3G race is decided
Author: 3GInvestor
Date: 08-23-02 14:44
linked to The Economist.
The 3G race is decided: Asia won, USA comes in second and Europe postponed its participation until 2003
Morgan Stanley, the famous investment bank, published a research report (report download) in early June, 2002, comparing the commercial success of the 3G technologies CDMA2000 and W-CDMA. The outcome of this report proves what Qualcomm and independent experts keep on preaching for a long time: wireless networks based on CDMA2000 1x and especially CDMA2000 1x EV-DO (Enhanced Version Data Optimized) are faster and cheaper to deploy than those ones based on W-CDMA. Moreover, the handsets, which are definitely a key success factor in the Mobile Economy Triangle, are cheaper in the CDMA2000 1x world, too.
The strength and fast diffusion of CDMA2000 benefit the Korean wireless providers SK Telecom, KT Freetel and LG Telecom, and the Japanese operator KDDI. In the U.S., the advantage is with Verizon Wireless and Sprint PCS.
South Korea leads the CDMA2000 space while NTTDoCoMo struggles
The majority of the more than 11 million CDMA2000 1x subscribers in the world come from South Korea. The market leader there is SK Telecom which enjoys a market share of 53.3% and served 16.5 million mobile subscribers as of the end of June 2002. Out of those, 6.7 million mobilieros own a CDMA2000 1X device. As for high speed wireless data, SK Telecom is a first mover, too, and launched the world's first CDMA2000 1x EV-DO network already in January 2002. Its competitor KT Freetel, number 2 with 10.1 million subscribers and a market share of 32,8 %, launched its CDMA2000 1x EV-DO network in May 2002, just in time for the FIFA World Cup. The third player in Korea, LG Telecom, also runs a CDMA2000 1x network and has got to total of 4.3 million subs which results in a market share of 13,9 %.
Looking at the subcriber numbers, Japan falls behind Korea. NTTDoCoMo introduced its 3G service FOMA (Freedom of Multimedia Access), based on W-CDMA, in October 2001. But the expensive handsets are single-mode and work only in the limited area of W-CDMA coverage. Therefore, DoCoMo still counted less than 130.000 FOMA users at the end of July 2002. Having launched its 3G service only in April 2002, the competitor KDDI runs away with 1.6 million CDMA2000 subscribers.
At the same time, it is not proven yet how much the data ARPU will be increased by the new high speed opportunities. DoCoMo, for example, published operational data proving that the main ARPU driver in today's narrowband environment is Java. The users of i-appli, DoCoMo's Java application provisioning service running on 9,6 kbps (503i handset series) or 28,8 kbps (504i series), spend twice as much on data packets and premium service commissions than normal i-mode users with non-Java devices. Thus, the success of low-bandwidth i-mode becomes one of the biggest dangers for 3G in Japan. The slower i-mode version is already really good which is why DoCoMo exports it to Europe and USA.
Qualcomm accelerates two U.S. cellcos to 3G
While Europeans always claimed they were ahead of the U.S. things have changed considerably in the meantime. Last week, the American wireless carrier Sprint PCS launched CDMA2000 1x. And its opponent Verizon Wireless, part of the Vodafone Group, upgraded its network to CDMA2000 1x already in the beginning of this year. Sprint calls its new 3G service PCS Vision and relies on the handsets provided by the Japanese manufacturers Sanyo, Hitachi and Toshiba and their Korean counterparts Samsung and LG Electronics.
The only American handset provider for PCS Vision so far is - you wouldn't believe it -Handspring which built a CDMA2000 1x chipset into the TREO 300 (at $ 499,- quite affordable) and, all of a sudden, offers the coolest smartphone on planet earth. mobiliser definitely ranks this one as being a member of dream device family or, better put, a must-have for the real wireless wizard.
European operators postpone their 3G launch in Germany
German operators have all postponed their UMTS launch until 2003. They give various reasons for postponing 3G operators and like to point fingers into the direction of the others. Recently, the CEO of Vodafone Germany, Juergen von Kucszkowski, has pointed out that the quality of early 3G handsets from Motorola and Nokia is not good enough. Instead of blaming Motorola or Nokia, Vodafone and the other European cellcos should look into partnerships with Japanese and Korean handset manufacturers if they are really interested in fast time-to-market. The Asians have got the experience of more than 10 million commercial 3G handsets and produce at very low costs and high quality. In the U.S., Sprint PCS and Verizon demonstrate agressively how well they understood this.
There might be other reasons behind postponing 3G. Among them is stretching the expenditures by building out the network more slowly. Or the intent to make as much money as possible with GRPS-based handsets and services. To extract a maximum amount of cash from today's infrastructure is a proper idea but European cellcos still have troubles with executing it. Implementing an i-mode type of business model which motivates content providers is hindered too often by inflexible billing systems or slow-moving management teams.
Already the first 3G operator left the German marketspace. Quam, a joint venture of Spanish Telefonica Moviles and Finnish Sonera, decided to stop investing any more money in their German GSM/GPRS operations. And it is fair to assume that this means they will never enter again as a 3G operator.
To sum up, CDMA2000 1x and CDMA2000 1x EV-DO experience a lot of commercial success in Asia and USA. The network is cheaper to build, handsets are cheaper to produce and, thanks to lower costs, services can be offered at lower prices to consumers. This quickly leads to the critical mass of 3G users which offers economies of scale and attracts a huge variety of content providers to join the party. This virtuous cylce is exactly what 3G needs in every market. Thus, mobiliser recommends European cellcos to check intensively if and how CDMA2000 can play a role in Europe, too.
www.mobiliser.org/article?id=45
The link to the Morgan Stanley report: 3gnewsroom.com
Kat |
