenue streams and applications, and ensure revenue continuity. They will also provide a platform for the introduction of several new applications and services, which will provide new revenue streams to operators. Some of the services that will create value in terms of margin to service providers are music-on-demand, unified messaging, e-mail with attachment, two-way video, video-on-demand, and so on. However, these services require high bandwidth to ensure quality customer experience.
There are evolution strategies in place for both GSM and CDMA. While GSM operators have evolution options that let them migrate to EDGE and UMTS, CDMA operators have evolution options from IS-95 to CDMA 2000 to 1xRTT EVDO (evolution to data only) and 1xRTT EVDV (evolution to data and voice).
For CDMA IS-95 operators, CDMA 1XRTT is the next evolution and is relatively an easy upgrade. It also provides at least 1.5 times more capacity for voice over CDMAone. Besides being easy to deploy and upgrade, it provides better coverage and can share the network with CDMAone. Operators can reuse their existing billing systems and BackOffice infrastructure to support the 1XRTT network. This will mean lower capital investment while they choose to upgrade to 3G networks. 1XRTT opens new sources of revenues like e-commerce, e-media subscriptions, advertising, and entertainment including voice and data access for operators. 1XRTT provides good data speeds to a maximum of 153k. The next generation of CDMA, 1XRTT-EVDO provides even better data rates of up to 2 Mbps.
While upgrading to 1XRTT, operators can reuse the spectrum allocated for their CDMA operations. This translates to a no-cost upgrade as far as spectrum allocation costs are concerned. CDMA can provide excellent battery life because of the lower power consumption in CDMA handsets. Moreover, CDMA-based networks have the potential to optimally use the spectrum allocated, thus enhancing the spectral efficiency of the network.
While this is the outlook for 3G in countries like India, certain critical aspects need to be considered. These include the growth in demand for data services; the creation of applications like photos, music games, and corporate secure mail for specific markets; and the availability of handsets with next-generation features at affordable prices.
Siva Ramamoorthy, manager (strategic wireless Internet programs), Nortel Networks |
