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CDMA Leads in the Cross-Country Race

By MJ Richter

CDMA has already established itself as the wireless technology of choice across much of the US; over half the country's service providers are rolling out CDMA-based services. Attention is now turning to its performance, in both the new PCS and upgraded cellular networks.

In the three-way race among CDMA, TDMA and GSM across the U.S. digital wireless market, CDMA has, in less than one year, taken the lead. Some argue that it has already won.

According to research by the CDMA Development Group (CDG), only CDMA-based service is going to be available to 100% of the United States, in terms of both geography and population.

Qualcomm Inc. reports that more than 55% of all U.S. wireless service providers have opted for CDMA, including the nation's 11 largest cellular carriers. About half of the 2,074 PCS licensees are using CDMA technology, while 20% have selected GSM and 20% have picked TDMA, according to CDG analyses.

A comprehensive listing of existing and planned U.S. CDMA cities, both cellular and PCS, would read like the index of a national atlas. Such a listing would be out of date almost immediately, simply because carriers are rolling out commercial CDMA service on a very aggressive schedule. On the PCS side alone, licensees in Blocks A, B and C have deployed networks, or are in the process of doing so, in more than 180 cities. Licensees in the D, E and F blocks are preparing to roll out their CDMA-based networks in more than 250 other cities.

Viewed from another angle, CDG studies reveal the average number of CDMA PCS operators in each of the 493 basic trading areas (BTAs) to be 2.4, compared with an average of 1.3 GSM operators. In fact, more than 83% of the BTAs have more than one CDMA service provider, while nearly half have three or more. Only 30% of the BTAs have more than one GSM operator.

Among the numerous U.S. cellular carriers upgrading to digital service via CDMA is AirTouch Communications. Up and running with its CDMA-based service in Los Angeles, San Diego and Detroit, AirTouch also has turned up service, through its joint venture with US West, in Seattle and Denver. Craig Farrill, Vice President of Strategic Technology, says the carrier plans to complete build-out of its other major markets by mid-1998. Those include Sacramento and Atlanta and, in Ohio, the Columbus, Cleveland and Cincinnati areas. He declines to say how many mobile switches AirTouch Cellular has installed.

Bell Atlantic NYNEX Mobile (BANM) has deployed CDMA-based cellular service in Washington, D.C./Baltimore; Philadelphia; Phoenix; Pittsburgh; Charlotte, NC; the NewYork/New Jersey metro area; Bucks County, PA/Trenton, NJ; and Greenville, SC. John Provinsal, staff director of product development and implementation, says the carrier plans to make CDMA service available by the end of this year to 75% of potential customers, with the remaining 25% to have access by 1998-1999. Also declining to reveal the number of base stations and cell sites involved, Provinsal says only that Bell Atlantic NYNEX Mobile is deploying CDMA on a 1:1 basis with its analog network.

GTE Wireless (formerly GTE Mobilnet) has launched CDMA cellular service in Austin, TX; San Francisco; and San Jose, CA. The company plans to deploy CDMA in most of its other major cellular markets by the end of this year.

On the PCS side, GTE has rolled out CDMA networks that initially covered 39% of the population of Cincinnati/Dayton; 44% of the Seattle populace; and 51% of Spokane residents. By the end of this year, the company plans to extend Cincinnati/Dayton coverage to 78% of the population and coverage in Seattle to 80%.

Donald Fye, Assistant Vice President for PCS Network Engineering and Construction, says GTE also is using roughly the same number of cell sites for PCS service as it does for cellular, although he declines to reveal specifics.

"That is a very interesting thing, considering the amount of information that's appeared in the press for years about how PCS requires lots of small cell sites," he says. "What we've discovered is that by using CDMA we can provide a very good grade of service with a number of sites no larger than what the 800-MHz cellular operators are using.

On a coarse basis, it's more or less a 1:1 ratio." PrimeCo Personal Communications L.P., the first U.S. PCS carrier to offer CDMA-based service, turned up its networks in 16 markets last November and has since increased that to 18 cities. A spokeswoman for the company says CDMA service is now available to 32 million of PrimeCo's potential 61 million customers nationwide.

