Technology wars still flourishing

As the world’s more mature wireless markets shift to third-generation networks and beyond, it seems as if backers of CDMA technology and those who are pushing 3G flavors of GSM are racing each other to hype their respective market gains.
The GSM Association recently published a list of CDMA operators that have reportedly decided to switch to GSM technology; hence the CDMA Development Group quickly unleashed its own list of GSM carriers that were supposedly jumping on the CDMA bandwagon.
The truth about the lists, according to analyst Andrew Seybold, is that “GSM operators in a number of places are deploying CDMA in addition to GSM and several operators have decided to move from TDMA to CDMA and not follow the TDMA-to-GSM route.”
The GSM Association claims there are 2.1 billion GSM/GPRS/EDGE and UMTS subscribers in the world, whereas the CDG says there are more than 350 million CDMA users.
Seybold opined that since all flavors of 3G are basically CDMA-based, 3G has become the fork in the road for many GSM operators.
“The GSM community might want to call its flavor of CDMA (W-CDMA) ‘3GSM’ or ‘UMTS,’ but at the end of the day, a rose is a rose and CDMA is CDMA. This means that as GSM operators continue to deploy their 3G (W-CDMA) networks, most if not all of their 2.1 billion customers will become CDMA customers.”
Not surprisingly, Seybold’s sentiments echo those of Qualcomm Inc. spokesman Jeremy James, who said he expects some form of CDMA snaring about 80 percent of the market. This estimate includes W-CDMA, as well as CDMA2000’s iterations.
James conceded that the CDMA2000 flavor of 3G will probably never flourish in Northern and Western Europe, the proven stronghold of GSM operators and home to mega GSM suppliers such as Alcatel Inc., L.M. Ericsson, Siemens A.G., and Nokia Corp.
Much of Asia is already sold on the CDMA evolution path, but uncertainties remain in China and India.
In China, the government is poised to issue 3G operator licenses that will determine the prevalence of the country’s homegrown 3G technology called TD-SCDMA. James said Qualcomm is ready to supply handset chips to support TD-SCDMA with companies like Huawei Technologies Co. Ltd., though Qualcomm doesn’t expect TD-SCDMA to invade markets outside of China.
Nevertheless, James said China’s TD-SCDMA market is estimated to be well worth Qualcomm’s chip-development efforts, and the arrangement saves Hauwei the money and time it would have needed to develop handset chips in time for the 2008 Beijing Olympics, considered the stake in the ground for TD-SCDMA’s launch. In addition to TD-SCDMA, Chinese operators are expected to deploy W-CDMA networks, and the usual set of vendors are waiting in the wings to serve up network gear, though Chinese vendors Huawei and ZTE Corp. are sure to be featured suppliers of their either flavor of their country’s advanced networks.
India’s government is in the midst of overhauling its spectrum-licensing system, which doles out precious spectrum as operators need it. The practice has long been criticized by Qualcomm since it seems to punish carriers for choosing the company’s spectrally efficient technology. GSM operators are granted more spectrum than CDMA service providers, which in some cases has tied the hands of CDMA operators looking to upgrade to 3G via CDMA. In effect, the government forces carriers to switch to GSM if it wants to sell 3G services solely because the needed spectrum can only be acquired by opting for GSM-based systems. If the government decides to change its spectrum policies, Qualcomm will likely see more CDMA2000 action in India.
Seybold pointed out that in Europe, where regulators tie spectrum licenses to specific technologies, CDMA isn’t even permitted.
“In countries that have taken a more open approach and not tied any one technology to any particular slice of spectrum, you will most often find that both technologies are alive and well. Eastern Europe, Russia, Africa, China, Japan and the Americas are dual-technology nations. Competition is good for the industry, as are diverse technologies.”
Overall, Seybold stressed that spectrum is a finite resource, and network operators who are free to make the most efficient use of their spectrum will survive and thrive.
Indeed. As differences in 3G handset prices for both CDMA and GSM all but diminish, spectrum could become a bigger differentiator for 3G-hungry carriers.