CDMA Technology
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Investing In Tomorrow

By Perry M. LaForge
Executive Director, CDMA Development Group

Cost-effective, high quality and future-proof... at a time when revenue generation and competition are on the minds of many operators, the inherent advantages of cdmaOne are more important than ever.

Competition is increasingly affecting the business strategies of the world's wireless operators. Deregulation and three or more operators per market are already common in the advanced telecommunications regions and are now increasingly being seen in developing nations as well.

The demands of this new, more competitive era are forcing operators to approach revenue enhancement and cost containment in ways that were not necessary in the old monopoly or duopoly environments. However, cdmaOne service providers are well positioned to respond to this challenge. Whether deploying mobile or fixed wireless systems, the inherent advantages of their chosen technology can be leveraged, enhancing both revenue generation and cost containment and helping them to achieve the necessary edge over their competition.

Mobile operators used to be able to rely on airtime rates to ensure revenue growth. The margin on home market minutes of use and roaming charges was high while the lack of competition meant that lowering prices to attract and retain customers was not necessary. Now, however, the changing landscape and trends toward drastically lower prices for airtime have made it impossible for operators to rely on price per minute as a guaranteed source of revenue. Not only that, but it is becoming essential for operators to introduce value-added features to attract customers to the network and generate minutes on the system.

Incentive
Competition for fixed line services has brought with it a new challenge. New entrants offering wireless access now have to come into the market with lower pricing than the consumer can get from the incumbent wireline provider. In fact, lower pricing alone may not be enough of an incentive for a consumer to leave the entrenched wireline provider he is comfortable with. Emphasis on service differentiation is necessary to draw customers away from their existing provider in this environment.

With these sort of demands being made of them, it is an important advantage for cdmaOne operators that a variety of features are available for service differentiation, and the superior nature of cdmaOne technology brings additional benefits for attracting customers and avoiding churn. Where voice services are concerned, the clarity of cdmaOne is an important aid to differentiation against competing technologies. In the mobile environment, if a subscriber has ever had an analog phone there is no comparison to the near-landline voice quality offered by cdmaOne. Even when matched against other digital technologies, voice clarity is an advantage of CDMA; cdmaOne is the only wireless technology that comes close to matching the voice quality users expect from the fixed-line service offered by copper wire transmission, for example.

Battery life is another area where CDMA out-performs rival technologies. This can be a strong selling point-not to mention a guarantee of more talk-time. As for fraud and security issues-common concerns of many users-here too, CDMA has qualities that make it more attractive than competing wireless technologies.

The value-added services that cdmaOne can help them to offer are another area operators can turn to for product differentiation. For the end-user requiring more than voice from a wireless device, cdmaOne is well positioned to offer a range of such services.

Short messaging service (SMS) is already quite popular in many markets, allowing text messaging to the CDMA handset. Data and fax service through a PC connection is another existing capability of CDMA; cdmaOne is in fact the wireless technology best suited to meet the emerging demand for advanced data services, including high-speed Internet connections.

The evolutionary path of cdmaOne is already set. Standards for 64kbit/s data have been defined and are in commercial development, while for 144kbit/s they are in the last phases of standardization and 300kbit/s has been incorporated into CDMA2000 (third generation cdmaOne).

CDMA manufacturers are already introducing products that incorporate palm computing with the wireless phone as well as enhanced micro browsers. The WirelessKnowledge venture between QUALCOMM and Microsoft and initiatives such as the Wireless Application Protocol (WAP) and Bluetooth promise to open new horizons for advanced data applications over the backbone of a cdmaOne network. Because cdmaOne is the wireless technology best suited to carry traffic for data services, a distinct advantage is available to the cdmaOne operator that wants to address the growing demand for mobile computing and Internet access.

All of these characteristics of the technology can be used to attract new customers and, of equal importance, to help operators fight customer loss, better known as churn. Churn has historically been an obstacle for operators when they cannot differentiate their service from the competition and rely on price alone, leading to a fall in customer numbers. With the combination of technical superiority and a wealth of advanced services that it can offer, the cdmaOne operator also has the advantage of appealing to the high-end user, the early adopter of cutting-edge products and the corporate business user. These types of customers are the most desired because, for the same cost of acquisition as the mainstream consumer, the return on investment is significantly greater.

There are clear advantages for cdmaOne on the cost side of the equation as well. Since cdmaOne systems offer capacity advantages over other wireless technologies, the cdmaOne operator can support more users on the same bandwidth as his competitor. This allows the maximum utility to be derived from one of the most significant resource investments an operator can make. Since acquiring additional spectrum is not an easy or cost-effective option for supporting more users, it is critical that an operator take advantage of every tool at his disposal to use the existing allocation efficiently. The increased capacity cdmaOne brings, coupled with a robust set of tools for network optimization, ensure that the cdmaOne operator realizes significant capacity gains compared to other technologies. These advantages follow cdmaOne into the next generation with the first phase of CDMA2000 (also known as 1XRTT) offering a two-fold increase in voice capacity. This enhancement is due for introduction to the market as early as 2000.

Developing economies
The economics of wireless local loop (WLL) are also worth highlighting, especially as achieving a cost advantage over wired network solutions is a key factor in WLL's being able to compete. Since many WLL deployments are in developing economies, the price of building a network has to be kept at a minimum to ensure the resulting services will be affordable to the target user population and still provide a return on investment for the operator. Offering rapid deployment, flexible capacity planning and competitive economics along with its capacity advantages and advanced features, cdmaOne is a cost-effective choice for fixed wireless access.

Investment preservation was a key consideration in the evolution to future generations of cdmaOne. The standards path from second generation cdmaOne to CDMA2000 builds on existing capabilities, keeping in mind the significant investments that have been made in infrastructure and spectrum. Only cdmaOne operators will be able to deploy 3G services within their existing frequencies and bandwidth allocations. The compatibility between the CDMA2000 3G air and network interface with the 2G cdmaOne system is another aspect of graceful migration that will cause the minimum of disruption to existing users as networks are upgraded, while capitalizing on the resource investments operators have in place. The result is that operators will be able to offer customers the 'services of the future' faster and more cost-effectively-considerable advantages for increasing market share.

As the dynamics of the marketplace continue to evolve, so does cdmaOne. The technology that has been proven to be the best choice for second generation wireless systems offers even greater value for operators and consumers in the next generation.