GSM/3GSM v. CDMA2000 and IS-856 (DO)
Tinker,
<< What is the motivation do you think for this predominance of GSM? Is it simply that the equipment is proven, readily available, and less expensive, and that any increased spectral efficiency is not worth the cost of moving to CDMA? Or is it simply adopting the worldwide standard? >>
All of the above and more. The 3GAmerica's whitepaper I linked in the prior post supplied their (obviously biased) answers to that question.
My short answer is that as they work through a decision matrix carriers are evidently able to discern that GSM/3GSM is a more robust, powerful, and flexible platform for voice and data than CDMA2000, and over a networks life span potentially a more cost effective solution. They base decisions on platform rather than air interface.
I do believe that the gap between the capabilities of the two technologies is narrowing considerably and by 2007 or 2008 there won't be too much difference. Unfortunately third generation technology choices will have all been made by that time, and will favor 3GSM at least 4:1. After decisions are made in China next year there is only the rest of the late majority and a few laggards to make choices.
In an article titled "Wireless Watch On Being Gildered" author and wireless journalist Grahame Lynch gave his answer to your question when he responded to the technohypesters scathing attack in the Wall Street Journal on AT&T Wireless's November 2000 choice of migration path to WCDMA:
"Gilder forgets that there is a big difference between an air interface and a standard. CDMA is a superior air interface to TDMA, but cdmaOne is not a superior standard to GSM. This is why the TDMA fraternity is frantically attempting to converge its back-end systems with GSM, which has the lead when it comes to roaming tables and databases, messaging protocols, billing procedures and subscriber identity modules. These standards enable GSM operators to earn lots of margin-heavy extra cash. ... It’s also no coincidence that the cdmaOne alliance is working hard to develop interoperability with GSM standards, given that cdmaOne operators are largely denied access to the $12 billion international roaming market as a result of their original failure to create an effective numbering plan."
Eventually over time the world will move to CDMA or WCDMA or CDM/TDM hybrids like 1xEV-DO or 3GSM UTRA TDD for the increased spectral efficiency and data rates it can provide but that move has to be cost justified and the business case for doing it constructed, so at this point in time it’s really difficult to assess the pace of transition, and obviously both the pace and the scale affects our Qualcomm investment. At the end of this decade there is going to be a large GSM GPRS and EDGE base still unconverted to WCDMA, although hopefully the vast majority of handsets will be backward compatible to GSM GPRS and EDGE but will be WCDMA enabled - but what the percentage will be is a question mark.
<< I have some concerns about W-CDMA adoption >>
Well, you can join my club then. <g>
I'm not concerned about W-CDMA adoption per se, since ~120 network carriers have already adopted it, are in various early stages of implementing it, and double that amount have chosen a migration path that will allow them to adopt it at sometime in the future.
I am simply concerned about the pace and scale or buildout and rollout of the technology and I am convinced it will not occur as fast and as furious as some others believe.
It's not an IF thing. Its a When and How Much thing.
<< W-CDMA adoption ... I do firmly consider this to be in the CDMA camp. >>
IMJ would be quite pleased. <g>
Rather obviously I place it in the CDMA camp for purposes of determining the revenue potential of Qualcomm's royalty stream, although I separate it from CDMA2000 for purposes of examining chipset market share.
For applying gorilla gaming principles, however, I place it where it belongs, in the GSM family since it is a comittee-based open architecture and standard and the architecture of WCDMA is a dramatically different than the architecture of CDMA 2000, and Qualcomm has no control over the technology or the value chain that has formed around it and consequently accrues no competitive advantage.
<< The handsets are suppose to be more expensive than they would be had everyone been sensible enough to toe the Qualcomm line >>
Toe the Qualcomm line? Doesn't Qualcomm wish? As a matter of fact, in October 1998 Qualcomm published their 5 (architectural) Principles, and threatened to use their IP to block WCDMA if manufacturers didn't "toe the Qualcomm line." That didn't last long.
Very few major communications equipment manufacturers would take leave of their senses long enough "to toe the Qualcomm line," if they could possibly avoid it.
Paying royalties on IPR is one thing. Consciously allowing a single company to control a technology's architecture and resulting standards would be absolutely insane and would initiate destruction of shareholder value for those companies "toeing the line."
The Finns, the Swedes, the Germans, the Koreans (who once made that mistake), and the Japanese, the Chinese, might speak a different native language than you or I, but they are not insane.
<< I am very concerned with the W-CDMA premium. Do you see any of this taken into account with W-CDMA adoption rates? >>
Yes. 3GSM WCDMA handset prices will, however, dramatically and quickly decline within 12 to 18 months after meaningful volume ramps commence - hopefully in H2 04. We won't see meaningful hypergrowth till handset prices are comparable to today's 1xRTT handset prices and we won't see mass market till they are at or below the price of todays GSM GPRS handsets ...
Initially, however, WCDMA will be geared to high end users, and as a consequence, even in volume we are talking high ASP, and that will limit adoption in the early stages.
<< EDGE is often scoffed at, laughed at >>
Laughing and scoffing is simply an unskillful method used to attempt to instill Fear, Uncertainty, and Doubt.