PrimeCo, a partnership among AirTouch Communications, Bell Atlantic, NYNEX and US West Media Group, has PCS licenses in 11 major U.S. trading areas that stretch across 19 states.

The carrier is now offering service in all first-tier cities in its territory and most of the second-tier markets as well. Hamid Akhavan, Executive Director of Product Management, says PrimeCo is currently focusing its build-out efforts on cities with populations of 100,000-200,000, as well as on highway coverage to connect major metro areas. With PrimeCo's initial 16-city launch, Akhavan says the carrier had well over 1,000 cell sites and plans to double that by the end of this year. "Right now [late April], we are well on target to meet that," Akhavan says.

By the end of the first quarter of this year, Sprint PCS had rolled out commercial CDMA service in 32 cities and will bring that number up to 65 by late this summer. At that point, the partnership among Sprint Corp., Tele-Communications, Inc., Cox Communications and Comcast Corp. will have about 5,300 cell sites and 46 switches, says Keith Paglusch, Vice President of Network Engineering and Operations.

The second phase of the Sprint PCS service launch will take place in late 1998 and early 1999. According to a company statement, the carrier "will expand its existing service coverage under licenses recently acquired by Sprint Corp. These new licenses, when combined with [those of] Sprint PCS and its affiliates, will give Sprint PCS unprecedented licensed coverage of nearly 260 million people in all 50 states, Puerto Rico and the U.S. Virgin Islands."

Clearly, CDMA has, in less than one year, established a vast footprint in the U.S. wireless market. Notwithstanding their limited experience with the technology thus far, cellular and PCS carriers alike say they are pleased with its performance. Although none of the carriers touts CDMA per se in its marketing efforts, each emphasizes to potential customers the benefits delivered by the technology. The carriers cite in particular the clarity of CDMA voice transmission, the enhanced security of calls, fewer dropped or blocked calls and, of course, CDMA's broad feature set that includes Caller ID, short messaging and message-waiting indicator. "On an experiential basis, you have to hear it to believe it," says Provinsal of BANM. "On a technical basis, it is meeting our expectations in most respects and exceeding our expectations in others."

BANM engineers especially like the strength of CDMA coverage. In areas where the carrier had some problems with its analog network, the CDMA coverage "seems, by virtue of the technology, to be somewhat better," Provinsal says. CDMA quickly put to rest any concerns that GTE Wireless may have had. Fye admits that he worried a bit, as he says he would with any technology not yet widely deployed, about how difficult it might be "to optimize" its performance. However, he says CDMA "performs extremely well right out of the box, using the default parameters recommended by the vendor."

Farrill says that CDMA has already surpassed the performance of the AirTouch analog systems. For a new technology, he says, that is "phenomenal." The service providers also appear to be pleased with their infrastructure vendors. None reports any problems with CDMA equipment delivered by Lucent, Motorola or Nortel. Sprint PCS, which uses Lucent and Nortel equipment, had some software bugs late last year, Paglusch says, "but those are well behind us. They are not causing us a single problem whatsoever."

Similarly, Akhavan characterizes Motorola and Lucent as "truly solid," saying that each is delivering what PrimeCo wants. Besides, he emphasizes, any vendor issues that do arise "typically are in different areas, so it's very difficult to make an apples-to-apples comparison.

AirTouch uses Motorola equipment in San Diego, Los Angeles, Sacramento and Atlanta, while relying on Nortel gear in Detroit and Ohio. Farrill says both vendors, along with Lucent, are "world-class" in terms of their CDMA equipment. "They are producing at a quality level one would expect for network telecommunications equipment," he says. "In the handset world, I think the same thing is true. Sony Qualcomm is now producing quality handsets that are competitive with the best analog sets that have been out there for 14 years. It's remarkable that something this new can be this solid this quickly."

The only discordant note on the vendor issue is sounded by Fye of GTE, who says the major CDMA equipment problem has nothing to do with infrastructure or, for that matter, with quality. It is the fact that, for now at least, Sony Qualcomm is the only game in town when it comes to handsets. "We would dearly like to see more handsets at more favorable prices," he says. "Frankly, this is the issue that's holding back CDMA deployment nationwide. We want more vendors, more choices."

