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Guest Column

With CDMA2000, 3G Is Real—and taking off

Perry M. LaForge
Executive Director
CDMA Development Group

Since the euphoria about the future of 3G as a new frontier for the wireless Internet peaked a couple of years ago, prospects for high-speed mobile data have been mostly discouraging. For many mobile carriers, technical and financial concerns are generating questions about when—or if—3G will happen.

In fact, there are plenty of commercially deployed 3G networks, but virtually all are owned by operators using CDMA2000 1X. It started quietly about 18 months ago, when SK Telecom in Korea launched the world’s first 3G network. Now, there are more than 8 million CDMA2000 1X subscribers in Korea, Japan, Europe, North America and Latin America.

Korean carriers continue to lead the CDMA2000 movement. SK Telecom, KT Freetel and LG Telecom have operated their CDMA2000 1X networks for more than a year, and SK Telecom and KT Freetel are deploying the first commercial networks using the CDMA2000 1xEV-DO standard, which provides theoretical data speeds up to 2.4 Mbps.

In Japan, KDDI has made significant market-share gains of 280,000 new users in the first month after the nationwide launch of its CDMA2000 1X network despite facing stiff competition from wireless data giant NTT DoCoMo. Two other Asian operators—Hutchison-CAT in Thailand and Saigon Postel in Vietnam—are scheduled to launch CDMA2000 1X commercially this year.

Last year, Monet Mobile Networks, Leap Wireless and Western Wireless became the first North American operators to deploy CDMA2000 1X, and they have been followed to market this year by fellow U.S. operators Verizon Wireless and Metro PCS and Canadian carrier Bell Mobility. Sprint PCS and its 11 affiliates will launch a nationwide CDMA2000 1X network in July, while U.S. carriers Alltel and U.S. Cellular plan to deploy their networks by the end of the year.

Brazil is the hotbed of 3G deployment in Latin America, with Telesp Celular commercially operating its CDMA2000 1X network since last year, Telefonica Celular launching in April, and Vesper planning its deployment later this year. Centennial in Puerto Rico introduced their CDMA2000 1X services in April. Chilean carrier Smartcom PCS, Venezuela’s Movilnet and Dominican operator Centennial are scheduled to launch CDMA2000 1X by the middle of the year.

Zapp Mobile in Romania is leading the CDMA2000 push in Europe after launching its CDMA2000 1X network last year, and Ukrainian carrier CST Invest Limited is expected to follow suit soon. Moscow Cellular of Russia plans to commercially deploy CDMA2000 1X during the second half of the year.

Elsewhere, Telecom New Zealand is expected to launch its CDMA2000 1X network soon, and Australian carrier Telstra has been trialing the technology for several months.

Several characteristics are fostering the growth of CDMA2000. While an obvious choice for cdmaOneTM operators, CDMA2000 1X offers such a compelling business case that TDMA carriers U.S. Cellular, Movilnet and BellSouth International are embarking on the CDMA2000 migration path.

Such widespread acceptance is causing some long-held beliefs such as economies of scale to be altered, if not debunked. As vendors struggle to manufacture handsets for competing technologies, CDMA2000 1X carriers can choose from more than 100 different models with features such as color screens, smaller form factors and longer battery life. While this situation may not be permanent, CDMA2000 carriers have a first- mover edge that will let them make market-share inroads in the near future.

By deploying CDMA2000 1X, carriers cost-effectively upgrade to 3G performance without paying to overhaul their base-station infrastructure or buying expensive new spectrum—important factors at a time when financial markets are scrutinizing capital costs and new spectrum is not available in markets such as the United States. While many of its U.S. competitors are spending more than $4 billion to upgrade their networks and have bid billions more in an effort to gain new spectrum, Sprint PCS is spending $800 million on its CDMA2000 1X upgrade and has the luxury of virtually being a non-participant in recent spectrum auctions.

While the wireless industry has great hopes for data applications, mobile operators’ core application remains voice, which is where CDMA2000 1X shines. While other 3G technologies see voice capacity deteriorate when offering increased data speeds, CDMA2000 1X lets carriers almost double their voice capacity, positioning operators to realize new revenues and/or compete effectively amid even aggressive price wars.

In addition, by offering real-world data speeds of up to 144kbps, CDMA2000 1X carriers are realizing new revenue streams from a burgeoning wireless data market that frequently has been frustrated by the performance of other technologies. At SK Telecom, data revenue per user has almost doubled since the upgrade to CDMA2000 1X, which enables quick downloads of ring tones, applications with color graphics and location-based information services to accompany traditional text-messaging functions.

Some analysts question whether the Korean success with consumers will translate immediately to other markets, but many industry insiders believe enterprise segment will lead the mobile-data movement in North America. With faster download speeds and greater signal security than other wireless technologies, CDMA2000 1X lets carriers offer an ideal suite of services to businesses willing to pay for always-on wireless connectivity.

“When you look at the enterprise segment, we believe there is a lot of pent-up demand and a willingness to pay,” said John Marinho, vice president of offer management for Lucent Mobility Solutions Group. “And any operator that goes with a spread-spectrum technology is going to have an advantage in the wireless data market.”

As with handsets, some observers believed the potentially larger GSM-based market would give carriers following this migration path access to more, and better, applications. To date, this has proven to be a myth.

“We’ve heard the argument that [GSM-based carriers will] get the applications and the cool handsets first, but there isn’t a lot of evidence for it so far,” said Tom Crook, director of technology, research and development for Sprint PCS.

One of the most noteworthy applications is real-time video, something SK Telecom and KT Freetel are providing over their commercial CDMA2000 1xEV-DO (data-only) networks. KT Freetel is offering TV broadcasts of World Cup soccer matches to its 1xEV-DO customers in May.

Other operators may choose another migration path. Crook said Sprint PCS likely will eschew the 1xEV-DO step to migrate directly to the 1xEV-DV standard—providing peak data rates of 4.8 Mbps over an integrated voice and data network—that is expected to be approved later this year.

Regardless of the paths taken by operators, expect CDMA2000 to continue its leadership role in the wireless industry’s pursuit of 3G promises largely because upgrading to CDMA2000 1X is relatively simple for carriers and users.

For cdmaOne operators, only software and new modules need to be installed in their existing infrastructure to upgrade throughout the CDMA2000 migration path, and the technology’s inherent backward compatibility gives carriers the flexibility to grow the upgraded network as warranted by customer demand. This backward compatibility assures users that core voice service will always be available to them—even if they travel to a portion of the network that has not been upgraded or if they have not upgraded their handset—and setting up devices for data uses is relatively simple.

Although largely intangible, this user-friendly factor is a critical component to the future success of CDMA2000 1X at a time when 30% of all GPRS handsets in Europe are being returned by frustrated users, according to Lucent’s Marinho. Combined with the tangible assets of data performance, handset availability, cost efficiency and spectral efficiency and flexibility, it is easy to understand CDMA2000’s current widespread popularity and logical to project greater success in the future.



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