TDMA ops do not reveal full costs of GSM/GPRS
Global Mobile Issue 2, 30 January 2002
Recent contract awards indicating that Cingular Wireless' planned GSM overlay could cost close to US$4 billion, rather than the expected US$2.6 billion, have raised some eyebrows. But one point not widely discussed is that those contract awards cover only new GSM/GPRS/EDGE solutions, not the several hundred million dollars in additional TDMA-related infrastructure the operator is expected to need in order to enact its technology migration.
For instance, in mid-January both Lucent Technologies and Ericsson announced they would supply GSM/ANSI-135 Interoperability Team (GAIT) software to Cingular so subscribers will be able to roam between the operator's GSM and TDMA networks using a single handset. Neither Lucent nor Ericsson divulged the value of these newly disclosed GAIT contracts. A Lucent spokeswoman said the company is supplying its GAIT platform under a broad five-year general-purchase agreement with Cingular that was announced in October.
Ericsson will supply Cingular with its JAMBALA Mobility Gateway as an infrastructure foundation for GAIT phones. An Ericsson spokeswoman confirmed its GAIT contract is separate from a previously announced contract under which Ericsson will supply GSM/GPRS/EDGE infrastructure to Cingular. Though market speculation cast the value of the GSM/GPRS/EDGE pact at nearly US$2 billion, the Ericsson spokeswoman would confirm only that the contract is worth "at least US$1 billion." Similarly, Nokia has said it will get US$1 billion from Cingular for GSM/GPRS/EDGE infrastructure, while Siemens will get at least US$500 million.
But all that equipment can't be used unless Cingular sacrifices numerous TDMA channels at 800MHz in order to bring on GSM/GPRS, a task expected to incur significant capital costs. That type of cell splitting is not expected to be a huge issue for fellow TDMA operator AT&T Wireless because it's switching to GSM at 1900MHz, where the company has considerable virgin spectrum.
According to one source, to make room for a single 200KHz GSM carrier, a TDMA operator will have to clear at least seven 30KHz TDMA channels
If those channels carry three calls each, the result could be the loss of at least 21 TDMA voice calls in exchange for seven GSM calls. But the use of fast frequency hopping, common in GSM networks, demands more spectrum availability and can cause the sacrifice of additional TDMA channels.
U.S. consultant Andrew Seybold is even more pessimistic about the numbers, estimating operators need to take away eight TDMA channels to accommodate one GSM carrier. Assuming those TDMA channels are delivering four voice channels each, 32 TDMA voice calls could be sacrificed in exchange for seven GSM voice calls.
No matter how one cuts the numbers, the engineering task will be colossal.
What makes the chore more challenging is that markets at capacity, which many large Cingular markets are, will require additional TDMA cell sites simply because the existing sites don't have excess capacity that can be dedicated to GSM technologies. Ironically, it appears Cingular will have to further build out its TDMA networks in order to migrate away from them before eventually phasing them out.
"In a typical urban area, to migrate to GSM/GPRS, they have to overbuild," says Seybold. "Cell splitting is a polite way for saying they have to overbuild their network in order to keep their quality of service up and migrate to GSM/GPRS. They have to build sites that they don't need for TDMA because they've got to clear some TDMA spectrum. The only way they can do that is to build more sites than they really need and then do some cell splitting so they can clear the spectrum they need for GSM/GPRS."
The recently publicized contracts with Ericsson, Nokia and Siemens covered delivery of GSM-related infrastructure, not TDMA infrastructure. So, where is Cingular getting TDMA equipment for all the new cell sites it needs?
One clue might be the aforementioned five-year general purchase agreement between Lucent and Cingular. The contract covers "base stations, software and professional services" that allow Cingular to immediately increase capacity and coverage of its TDMA networks in 30 markets as well as have "investment protection."
The companies have not disclosed the value of this far-reaching contract, rumored to have TDMA cell-splitting and GAIT issues at its heart, but an informed source suggests the total is at least US$750 million. Also not accounted for is the cost of securing additional real estate where the new TDMA cell sites would be installed. Cingular declined to comment about costs related to TDMA cell splitting.
Complicating the engineering issues is the fact that GSM is less efficient than TDMA and will demand more base stations than are now built out for existing TDMA networks. Cingular's stance has consistently been that it can co-locate the two networks' transmitters, receivers and base stations, thus reusing existing TDMA towers. Analysts disagree. "Between CDMA, TDMA and GSM, it's always been known that it takes more GSM cell sites to build out a network," states Gartner research director Phillip Redman.
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