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Fast Forward

By Perry LaForge
October 1998

cdmaOne is continuing along an incredible growth path. This claim is not just public relations rhetoric but a fact that is substantiated by metrics from independent sources. The thing that makes the success story all that more impressive is the fact that economic downturns in some CDMA markets have not hindered growth as one might suspect. In fact, a recent report by an industry analyst suggested that there may be a global slow down for CDMA. Nothing can be further from the truth.

Global subscriber growth beats all estimates

The growth of the global CDMA subscriber base continues to outstrip the most optimistic projections. At the end of August 1998, over 16 million people worldwide were using CDMA, an increase of over 100% from December 1997. The growth rate in North America is even more impressive: the August figure of 4.5 million subscribers represents a 500% increase over the same point last year. These figures are the result of two key factors. First, existing CDMA operators are providing a superior wireless service that is attracting an ever-larger proportion of customers. Second, wireless operators across the globe, whether license recipients or transitioning from analog networks, are selecting CDMA to secure a clear advantage over competitors using other digital technologies. Thus, the significant growth in CDMA subscribers is not confined to established markets, but is a broad-based expansion driven by growth in all markets around the world.

Korea is a clear example of this trend. In spite of lingering economic turmoil, Korea continues to lead the world in CDMA subscribers. Both the established operators and the new PCS players are reporting tremendous subscriber growth. Many observers expect this trend to continue unabated. The investment bank BT Alex. Brown recently released a report stating that subscriber growth continued to increase in spite of severe economic conditions, reaching an annual rate of over 50 percent in the first half of 1998. The growth in subscribers has resulted, in turn, in a tripling of revenues for the five CDMA operators in Korea, according to a report in the Korean Herald.

CDMA network deployments in Japan are a further indication of growth uninhibited by financial difficulties. During the summer of 1998, cellular operator DDI launched commercial CDMA service in 177 cities, including Osaka, Kyoto, Nagasaki, Fukuoka and Naha, and 440 towns and villages. Five DDI regional affiliates will launch CDMA commercial service between December 1998 and April 1999, thereby expanding coverage to more than 800 cities and towns. The launch of commercial service by IDO in April 1999 will bring CDMA service to nearly 2,000 cities and towns throughout Japan.

Just as in Korea, the Japanese CDMA subscriber base is expanding rapidly. DDI is adding over 2,000 subscriber per day and projects 700,000 CDMA subscribers by the end of the first quarter of 1999. In addition, CDMA has established a reputation among Japanese consumers for excellent voice quality. According to a recent DDI survey of more than 1,400 cellular subscribers, 80 percent reported that CDMA had voice quality equal to or better than their wireline phone. In addition, 82 percent of those surveyed said that CDMA call quality was superior to their current wireless service. The Japanese magazine Nikkei Trendy also published a survey in October, 1998 that ranked cdmaOne above other technology options for voice and system quality.

The third major market for CDMA in Asia, and the one with the greatest potential, is China. CDMA cellular networks have entered commercial service in the cities of Beijing, Shanghai and Xi'an. CDMA wireless local loop networks are also expanding their presence in China with a commercial network deploying in the Shenzen special economic zone and trials underway in Beijing and other major cities. Australia is emerging as well as a major CDMA market. Telstra's recent announcement of a nationwide CDMA network adds to the country's growing cdmaOne presence for both mobile and Wireless Local Loop systems.
The acceleration in CDMA subscriber growth has not been restricted to Asia. 1998 has seen Latin America become a growth market for CDMA. There are now commercial CDMA systems in Brazil, Chile, Dominican Republic, Guatemala, Mexico, Peru, Puerto Rico and Venezuela. In Brazil, the largest telecommunications market in the region, CDMA networks are in operation in the province of Bahia and will launch in Rio de Janeiro and Sao Paulo by the end of 1998. These three networks will cover 65 percent of the Brazilian populace.