Despite that limitation, CDMA seems to be on a proverbial roll in the United States. After years of controversy about TDMA versus CDMA versus GSM, could it be that a clear winner finally has emerged? Has CDMA in fact turned out to be the platform of choice among U.S. wireless carriers?

GTE Wireless thinks so. Fye acknowledges that AT&T,, in selecting TDMA for its PCS offerings, may achieve some short-term advantages in terms of PCS compatibility with its existing cellular systems and maybe even in handset costs. However, the long-term U.S. momentum behind CDMA is so high, he says, "that you can't help but envision favorable handset pricing for CDMA-and the quality is there already. Yes, I think CDMA has won."

Also nodding to AT&T and its commitment to TDMA technology, BANM's Provinsal says no one can acknowledge the size and influence of AT&T and still claim that CDMA is the incontrovertible winner. Still, he points to BANM's earlier offerings of TDMA-based wireless service, based on what the carrier perceived to be customer demand. "Since we've been offering CDMA, the customer demand has absolutely outstripped whatever TDMA could have offered," he says. "Plus, in terms of having the flexibility to offer wideband applications, rather than just straight mobile-to-mobile communications, I think CDMA holds the greater promise."

Farrill too is not quite ready to declare CDMA the unqualified platform victor. The war will go on, he says, as long as technologies continue to compete in the marketplace. "However, the undeniable facts are in front of us," he says, "CDMA exists, it works and it works well."

For Paglusch, the only relevant issue is that CDMA is the Sprint PCS platform of choice. The carrier never has been interested in arguing that CDMA is better or that GSM and TDMA aren't any good, he says. "We believed that for our solution-our solution being end- to-end wireless across the country-CDMA was better. So, for us, CDMA wins," he says.

Despite CDMA's unquestioned lead thus far, the fact remains that the U.S. market is huge--and growing. The combined number of existing cellular and PCS customers is expected to reach 50 million by the end of June, and it by no means is even approaching saturation point. Some observers believe that CDMA's lead will evaporate as the market continues to expand. For example, according to the January/February issue of Cellular Strategies, a newsletter produced by Herschel Shosteck Associates, Ltd., the only important question is whether mature CDMA will deliver voice quality superior to mature TDMA or GSM. The most likely answer, the wireless consulting firm concludes, is no. "Most end-users will discern little difference. At the end of the day, speed of deployment, terminal costs and marketing skills of the carriers will determine which technologies succeed most," according to the publication. "In both the U.S. and the world, CDMA is at a disadvantage in terms of deployment and terminal costs."

PrimeCo's Akhavan questions that conclusion, although he says he is not familiar with the article or the research behind it. He says he is familiar, however, with the tradition of casting doubt on CDMA. "A year ago, if you recall, the question was: `Will CDMA ever work? Will it ever get to market?' Two years before that, the idea was, `CDMA is a product for the year 2005.' "Well, millions of CDMA handsets have been produced," he points out, "people are using the product and things are looking pretty good. So now, of course, someone has come up with the question, `will CDMA in the long run be better than the other products?'"

No one knows for certain exactly how many Americans now subscribe to CDMA-based wireless service-and the number most likely changes from one day to the next anyway. Obviously, the service providers are guarding their subscriber numbers as closely as they do the number of mobile switches they've deployed.

Still, the Yankee Group, the Boston-based consulting firm, took a stab at it at the end of February, estimating at the time that Sprint PCS and PrimeCo accounted for 170,000-200,000 customers. Clearly, both carriers, along with their cellular and PCS rivals, have added a lot of subscribers since then.

Taking a broader perspective, Strategis, a Washington, D.C. consulting firm, predicts the global cellular and PCS market will total more than half a billion subscribers by 2002, up from 140 million at the end of 1996. Based on data collected from 142 nations, the Strategis study shows GSM right now to be the dominant digital technology, with CDMA expected to be in second place by 2002.