There are many unskilled Fudsters residing in Wireless Valley and its environs.
In the EDGE case, Gilder kicked it off, then the "Boss" added his 2¢ at CTIA Wireless 2001 and Qualcomm's ad hoc marketing head was still scoffing at the 3G World Congress early this month, 2 weeks before AWS announced their nationwide EDGE launch covering 214 million POPs out of the 250 million they cover with GSM:
"The reasons that CDMA 2000 is successful is exactly the reasons that EDGE will fail miserably." - Perry LaForge for CDG -
I'm not sure that he was scoffing 2 weeks later, but if so, he'll probably be scoffing much less at this time next year.
The brutal fact is that the combined subscriber base of carriers that have already committed to EDGE is larger than the entire worldwide CDMA subscriber base and we may have only seen the tip of the iceberg relative to EDGE adoption. EDGE is in play but we can not yet determine to what extent EDGE will retard WCDMA proliferation. It will probably affect pace and scale. In Italy, TIM will complete their nationwide EDGE rollout in 900 and 1800 MHz by the end of 2005 even as they rollout WCDMA in 2.1 GHz. They will not be the last major European 3G licensee to do this. EDGE is a wild card.
<< In your opinion, how inferior do you think EDGE will be, practically speaking, to EV-DO? >>
At this early stage of mobile wireless data implementation and adoption, and although data transmission speed plays a role in that adoption, adoption is about much more than speed.
From a technology adoption POV I think that 1xEV-DO will be markedly inferior to EDGE - which will be adopted on much wider scale.
Since I'm more into technology adoption than the glamour of technology per se, I'm not yet overly convinced that this rather proprietary DO technology (compared to CDMA2000, 0, A, B, C, D) is going to contribute substantially to enrich my Qualcomm investment - although I'm willing to be convinced that it will.
The only inferiority EDGE has to 1xEV-DO Release 0 is downlink data transmission rates. and that difference is of course sizeable. In that regard IS-856 blows EDGE or WCDMA (without the HSDPA extension) away. To some individuals and particularly corporate business types that could be very important. It creates a big pipe but on the downside it does so at the expense of spectrum that could otherwise be used for voice (and data), and that will limit its adoption.
Speed aside, technically EDGE has some marked advantages over 1xEV-DO Release 0 which offers no QoS, no multitasking of voice and data, and not even the capability to pause a data session to take a voice call then resume the data session, and has very week integration with CDMA2000 and as a consequence must be managed separately. This is one of the issues Oliver Valente CTO of Sprint PCS has raised. IS-856 Release A - which is maybe 1½ to 2 years away from commercialization, promises to improve on that integration.
With your new CDMA Treo (how do you like it?) if you're in a data session and somebody tries to reach you their call goes to voice mail. That's inconvenient to say the least, and it's not the case with the GPRS TREO and it won't be with an EGPRS TREO. We are back to that air-interface rather than platform for services thingie.
<< The only way to remove an existing standard is to bring in something enormously better. Do you see this happening as Verizon and Sprint offer speeds (and hopefully services) that run circles around EDGE >>
When do you think that Verizon and Sprint will offer these speeds and nonexistent services that run circles around EDGE and when do you see those speeds being meaningful to the consumer, the majority of whom currently use mobile wireless telephony for voice and messaging?
Outside of Korea and Japan we don't know when and on what scale either IS-856 or evolved CDMA2000 are going to be deployed. In the interim, and before we put a horse before the cart, EDGE will compete right nicely with 1xRTT Release 0 (or release A if its ever implemented) although in reality EDGE needs a year to mature through network optimization and tuning and needs a much broader menu of available handsets than what is currently announced.
<< or might EDGE have staying power much longer than any QCOM owner might like to see? >>
EDGE will unquestionably have great staying power. It is simply GSM GPRS evolution. GPRS on steroids. EGPRS is as much a "no brainer upgrade" for GPRS networks operating in 850/900/1800/1900 MHz as 1xRTT was for IS-95B packet networks or even IS-95A csd to 1xRTT upgrades.
Every major GSM handset vendor will follow Nokia's lead and have the majority of their handsets EGPRS capable by end of 2004 or early 2005 and that includes their 3GSM WCDMA handsets, so that particular issue or barrier is simply not in play.
The question, as it relates to incumbent European and Asian carriers that are licensed for 3G in IMT-2000 core spectrum is how their upgrades to EDGE balance their WCDMA buildouts. It appears that it is not a question of IF, it is a question of WHEN, and what priority is given to WCDMA buildout v. EDGE upgrades. Every prudent investor in Qualcomm should, IMO, start factoring this into their models for Qualcomm growth.
What is now being implemented in the carrier community is GSM EDGE Release 99 and possibly elements of R4.
GSM EDGE will become considerably enhanced in Release 5 and 6 (capabilities not data transmission speed enhancements). Release 5 and 6 kick in IMS, rich voice, enhanced QoS, GERAN. a new interface to the CN - the same interface as WCDMA, and multiradio. It is not going away. It will simply evolve.
<< I know, tough questions, and certainly no one knows all the answers >>
Certainly not I, but given the size of my Qualcomm hold, questions I have to ask myself, and noodle with others.
Best to thee,
- Eric - |
