The union of AirTouch Communications Inc. and Vodafone plc could be a pinnacle event in the
third-generation technology debate, industry experts say.
The new company’s economic decisions could weigh
heavily on a sensitive and political debate over wideband Code Division Multiple Access technology. The two carriers-
one using Global System for Mobile communications technology and the other using CDMA technology-are poised to
become the largest wireless operator in the world and leverage their massive holdings to buy equipment at significant
savings.
Sam Ginn, chairman and chief executive officer of AirTouch, said they will mold their networks together
using CDMA 3G technology. The two, however, haven’t commented on whether they will use a chip rate of 3.68
Megachips per second to do so. Vodafone declined RCR’s request for comment, and AirTouch could not be reached by
RCR press time.
The chip rate is a major area of contention in the worldwide debate over convergence of CDMA
technology considered for the third generation. Most of the world’s standards bodies have chosen some form of CDMA
technology for 3G technology, which will allow access to high-speed data and Internet-friendly phones in the next
millennium. The International Telecommunication Union is looking to merge these proposals into one
standard.
Many carriers and vendors are reluctant to comment on the chip-rate issue on the record as they try to
work out a compromise and avoid a potential deadlock over intellectual property rights to CDMA technology
Qualcomm Inc. and L.M. Ericsson say they own and will not grant unless certain conditions are met. The ITU is in the
midst of determining whether to proceed with CDMA-based proposals in light of the IPR deadlock. This standstill also
involves convergence.
Mainly, North American and European GSM operators along with vendors favor W-CDMA
technology, and are unwilling to move the chip rate below 3.84 Mcps because of capacity reasons. CdmaOne operators
say they need to stay at 3.68 Mcps to preserve their investments in current systems. They claim the difference between
the two chip rates has a minimal effect on capacity. GSM operators say they want the best possible standard. The 3.68
Mcps rate will degrade their standard, they say.
People close to the situation say political posturing plays a large
role in the process, with parties not wanting to give up competitive positions in the marketplace.
A
Vodafone/AirTouch merger could mean economics will win over politics, say analysts.
“Certainly [the
merger] doesn’t hurt the chance for convergence. It increases the likelihood that Vodafone would support convergence
more aggressively than it had in the past,” said Jeffrey Schlesinger, senior technology analyst with Warburg
Dillon Read in New York. “It will result in lower-cost products and better interoperability.”
Bob Egan,
research director with Gartner Group in Stamford, Conn., said it is imperative for the two companies to merge their
properties around the world the most economical way possible.
“Vodafone and AirTouch represent a business
imperative to harmonize their pan-European properties and investments in the United States that will likely grow over
time,” he said. “Therefore, there is an increased importance on harmonization. Vodafone is likely to
express the business imperatives of harmonization with North America.”
But the event is easier said than
done. Sources say European operators are staying course with the work done in the European Telecommunications
Standards Institute, which is pushing ahead with W-CDMA technology. Any deviation from those plans could
jeopardize their chances of getting new spectrum for 3G services in Europe, they believe.
Today, many European
operators propose to compromise by offering up a multiple chip rate that allows the use of both chip rates through
multi-mode handsets. AirTouch previously indicated it supports this stance, and Canada’s Bell Mobility, a cdmaOne
operator, supports it as well.
“Whether you have a single chip rate or multiple chip rate, the debate is
raging,” said Vino Vonodrai, director of industry relations and research with Bell Mobility. “One can look
at it in different ways. Our proposition is that if things are going to converge, it has to be win/win for both sides of the
fence.”
AirTouch previously has said it believes multi-mode phones will resolve technology and frequency
differences. Though complex and costly, the volume of units sold would drive down the price.
Many cdmaOne
operators remain strongly opposed to a multiple chip rate.
“We’re opposed to a standard that has multiple chip
rates in it,” said Keith Paglusch, senior vice president of technical services and network operations with Sprint
PCS, a nationwide cdmaOne operator in Kansas City. “It adds unnecessary cost in the long-run to the consumer
… This is not the time to add extra costs and development efforts.”
Japanese cdmaOne operators DDI and IDO
favor one chip rate as well.
“The single chip rate would result in true harmonization among CDMA-based
RTT’s submitted to the ITU,” said Kyoko Kakishima, spokesman for DDI. “The single chip rate should be
3.6864 Mcps because the cdma2000 RTT cannot accept any change in the chip rate while other RTTs
can.”
Many industry experts agree that Japan may hold the key to whether convergence among CDMA-based
proposals worldwide is achieved. If Japan agrees to convergence, this may sway China as well. Japan desperately wants
to become a worldwide player in the wireless industry, rather than isolating itself like it has in the past through
deploying Personal Digital Cellular technology, a technology incompatible with the rest of the world. The country’s
standards body submitted W-CDMA technology to the ITU as its 3G proposal, but has been looking for ways to
harmonize it with cdma2000 technology.
NTT DoCoMo, Japan’s largest wireless operator, plans to become the first
carrier to commercially deploy W-CDMA technology by 2001 to relieve congestion problems. It has not weighed in on
whether it accepts the 3.6 Mcps chip rate.
“Japan is going to make some decisions based on technical merit,
and if that decision means 3.68, this will set up a domino effect,” said Egan.
