The following is dated article but is pertinent to the WLL/mobile discussion. Note the Quote by a GSM official in BOLD.
Those who live by technology...
ACellular operators run scared as MTNL brings in new technology that is making waves around
the world. Josey Puliyenthuruthel reports
Last Wednesday, Chris Weston-Simmons, executive director of Willis Faber & Dumas, a London-based
insurance firm, packed a lot of passion into his six foot-three frame when he told a 100-strong audience attending
a telecom seminar, “We insurance companies hate new technologies.”
He should know. After all, as the joke goes, the last person off a sinking ship is not the captain, but the insurance
man. This time around, however, Weston-Simmons was not the only technophobe in the conference room.
Barely two years after GSM (global system for mobile communications, a European digital standard-based
mobile telecom service) was introduced in the country, there is a new technology on the shelf which threatens to
throw the business cases of cellular operators out of the window: CDMA-based wireless systems. CDMA is the
acronym for code division multiple access, an extremely efficient signal modulation technique used in US satellite
and defence applications in the late '60s.
CDMA, along with other wireless technologies like the European DECT (digital enhanced cordless
telecommunications) and Japanese PHS (personal handyphone system), has redefined mobility in telecom and
succeeded in blurring the distinctions between GSM-based and wireless in local loop (WiLL) services. The use
of DECT systems is just starting in India on an experimental basis, while PHS has not been allowed in yet. With a
lead into the market, CDMA has awakened investors, potential operators, bankers and, chillingly for the GSM
operators, customers, to new avenues of mobile communications.
It has been a controversial technology since 1992 when it went into commercial trials, embarrassingly so for
Qualcomm, its San Diego-based pioneer. The initial field trials did not achieve the benchmark capacity and range
standards that the $2 billion US telecom company claimed it was capable of. But, prolonged teething years later,
it has some 2.5 million users — mainly, cellular — on its honour rolls the world over.
Perry La Forge, the executive director of CDG — the CDMA Development Group, a grouping of 75 CDMA
equipment manufacturers and service providers — sets the total number at 4.5-5 million this year. “Last year was
commercialisation, this year it will be globalisation,” he predicted to the Business Standard in June. Adds B A
Mazumdar, Qualcomm vice president, India operations, “People can say what they want about it, but CDMA is
here to stay.”
Interestingly, the threat to GSM-based cellular technologies is not coming from CDMA cellular systems, but from
the latter's WiLL applications. WiLL does away with the need for cables going into homes. Instead, it has a
wireless connection to the exchange through a small antenna attached to the phone. Qualcomm has set up a
1,000-line CDMA based experimental system in Delhi for Mahanagar Telephone Nigam Ltd (MTNL, the
state-owned provider in Delhi and Mumbai). The technology, which was clouded in controversy due to repeated
failures during trials, is finally on offer to subscribers.
Two radio towers in the capital, with a range of 6-7 km for mobile handsets (which come in the same size as
normal cellular phones) and upto 25 km for fixed wireless phones (like normal phones sans wires), ensure
coverage across most of Delhi. Much to the consternation of the two GSM operators in Delhi — Essar Cellphone
and Airtel (the Bharti Cellular brand) — MTNL allows ‘handoff' between the two cellsites. That is, a subscriber
moving from the footprint of one radio tower to another can carry on a conversation without being interrupted.
The result: “A user can move from Connaught Place to Nehru Place (both busy commercial areas in Delhi),” says
Mazumdar.Coupled with low airtime usage charges (Rs 1.40 per three minute call compared to about Rs 20 on
GSM networks), the WiLL service has had a decent response despite MTNL's tepid marketing efforts. Of the
1,000 available lines, nearly 500 have already found takers. And this despite a steep Rs 25,000 refundable
deposit.
All with good reason. For a heavy user (with a monthly usage of 500 minutes), the monthly WiLL bill works out
to one-third her GSM cellular bill. The price-value equation gets further skewed if the trend of users carrying
their fixed wireless phones in their cars moves north.
Says Mahesh Swami (name changed for tax reasons), a South Delhi businessman: “My monthly bill comes to
about Rs 7,000-8,000. There are days when I end up speaking for as much as 100 minutes on my mobile (phone).
I want details of this CDMA thing.” Heavy users like Swami — who constitute 10-15 per cent of the total
subscriber base — are the ones who account for more than 50-60 per cent of the revenues of GSM operators.
Losing them would directly pinch at the bottomline.
Not surprisingly, alarm bells have set off in the corner rooms of cellular operators' offices. Says Akhil Gupta,
CEO of Bharti Televentures, the holding company of the Delhi-based group's telecom service ventures: “We are
going to ask DoT what this service is. Is it a cellular service which MTNL has a right to enter into? Or is it a
WiLL service, in which case a handoff between cellsites should not be allowed.”
Gupta, however, is in two minds because a group company, Bharti Telenet, which has the basic telecom services
licence in Madhya Pradesh, was the project which first adopted CDMA WiLL technology in the country!The
writing on the telecom wall is certainly not encouraging for GSM operators. For, as Nanda K Menon, assistant
director, Jardine Fleming India Securities points out, these are competing technologies offering mobility.
Precisely with this objective — and the fast deployment it enables — in mind, most basic operators are opting for
CDMA-based WiLL systems.
Even if DoT were to ban handoff between CDMA cellsites, the fact remains that most of the smaller cities and
towns in the country can be covered with a single radio tower. In other words, Bharti Telenet could cover most of
Indore with a single tower offering mobility. The downside then would all be with Reliance (Cellular) and RPG
Cellcom, the two cellular operators in Madhya Pradesh.
However, CDMA is not without its limitations. The capacity of a single tower is limited, restricting the the
number of subscribers who can be served. But analysts point out that the user base in smaller cities and towns
will be in four digits for some time and usage will tend to be low. Further, dual mode handsets which can be used
both on GSM and CDMA platforms are expected to arrive in the markets in two years, allowing users the best of
both worlds.
Telecom purists like GSM equipment vendors point out that roaming between cities and circles is not best served
on CDMA systems. Says a manager with a European telecom equipment major which, like other vendors on the
continent, is sceptical about CDMA, “GSM is the most advanced mobile technology with superior features not
matched on any other platform. CDMA doesn't work in fast moving cars.” True, but as the past two years have
shown, the Indian consumer is extremely price conscious and will opt for the most cost-effective solution which
suits her needs best.
What about DECT and PHS? The former is just being introduced in the country and, if vendors are to be believed,
it is less costly than CDMA systems. But an industry source makes a telling comment: “Of the seven basic
operators, except for one (Hughes Ispat), all others are opting for CDMA systems.” Even the department of
telecommunications plans to go in for a 60,000-line CDMA WiLL tender.And PHS and other wireless
technologies? Well.
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