Will CDMA change the face of Indian telecom? By the time you read this piece, you would have formed an opinion—pro or anti—having read the lead story in this issue. India is still a voice market and with a large part of population yet to be covered, voice will continue to drive growth. So everyone is betting on Reliance’s tariff and schemes to decide whether CDMA could actually make an impact on India. Reliance chairman Mukesh Ambani is playing the affordability card. In short, the expectation from CDMA is that it will be a poor man’s mobile.

Whether it will be or not remains a hot debate. Let us get to some cool stuff. Data, to be precise.

Of late, we have seen a few Indian operators launching GPRS networks and GPRS-based services. But still 90 percent of us know about only one such service—MMS. (By the way, is there something else as well?). With that, talks have begun on the future of data, or more correctly the future of mobile with data.

Gartner notes that by the year 2005, as much as 29.9 percent (analysts love decimal points) of the mobile service revenues in Asia-Pacific will come from data services. If you find it a little too optimistic, here is some other piece of information. Today, more than 10 percent of revenues come from data in this region, with some operators like SK Telecom, NTT DoCoMo and KDDI reporting far higher percentages.

Yes, statistics has the reputation of being clubbed with lies and damn lies. Just in case you are thinking of accusing us of exploiting this particular quality of statistics, it is better to clear one point. The aforesaid impressive figure about Asia does not reflect the reality worldwide. Asia is going to lead in terms of data usage. The reason is not difficult to guess. According to a much-quoted June 2002 report by Morgan Stanley, Asia is going to lead 3G deployment, with Korea, India, China, and of course, Japan leading the pack. While the US will follow, the enfant terribles of mobile communications, the European operators, are going to be the last—for the fault of their governments.

According to the license conditions, European 3G operators have to roll out WCDMA networks, a technology proposed by NTT DocoMo, Nokia, Ericsson, and decided by the European Union as the sole 3G technology in Europe.

What’s wrong about that?
Supporters of WCDMA will tell you that it’s the high license fee and not the technology that’s troubling 3G in Europe. That’s far from true. WCDMA, somehow, isn’t working.

According to a Morgan Stanley report published in June 2002, there are a few reasons for WCDMA not being able to take off. And most of them have something to do with handsets. Apart from availability, pricing remains a major problem with WCDMA handsets. The report compares the pricing of WCDMA and CDMA 2000 1x handsets. While DoCoMo’s WCDMA color handsets cost $400–500, similar CDMA 2000 1x handsets in Korea cost about $200–300. What’s more, Morgan Stanley forecasts CDMA 1x handset prices to fall faster than WCDMA handset prices.

CDMA 1x handsets score on the speed front too. The actual speed of 100–120 kbps of CDMA 1x handsets is not matched by WCDMA’s 80-90 kbps. The CDMA 1x EV-DO technology is expected to take this speed to 2.4 mbps. There are other fronts like backward compatibility, supply of handsets, and even capex where CDMA 1x scores, according to Morgan Stanley. In short, CDMA 1x scores on all fronts, when it comes to data. This was stated in no uncertain terms by a September 2002 article in The Economist, "Imposing WCDMA as a single standard in 3G now looks like a big mistake."

But Morgan Stanley’s or Economist’s, an analysis is still an opinion. So let data do the talking. And let that data not be based on technology comparisons or test results, but come from the most objective source—the market.

By the end of October 2002, data for which is available, WCDMA accounted for only 0.6 percent of the market as compared to CDMA 1x’s 99.4 percent. Even if one adds GPRS, the percentage of next-gen GSM derivatives rises only to 11.2 percent. And don’t forget, GSM accounts for more than 70 percent of world’s digital mobile subscribers, with CDMA accounting for only less than 13 percent (See table).

As data emerges as the major revenue source for operators, it makes more sense for operators to use CDMA 1x when moving to 3G. Qualcomm, the company behind CDMA, sees this as a big opportunity and is coming to market with GSM 1x that it says will allow GSM operators to smoothly migrate to CDMA 1x.

As CDMA 1x wins in most parameters over WCDMA, the WCDMA backers, whose number is ever on the decline, have just one thing against CDMA 1x. "It is not 3G," they say.

True, but CDMA 1x does all the things that WCDMA does, and, does them better. And it actually works. The reason why this doubt comes is that the Korean operators have not marketed it as ‘3G’. They have called it the next version of CDMA.

Thanks to Europe’s airwave auction, 3G became a big thing much before it was started. So operators had to market it big as ‘3G’, that descended from heaven. Last heard, some of them were daring their regulators to allow them to use CDMA 1x.

Shyamanuja Das