Motorola Inc. has won what it calls the largest cellular infrastructure contract in the world to date.
The company’s Cellular Infrastructure Group announced Japanese carriers DDI Corp. and Nippon Idou Tsushin Corp. (IDO), two of Japan’s leading cellular service providers, have selected Motorola to provide Code Division Multiple Access infrastructure equipment. Commercial service is expected by second quarter 1998.
The announcement comes after the Japanese Telecommunications Technology Council in February approved a final report and officially sanctioned CDMA technology for use in Japan. The Japanese Ministry of Posts and Telecommunications is in the process of revising regulations in accordance with the final report.
DDI and IDO already have indicated their intentions to use the technology in anticipation of network capacity problems and have begun limited trials of Interim Standard 95 CDMA, said the Yankee Group in Japan. Japanese newspapers have reported that the two carriers are in negotiations to provide a joint service using the technology.
Motorola did not comment on the value of the contract, which is free from vendor financing but said DDI and IDO have announced their intentions to invest about $3 billion in capital expenditures. Herschel Shosteck Associates Ltd. estimates the value of the contract at between $1.1 billion and $1.2 billion.
Motorola said it has been working closely with Japanese operators during the ministry’s study of CDMA technology. The company has a long history of deployments in Japan, having implemented its first analog networks with several of DDI’s group companies in 1989. Since then, Motorola has provided advanced analog networks, including those based on the Japanese-created Personal Digital Communications technology, to both providers.
“This (contract) is another indication of Motorola’s strength in the Pacific Rim,” said Brian Cotton, senior research telecommunications analyst with Frost & Sullivan. “It has joint ventures in China and a long history in Japan.”
Korea Telecom Freetel also awarded Motorola a $180 million contract last week to deploy CDMA networks in Seoul, South Korea. The Korean contract combined with the award by IDO and DDI gives Motorola a strategic advantage for deploying CDMA networks in Asia and signifies substantial wins over competitors, said Herschel Shosteck Associates.
Important features Motorola is able to offer the carriers are advanced capacity beyond what CDMA technology traditionally can handle along with an 8 kilobit-per-second enhanced rate vocoder that it expects to offer commercially by the end of the year, said the company.
Using a six-sector cell design, Motorola CIG President Jack Scanlon said network capacity is increased 16 to 18 times that of Advanced Mobile Phone Service. The traditional IS-95 version provides about 10 times that of AMPS. “CDMA by itself is not good enough to meet their higher capacity needs,” said Scanlon.
The 8 kbps EVRC is expected to deliver voice quality equivalent to the 13 kbps vocoder but without compromising capacity like the 13 kbps vocoder.
“Capacity is a real issue for [Japan],” said Jane Zweig, senior vice president of marketing for Herschel Shosteck Associates. “Motorola found a solution to bridge that. In order to get new [contracts], they had to bring something to the table.”
Japan is the second largest cellular market in the world, said Zweig. About 1 million subscribers have been added every month, and penetration is more than 16 percent, which has resulted in a huge capacity crunch. Herschel Shosteck Associates estimates that by 2000, Japan will have more than 45 million subscribers.
DDI initially will deploy its CDMA network in the Kansai region, which includes the cities of Osaka, Kobe and Kyoto. Osaka is one of the most competitive regions in Japan, and DDI expects its network there to reach the capacity limit faster. Motorola will deploy the IDO network in the Kanto and Tokai areas which include Tokyo, Nagoya and Nagano. Trial systems for both are scheduled to begin during the second half of 1997. Combined nationwide CDMA coverage is planned for 1999. A contract for handsets is expected in about three to five months, said Motorola. DSC Communications Corp. said it will provide the switching systems.
