againREVISED "Two Faces of Wireless"
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. |
