The Long-Term Shift Toward OFDM/OFDMA from CDMA Based Technologies
The global Lehman Brothers Wireless Team has just published an very good 33 page report titled "Wireless Equipment: A Long-Term Shift Toward OFDM." which I accessed through Fidelity.
The introductory paragraph states ...
We believe OFDM in its variants, LTE, UMB, and WiMAX, is likely to become the technology standard of choice for most wireless carriers. This report describes the migration options and considers the impact on the mobile systems and semi vendors. ...
It goes on to state ...
We believe the GSM/W-CDMA variant, LTE, has gained considerable momentum in the vendor and carrier communities given likely scale advantages, although vendors differ on timelines to availability from late 2009 to 2011. ... The W-CDMA migration path includes several HSPA migrations before ending in LTE with a standard currently targeted for finalization by the end of 2007 and equipment by late 2009 at the earliest. Some vendors believe the timelines may extend into the next decade. We expect most W-CDMA carriers to eventually adopt this plan, although likely over a very long period. We believe W-CDMA / HSPA is likely to remain a critical component of carrier networks for many years.
I found this interesting, even though it isn't the first time I've heard it (as regards Verizon) from other sources. ...
The CDMA version of OFDM, once called EV-DO Rev C and now UMB, may be available 12 to 18 months before LTE. Our checks, however, indicate that several carriers are considering a migration to LTE rather than UMB. Our checks, however, indicate that several carriers are considering a migration to LTE rather than UMB. ...
... The CDMA2000 path follows from Rev A to Rev B (largely through a software upgrade) in late 2007 or 2008. OFDM based Rev C, recently renamed UMB, should arrive in late 2008 or 2009. We believe CDMA carriers are monitoring the ability of handset/infrastructure vendors to invest in CDMA given the rising economies of scale in GSM/W-CDMA.
... ADOPTION UNCERTAINTIES FOR UMB: We believe several CDMA carriers may consider migrating to the W-CDMA variant, LTE, rather than the CDMA2000 variant, UMB. While UMB is likely to be available more quickly than LTE, we believe LTE will ultimately offer much greater scale benefits. We believe Verizon and Alltel, among others, are deliberating between the two technologies. The need for either to make any immediate announcement is of course low, although we consider a decision likely in 2007 or early 2008.
SOME LOSS OF CDMA MOMENTUM POSSIBLE WITH UMB: Brazil’s leading operator and CDMA player Vivo recently announced plans for a GSM overlay. Vivo hopes to fill in some CDMA coverage it currently lacks in two regions as well as offer new GSM handsets for price sensitive customers where they feel they have been at a recent disadvantage to its competitors. Vivo has stated though that the carrier plans to continue to promote CDMA offerings to mid- and high-tier customers who remain intact. Vivo currently represents about 50% of the CDMA subscribers in Latin America, and holds about a 30%-33% market share in Brazil. Meanwhile in India, leading CDMA operator Reliance has acknowledged that the carrier has been weighing proceeding with GSM build-outs in some regions given a range of factors including spectrum related issues and lower pricing of GSM handsets. Recent press reports from industry sources including Global Mobile suggest a sizeable $7 billion–$8 billion GSM tender from Reliance, highlighting the extent of Reliance’s planned move to GSM, may ultimately be possible.
Our vendor and carrier discussions indicate some concern that this loss of CDMA momentum will ultimately limit the ecosystem of scale and R&D money. This could limit vendor capacity to invest in new CDMA technology migrations, could reduce handset variety, and compromise scale. A migration to LTE would offer a CDMA carrier the opportunity to significantly improve handset and infrastructure cost through improved economies of scale, greater handset variety, and participation in the lucrative global roaming market. Conversely, UMB’s development timeframe is at least one and possibly two years ahead of LTEs. We believe most CDMA carriers are evaluating both standards. Our service provider research colleagues here suggest that Verizon may be leaning toward LTE.
They also discuss vendors positioning for OFDM migration after these introductory remarks ...
We believe a slow adoption of OFDM implies incumbent vendors, i.e., Ericsson and Nokia-Siemens, may hold if not extend share in OFDM, possibly aided by a CDMA to LTE migration. Those that fared poorly in UMTS, such as Nortel and Motorola, may struggle to reenter with LTE and thus are also focused on UMB and WiMAX. We consider incumbency at an operator to be vital during technology transitions, as shown by the fact that W-CDMA market shares are more consolidated still than in GSM, with no weak GSM vendors having made a break through in W-CDMA. In addition, we believe the leading CDMA vendors, Alcatel-Lucent and Nortel, might struggle if they don’t effectively migrate to LTE given our belief that several CDMA carriers are considering a shift to LTE.
Key emerging communications technology beneficiaries including ADC Telecom, Adtran, AudioCodes, Ciena, ECI Telecom, Tekelec, and Tellabs are likely to benefit from more robust backhaul and transmission requirements of these bandwidth intensive networks. Leading networking vendors including Cisco and Juniper should also benefit from greater backhaul and transmission requirements.
Greater silicon content in the handset should benefit the semiconductor players, particularly baseband vendors QUALCOMM and Texas Instruments. The longevity of W-CDMA should support QUALCOMM’s royalty revenue for many years despite IPR uncertainty. We consider Intel the leading WiMAX baseband vendor. While WiMAX is likely to be the first mobile OFDM flavor deployed, we believe LTE’s volumes will ultimately surpass its volumes.
- Eric - |
