09/14/2000
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Firms turn to nat'l competitiveness issue ahead
of 3G license application
With applications for the third-generation mobile telecom service licenses due
from Sept. 25, the biggest question now is how the three telecom companies
applying for the three available licenses will settle the technology standards issue.
The largest wireless company, SK Telecom (SKT), which had been vocal about
its desire to adopt the W-CDMA (wideband code division multiple access)
standard, has recently come out saying that it would delay 3G deployment to after
fall of 2003 when locally manufactured W-CDMA equipment will be available.
While Samsung Electronics and other CDMA (code division multiple access)
equipment makers find it difficult to accept that SKT would abandon CDMA
technology, a technology which it pioneered commercially, in favor of W-CDMA
technology, the latest word from SKT is seen as an offer of a compromise.
LG Telecom has said from the beginning that it would deploy W-CDMA service
using the technology being developed by LG Electronics, formerly LG Information
and Communications.
Korea Telecom (KT) continues to maintain that it would prefer to use
W-CDMA technology but has said on a number of occasions that it would go along
with the competing cdma2000 if SKT chooses to adopt cdma2000. All things
considered, the standards issue seems to ride on how SKT decides to proceed.
SKT's recent announcement that it would delay 3G deployment until the fall of
2003 is in response to concerns that W-CDMA service will result in the import of
most of the equipment, in detriment to the economy. It is expected that Samsung
Electronics would be able to complete development of W-CDMA equipment by
the fall of 2003.
"Operators are allowed to decide when to start 3G service. In order to protect
the domestic equipment market, we plan to commence 3G service after the fall of
2003 when Samsung Electronics will have completed W-CDMA equipment
development," said Cho Min-lae, vice president of SKT IMT-200 business strategy
team.
"Prior to the IMT-2000 deployment, we will be providing services similar to
IMT-2000 using IS-95C which will be available starting next month," he added.
The argument here is that while IS-95C will initially support a speed of
144Kbps, the technology will continue to evolve, eventually reaching a speed of up
to 2.4Mbps available through IS-95C. That should make the IS-95C service
competitive with 3G, also known as the IMT-2000 service, whose average
transmission speed is 384Kbps, according to SKT.
Even the Ministry of Information and Communications has projected that the
current second-generation mobile telecom service will co-exist with IMT-2000 for
quite some time, with demand for IMT-2000 outstripping 2G services only in 2007.
SKT reasons that there is no reason to rush IMT-2000 deployment in time for the
World Cup Soccer tournament in June 2002, given such market projections.
Because continued investment is required for IS-95C, the CDMA market will
be maintained, even if the company adopts W-CDMA, thus maintaining the
country's competitiveness in the CDMA market overseas, according to SKT.
Indeed, a number of Asian countries, including Taiwan, Malaysia and Indonesia
are looking to replacing the analog cellular service in the 800MHz frequency band,
called AMPS, with CDMA service. However, the potential CDMA markets there
are rather small, argues SKT, citing the example of Taiwan's Chunghwa Telecom.
The GSM (Global service for mobile communications) subscribers at Chunghwa
Telecom number some 3.5 million while AMPS subscribers total a mere 470,000,
making it likely that the Taiwanese telecom company would adopt W-CDMA for
3G service.
Hence, the argument put forward by SKT that having both W-CDMA and
cdma2000 technologies will maximize the country's export competitiveness. The
company also suggests that as the dominant wireless company with the most
experience in CDMA technology, if it leads the development of W-CDMA, it
would stimulate competition and ultimately hasten the development of W-CDMA
technology locally.
The company also points out that with the exception of the core chip, more than
90 percent of parts developed by local SME (small and medium enterprises) and
venture companies can be used in both W-CDMA and cdma2000.
Another concern, according to SKT, is that insisting on cdma2000 for 3G could
lead to a technological isolation, a predicament suffered by Japan in 2G. In fact,
even in Hong Kong, Thailand, the Philippines, Singapore and Israel where some
wireless operators offer CDMA service, the GSM markets enjoy an overwhelming
majority, making it most likely that the operators there would choose W-CDMA,
largely based on GSM, for 3G.
In China, China Unicom, which already operates a GSM network, is planning
the introduction of IS-95A or IS-95C. However, Chinese companies have already
developed IS-95A systems, with Korean business prospects there now limited to
joint ventures or handsets.
Furthermore, the second-largest wireless carrier in China is also likely to adopt
W-CDMA for 3G, given the vast size of the country and the need to roam with the
no.1 wireless carrier China Mobile, according to SKT.
Samsung Electronics has been the most vehement critic of the service operators'
decisions to adopt W-CDMA. The largest CDMA equipment maker here argues
that it would be difficult for local companies to acquire the same level of W-CDMA
technology that European and Japanese company have already developed.
Because the current W-CDMA technology standard includes much of the
standard developed by Japan's NTT DoCoMo, it would be possible to
manufacture W-CDMA equipment here only after the fall of 2003. Exports, the
company argues, could only come after 2005. Even then, export to the European
and Japanese markets would not be possible, severely limiting the overseas market,
according to Samsung Electronics.
Pointing out that early entry is a key to success in the telecom market, a
Samsung Electronics official said, "In the case of IS-95C, we are able to market
our products about three months ahead of Lucent Technologies, and six to ten
months ahead of Nortel Networks and Motorola."
The company also questions whether W-CDMA and cdma2000 will indeed
take 80 percent and 20 percent of the 3G market, respectively, as projected by the
industry. How the cdma2000 market performs depends largely on how the country
decides on the technology standard, according to Samsung Electronics.
When Korea deployed cdmaOne in May 1996, the CDMA market was limited
to three countries, but that market has now grown to 44 countries and 20 percent
of the global market, the company points out.
Even global roaming, a main argument for W-CDMA advanced by telecom
operators, should not be a problem since dual mode handsets that can roam
between W-CDMA and cdma2000 networks will soon be available, according to
Samsung Electronics.
The country enjoys world-class status in the CDMA market and CDMA
technology has contributed tremendously to the local economy, resulting in 3.1
trillion won in production, 330,000 jobs and 1.1 trillion won in added value,
according to Samsung Electronics. It is also responsible for creating some 20,000
parts makers.
Based on such figures, the company projects that CDMA exports this year will
amount to $4 billion, with surplus of $2.5. CDMA has been a major vehicle in
rebuilding the country's economy, it argues.
"It is improbable that service operators will all opt for W-CDMA standard,
giving away the 7.5 trillion won domestic market to Japan and other foreign
countries, when we have the world-class CDMA technology," an industry official
said.
Updated: 09/14/2000
by Kim Hoo-ran Staff reporter
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