Assessing the Impact of IS-95
Now that IS-95 CDMA has made the jump from promising technology to major world player, where do the people driving its growth think its future lies? CDMA Spectrum talked to senior figures in two of the biggest companies working with CDMA, Lucent and Motorola, about the way forward for IS-95. Here, Scott Erickson, Vice President, Marketing and International Business Development, Wireless Infrastructure, of Lucent, assesses the progress IS-95 has made in a relatively short time and suggests that a great deal more market growth is on the horizon.
CDMAS: Do you think that CDMA both technically and in the market has proved itself, that it has a lot more credibility than it did, say, two years ago?
Scott Erickson: Absolutely. I think it's got a lot more credibility than it had even within the last six months. I think it's kind of nice going to a lot of these industry forums and analyst meetings and not having to stand up there and answer those questions anymore.
I think from the viewpoint of the operators, the industry analysts and even the financial investment community that's been asked to invest in companies that are deploying IS-95, the answer to the question about whether IS-95 is really a viable commercial standard is obviously `yes'.
CDMAS: Has there been enough on-the-ground proof of its ability under heavy loading?
Scott Erickson: The networks that we've turned up last year, cellular as well as PCS networks, have been growing very rapidly. I know that with the PCS systems that we've turned up here in the U.S. we're processing a couple of million calls a day. The system that we've deployed in Korea for instance with Shinsegi is in a very high teledensity area and within three months they've already put 60,000 subscribers on that system and that goes through some fairly heavy call load volumes during the day.
CDMAS: What about other selling points like wireless local loop applications?
Scott Erickson: I think spread spectrum technologies offer a lot of benefits to the service operators now that penetration rates are so high in many countries-and here in the US as well for mobile services. IS-95 CDMA offers the operators benefits of more spectral efficiency and when you get to high penetration rates in teledensity areas the spectrum is at a premium. You need to provide a technology that provides you the highest capacity loading in the most efficient manner with the scarce resources you have for spectrum right now. In many international markets, governments are driving the teledensity levels to twice what they are today over the next three or four years. The only way they're going to get to those teledensity levels in that timeframe is via wireless access or wireless local loop. And IS-95 is flexible enough to allow operators to both provide high mobility services but also to use the same infrastructure to provide local loop services from the same platform. It's clearly a benefit that other technologies such as AMPS, or any other kind of time slot technology, are just not capable of providing.
CDMAS: In the United States is the value of CDMA simply a matter of its ability to support heavy loading or is it simply a convenient migration path from AMPS?
Scott Erickson: I think since the U.S. and Americas provide possibly the highest analog customer base in the world, we needed a technology that provided a migration path from analog to digital, and provided it in such a way that as you partitioned off part of the existing spectrum that was already allocated for wireless services you were able to provide higher capacity levels within a given market without taking a lot of spectrum out of service. The standard also provides for dual mode operation so it provides a migration path throughout all of the Americas as the systems over the next two years here migrate to digital.
CDMAS: Are there enough handsets at the moment to cope with demand?
Scott Erickson: I am not aware of any delays or backlog in manufacturing of CDMA handsets either for cellular or for the PCS markets throughout the world. I think overall there's approximately 26 terminal manufacturers that have signed up to participate. We have at least 16 of those terminal manufacturers that have indicated they want to come through Lucent's own terminal interoperability lab to test the products against our infrastructure.
CDMAS: How do you see the prospects for the development of international roaming?
Scott Erickson: We expect [more of this] now with CDMA being a worldwide accepted standard for digital access to the networks. And because CDMA and IS-95 provide a higher level of fraud protection-way more than what's capable, say, in the analog network-you'll begin to see more and more international roaming agreements between U.S. service operators and international markets. There's really been no technical reason why international roaming for AMPS did not exist. The IS-41 inter-system standard provides for system-to-system communications for roaming and interoperabilty. However, because of the high volume of fraud both in the U.S. and international markets, the analog portion of that made it more susceptible to fraud for international roaming. I think with the introduction now of CDMA as a worldwide digital standard it provides a higher level of fraud protection in the marketplace. I think you'll see the operators more willing to put their business agreements in place to provide international roaming.