Elsewhere in South America, CDMA has established a strong and growing presence. In Peru, a CDMA cellular network covers over 60,000 people in Lima and other major cities. The citizens of Santiago, Chile are the first in South America to enjoy a CDMA PCS system, which launched service in September 1998. Further north, CDMA cellular service is expected to begin in Caracas, Venezuela in November 1998. Two operators in the Dominican Republic are launching CDMA mobile networks, while Puerto Rico and Guatemala have CDMA WLL systems.

North America, where CDMA has established its position as the fastest growing wireless technology, continues to record impressive gains in subscribers, in both the PCS and cellular markets. A recent report by Dataquest (June 8, 1998) showed that subscriber growth for US cdmaOne PCS systems outstripped that of PCS operators adopting other digital technologies. According to the report, net additional subscribers for CDMA in the United States for the one year period from the first quarter 1997 to 1998 exceeded the growth for TDMA and GSM combined.

On the PCS side, the Dataquest report cited Sprint PCS as adding 226,000 subscriber in the first quarter of 1998 alone, while AT&T Wireless, a TDMA operator, added only 199,000 subscribers between the first quarter of 1997 and the first quarter of 1998. Other leading CDMA PCS operators, such as Centennial Cellular and PrimeCo PCS, experienced similarly impressive gains for the same period. For cellular operators, Dataquest reported that a large proportion of net additions to their customer bases in 1997 came from CDMA: 46% for GTE Wireless, 30% for Bell Atlantic Mobile, and 25% for AirTouch Communications.

The combination of strong subscriber growth in all major CDMA markets - Asia, North America and Latin America - clearly demonstrates that demand for the superior voice quality and advanced features of CDMA service is nearly impervious to the current economic difficulties. The CDG expects this phenomenal growth to accelerate in 1999 as further system launches in Asia and Latin America bring CDMA services to an even wider customer base.

A CDMA handset to fit every need

To meet this global surge in CDMA subscriber growth, handset manufacturers are bringing a flood of new models to market. The number of CDMA handset choices has doubled over the past year to more than 70 different models produced by 14 global manufacturers. Consumers who purchase CDMA handsets experience the wireless industry's most advanced features including short messaging services, caller identification and voice mail notification, and longer battery life. A significant addition to CDMA handset types are those incorporating palm-top computers or voice-activated dialing capabilities.

In order to facilitate domestic and international roaming, the availability of multi-mode phones is rapidly expanding. Dual band/dual mode PCS CDMA/AMPS phones and dual mode cellular CDMA/AMPS phones are available from a number of manufacturers and will be joined soon by a tri-mode PCS CDMA/cellular CDMA/AMPS phone. These handset models offer the consumer the advantages of CDMA digital services along with expanded coverage.

A corresponding development that will further stimulate the CDMA handset market is the launch of new low-power chipset and system software. These advances allow manufacturers to design even smaller handsets with extended stand-by times and support for much higher data-rate services. In addition, the expansion of handset manufacturing capabilities into Brazil and other key markets will ensure that handset availability meets the burgeoning level of demand in growth markets.

And the beat goes on

Efforts of the CDG and member companies to continually evolve cdmaOne ensure that this growth is not a short-lived phenomenon to be replaced by the next great technology solution. So much attention of late is paid to 3G that we sometimes forget to recognize the emerging capabilities of CDMA that will deliver the next generation of advanced services long before the 3G systems see commercial reality.

Operators do not benefit from technologies that require major overhauls and infrastructure replacement to implement new services. They need a technology that can evolve to keep pace with market demands for advanced services and capacity pressures. cdmaOne has the flexibility of design and the standards in process to do just that, ensuring that it will remain the technologically and economically superior choice for wireless, regardless of "generation".

The CDG believes that evolution is the path to the future, so expect to experience the results of the cdmaOne evolution process as more and more capabilities and advanced services are announced by manufacturers and operators in the coming months and throughout 1999.