From Seoul to Sao Paulo
The growth of cdmaOne in 1998 was impressive, but next year promises even faster network expansion. With Latin America set to make a major contribution to cdmaOne growth in 1999 and beyond, the standard can now offer a presence in every continent on earth. Perry LaForge, executive director, CDMA Development Group.
In the end-of-year edition of a magazine, it is tempting to only take a look back at the year's activities and successes. While 1998 was an extraordinary year for the growth of cdmaOne around the word, we prefer to continue our success in the same manner that got us where we are today-by looking forward. Growth will undoubtedly continue in the two world regions where we have seen the most success to date-Asia Pacific and North America. The real excitement, however, for cdmaOne is in emerging markets like Latin America where the technology is poised for explosive expansion.
The Asia Pacific market continues to set a strong pace for cdmaOne growth. The introduction of the technology into the Japanese market by DDI Corporation, the expansion into additional markets by IDO Corporation in early 1999 and the launch of cdmaOne service in Australia by Telstra in 1999 position the region to continue its strong role in subscriber growth. The second largest cdmaOne region by number of subscribers, North America, has outstripped all projections-and other technologies-by realizing a 600 per cent growth rate in the one-year period between September 1997 and 1998. The 4.5 million North American subscribers are double the number of subscribers on GSM systems in the region. As markets launch across America and Canada, this region too will continue its central contribution to cdmaOne growth.
The latest region to come alive for cdmaOne and offer enormous potential moving forward is Latin America. The existing presence of the technology throughout the region has been augmented by recent contract announcements and commercial service launches. Telesp and the Telefonica Group announced expansion of cdmaOne in Brazil, Chilesat launched commercial service in October of this year, Venezuela became a cdmaOne country with the adoption of the technology by Telcel and plans for nationwide coverage in Mexico were kicked off with inaugural CDMA service in the four largest wireless markets-Mexico City, Monterey, Guadalajara and Tijuana.
Telefonica del Peru (TdP) pioneered the introduction of cdmaOne in Latin America two years ago with a trial agreement that turned into a five-year, $350 million nationwide contract. TdP was joined by other operators who chose cdmaOne, including Puerto Rico's Centennial (4Q 1996) and Mexico's Grupo Iusacell (3Q 1997). In August of this year TdP initiated a network expansion project to extend service beyond the capital city of Lima into the country's western provinces between the Pacific Coast and the Andes Mountains. TdP expects subscribers on its network to surpass one million over the next five years.
Brazil is also positioned as a major growth market for cdmaOne. In October, 1998 Grupo Telefonica announced a contract award for cdmaOne coverage in Rio de Janeiro and Sergipe. The initial phase of the project will add cdmaOne capacity for up to one million subscribers in Rio alone. A month later Telesp was awarded a contract to build a cdmaOne network in Sao Paulo's metropolitan and interior areas. Sao Paulo is the largest cellular market in Brazil, and the Telesp cellular network, managing more than 1.6 million subscribers, can be considered the largest in Latin America.
Mexico has also seen significant cdmaOne activity. The recent PCS auctions saw three operators select cdmaOne, including two nationwide operators Sistemas Profesionales de Comunicacion (SPC) and Pegaso Telecomunicaciones S.A. de C.V. Five cellular operators have signed cdmaOne contracts in eight of the country's nine regions. The large roaming border between the US and Mexico makes the contiguous continental coverage across North America a noteworthy achievement.
Latin America is moving to cdmaOne for the technological superiority it can offer today and in the future with its seamless evolution path to 3G services. What makes cdmaOne a natural fit for Latin America? A few of the factors include the technology's ability to offer advantages for capacity in large urban centers, superior voice quality and value-added services for differentiation in markets that are becoming increasingly competitive, and financial advantages for operators winning new licenses or building out networks. There is also the fact that the technology is equally well suited to cellular, PCS and Wireless Local Loop (WLL) applications. In fact, of the 29 Latin American cdmaOne deployments announced to date, six are for WLL networks.
The CDG is obviously bullish on Latin America and its potential for future growth. To further demonstrate our commitment to the region, we are opening an in-region office, appropriately in South America's largest cellular market of Sao Paulo. Building on our successful model in other world regions, the CDG's goal is to offer technical and operational assistance by leveraging the expertise of our staff and member companies.
Bringing the collective knowledge of cdmaOne experts into a region to foster the growth of the technology and ensure that the implementation issues unique to an operator or location are addressed is one of the primary CDG activities. The Latin America office will join our Hong Kong office as a regional resource center. Both of our regional offices are supported by the CDG headquarters staff and over 500 professionals from member companies working on technical and business teams around the world.
So, we look back at 1998 not so much to congratulate ourselves for the success we had, but to see how to build on that success to keep the momentum going. All indications point to 1999 being another great year for cdmaOne.