CDMAS: Have you had a look at what sort of market growth there could be if there was seamless roaming between countries?
Scott Erickson: I think CDMA is now going to provide options for customers to choose between CDMA and GSM. It's not going to be a barrier anymore.
CDMAS: Wireless local loop has been mentioned as a way into some developing markets like India.
Scott Erickson: Absolutely. Even though some of the major circles within India have deployed GSM technologies, because of the spectral efficiency of CDMA and the limited spectrum resources they have, using CDMA for wireless local loop uses the spectrum more efficiently. In developing countries like India they need to provide many local services out to many towns and villages. Doing that through wireless is a much more economic avenue to take. When you look at CDMA and how it uses the spectrum you could allocate limited resources to that but still provide high capacity systems.
CDMAS: You were recently at a conference in China. What feedback did you get about CDMA's market prospects?
Scott Erickson: Very positive. The conference was called the China CDMA Summit. The attendance wildly exceeded our expectations. There were over 800 people registered for this particular conference. We got to hear not only from some of the existing CDMA operators throughout the world but also from local operators right in China that have participated in CDMA trial systems as well as from some of the engineering research institutes within China that have looked at CDMA as an evolutionary technology. In China they're already looking at IS-95 as a good technology to put in place for today's services but they also see it as a viable platform for wideband services in the future.
CDMAS: What does CDMA offer developing countries?
Scott Erickson: Because of the ability to deploy an infrastructure for higher capacity, the more users you put on your system you're actually lowering your capital cost per investment per subscriber. When you're deploying timeslotted technologies, your cost per subscriber is really fixed regardless of the capacity of the system.
CDMAS: Do you regard Brazil and South America as promising?
Scott Erickson: Absolutely. Brazil is a market that out of all the Latin American markets probably offers the largest market opportunity. The government is finally going through the process of allocating the B band cellular licences. There are a number of consortia that have applied for licences that are looking to deploy CDMA technology in the Brazilian market.
The government of Argentina is about to go through the auction process for spectrum up in the 1.9 GHz range which is compatible with the U.S. PCS spectrum that was allocated. They're currently in the process of evaluating their competitive guidelines, making rules as far as who can apply for the spectrum in what markets. They will most likely auction the spectrum and be technology neutral. In other words, they'll let the operators that bid for the spectrum determine what's the right technology to deploy for their market conditions. Most of the operators we've had discussions with that are interested in Argentina have indicated that deployment of CDMA would be the right technological choice.
The government of Mexico have indicated now that they will go through the award process beginning in October of this year. So I think you'll see new operating licenses before the end of 1997. This will allow operators to begin providing service in many of these markets in 1998.
CDMAS: Finally, are there any other comments or forecasts you'd like to make concerning the prospects for CDMA?
Scott Erickson: I think we in the industry are all very pleased about how IS-95 as a standard has really taken off. It's probably one of the most rapidly moving deployments of technology throughout the world that we have seen since the introduction of wireless services. Even when GSM was adopted as a standard in the late 1980s, it really took three to five years before it became generally accepted as a technology not just in the European Community but starting to move outside it as well. IS-95 CDMA as a standard, primarily I think because it was built off the AMPS standard platform, has made itself easy to adopt in many countries throughout the world. It has moved very rapidly in terms of the enhancement of features, functions and capabilities.
When we first introduced IS-95 it was not just a vanilla offering of voice services. It provided many enhanced feature capabilities to end-users which allowed the operators to put it into the marketplace very quickly and compete with the existing technologies from a feature, form and function point of view. PCS operators in the U.S. are now competing very effectively with cellular operators in terms of both the quality and the features offered. We're seeing that happen in the international markets now too, which is why many of the markets in Asia are moving very rapidly with the deployment of CDMA. Latin American markets are following very quickly as well.