REVISED "Two Faces of Wireless" as revised
Two Faces of Wireless--First is user experience and second is Operator profitability
FACE 1--User Experience
High data rate is a way of providing a satisfactory user experience. Streaming music video, Picture phones,
and GPS location map functions require it.
a) MOBILE ENVIRONMENT OR FIXED ENVIRONMENT
1XRTT provides good user experience with Rev 0 at a 153 Kbps data rate and an even better user experience
with Rev A at a 307 Kbps data rate. 1X EVDO provides a superior user experience at a 2.4 Mbps data rate
and a future 4.8 Mbps data rate. GPRS also provides a fair user experience with average 30 to 50 Kbps data
rates.
b) FIXED ONLY ENVIRONMENT
In a fixed location, 802.11b is very capable of providing good user experience at perhaps 12 Mbps
FACE 2 --Operator Profitability.
Broadly speaking, it is the data capacity of the cell sites that determines operator profitability. Operators must
make a profit if they are to survive. Because they compete with each other to provide similar services, they
must sell their data capacity at prices not too terribly different from each other. For different operators,
covering a set area in a medium city, $100 million or so may provide adequate cell sites to cover the city.
However, for a CDMA 1X RTT or 1X EVDO operator, the capacity provided would be several times the
capacity provided for a GSM/GPRS operator. Thus, with an equal investment in cell sites, the CDMA
operator has the potential to receive several times the revenue received by the GSP/GPRS operator.
1) MOBILE EVNVIRONMENT OR FIXED ENVIRONMENT
The CDMA2000 (1XRTT) service provides a very large data capacity. The 1X EV DO service provides an
even
greater data capacity. UNFORTUNATELY, the GSM/GPRS service provides a very small data capacity.
2) FIXED ENVIRONMENT
The 802.11b service provides a very huge data capacity
Given this situation, in a mobile environment, both the CDMA operators using 1XRTT or 1X EVDO and the
GPRS operators can provide a satisfactory user experience for limited video user applications. For highly
demanding streaming music video, GPRS just doesn't do well. A GPRS operator can spend more money and
convert to W-CDMA and provide a little better experience than 1X RTT. Unfortunately, the GPRS operator
cannot even come close to the potential revenue stream of the 1X RTT or 1XEV DO operator. THIS IS THE
RUB!!
In a fixed environment, GPRS still fails to compete economically, but it is possible for the GPRS
Operator to install seamless blanket 802.11b coverage in fixed locations such as office buildings,
airports, restaurants and public places. The GPRS operator can thus make a profit on
high data rate applications in those fixed locations. On the other hand, the CDMA 1XRTT or 1XEV DO
operator can also supplement his capacity in a fixed environment by offering seamless 802.11b.
It is because of the GSM/GPRS capacity limitations that we see Voice Stream, realizing that its GPRS
just doesn't have the capacity to allow it to compete profitably. To relieve this problem, Voice Stream is
contracting to have 802.11b installed in public locations. Recently VoiceStream contracted StarBucks to
install 802.11b in their coffee shops. VoiceStream hopes that, If GPRS won't compete economically in a
mobile environment, at least supplementing it with 802.11b will allow them to compete profitably in a fixed
public location. Unfortunately for VoiceStream Boingo is now providing 802.11b competition on a nation
wide basis. Small 802.11b operators can simply affiliate with Boingo and have their 802.11b service
marketed nation wide. Boingo could conceivably even offer the service through Sprint or Verizon (because
QCOM ASICS do incorporate
802.11b reception).
Thus the "3G on the cheap" strategy of VoiceStream is a little fuzzy because it
appears to have little competitive advantage in fixed locations (because 802.11b will be available to all
operators) and a huge competitive DISADVANTAGE in mobile situations (because GPRS provides operators
with such a low data capacity). Clearly Boingo, if it grows, will become an acquisition target for the GSM
operators.
The more sane solution for GSM operators is to simply switch to Qualcomm's new GSM1X interface rather
than follow the GPRS/WCDMA path. This way, the GSM operators acquire the CDMA air interface with its
huge data capacity and can immediately compete profitably with CDMA 1XRTT and CDMA 1X EVDO
operators.
In Europe, where socialism and national industrial policy discourages competition, GSM operators will only
need to compete successfully with each other.
Thus GSM/GPRS operators will have increasing difficulty remaining profitable in countries where they go
head to head against CDMA. However, countries must adopt CDMA if they are to have the benefits of
applications requiring high data rates. It is in the US, Latin America and Asia where we see CDMA
competing directly with GSM/GPRS. If consumers love the rich multimedia applications, then GSM/GPRS
will face an impossible competitive situation situation. Even voice only competition will be tough for
GSM/GPRS because CDMA1xRTT simply has much greater voice capacity per cell site. |
