CDMA2000 Offers TDMA operators a Fast Track to 3G

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The CDMA community has an enviable track record of delivering on its promises. For instance, operators deploying CDMA2000 1X found that this technology does indeed offer doubled voice capacity and 3G data speeds, exactly as pledged. And CDMA2000 consumers around the globe have an almost dizzying array of new devices to choose from, just as the CDMA industry had vowed they would. It's no wonder then that TDMA operators, such as those in Latin America, are increasingly realizing the vast opportunities offered by CDMA2000 technology, particularly in markets that rely upon spectrum in the 800 MHz and 1900 MHz bands.

As vendors focus their energies on more robust air interface platforms - reducing device and support options for legacy TDMA networks - operators are challenged to make the right choice in network migration. CDMA2000 offers a direct, economical path to the future for TDMA operators, that:

• Quickly enables opportunities for new 3G revenue streams
• Provides increased voice capacity and superior spectral efficiency
• Preserves investment in existing infrastructure
• Offers a broad range of devices
• Brings significant roaming opportunities

CDMA2000 - dominates 3G

With 34 commercial networks and over 25 million subscribers worldwide, CDMA2000 dominates the 3G market today, and analysts predict that it will continue to lead throughout this decade. Operators are already starting to see positive financial results from the wireless data services enabled by CDMA2000 1X. Morgan Stanley reported that CDMA2000 delivers a nearly fivefold increase in data revenue and more than 50% higher total revenue per subscriber.

In commercial deployments, CDMA2000 1X provides data throughput of 60-100 kbps, and the 1xEV-DO upgrade supplies speeds of 500-1,200 kbps. In contrast, commercial GPRS networks offer data speeds of only 20-40 kbps, with some research showing GPRS throughput as low as 10 kbps in the United States. NTT DoCoMo's WCDMA network offers data throughput of 64 kbps. Data throughput directly impacts the types of applications that can be offered by a wireless operator and thus, significantly influences potential revenue streams from data offerings. So, while GSM and GPRS can support only simple applications like SMS, microbrowsing on WAP and limited multimedia, CDMA2000 enables an operator to deliver a full package of multimedia messaging, Web browsing, enterprise applications, and video and audio streaming.

CDMA2000 Deployments

CDMA2000 - a one-step evolution to 3G

CDMA2000 technology is being deployed at 450 MHz, 800 MHz, 1900 MHz and 2.1 GHz. With nearly 88% of Central and Latin America (CALA) wireless subscribers using 800 MHz network services, it's essential for incumbent operators to find solutions befitting that spectrum. It is true that the GSM camp is just now beginning to support 800 MHz service, but that support only extends through GPRS and possibly EDGE. There is no planned support for GSM's 3G solution, WCDMA, at 800 MHz, thus, CDMA2000 1X is the only 3G solution available for operators with 800MHz.

To experience the benefits of 3G technology, a TDMA operator need only migrate once to CDMA2000. Yet an operator choosing to migrate from TDMA to GSM/GPRS, then possibly to EDGE, then to WCDMA will have to undergo two complete network overhauls.

The upgrade from GSM to WCDMA clearly requires additional investment in new spectrum beyond what most operators possess today. Acquisition of additional spectrum is a must before an operator can even begin the subsequent buildout of its entirely new WCDMA network. To offer WCDMA an operator must have at least 5 MHz of spectrum in which it can fit voice and data. As designed, WCDMA allows for voice service in 60% of the available spectrum, leaving 40% open for what will likely grow to be spectrum-consuming data services. CDMA2000, however, can be deployed in only 1.25 MHz of spectrum. By offering voice service on a maximum of two CDMA carriers, six to seven carriers can be left open for data services.

CDMA2000 - delivers maximum benefits at minimum investment

Another area where CDMA2000 particularly outshines its competitors is in voice capacity. CDMA2000 doubles capacity of cdmaOne™ systems and increases the capacity of TDMA networks by four to six times. CDMA2000 operators can grow their businesses with the assurance that their networks are "future-proofed" to handle increasing voice and data traffic. As the most spectrally efficient of all mobile network air interfaces, CDMA2000 is the perfect answer for operators that face increasing penetration rates and escalating minutes of use. In economic terms, increased spectral efficiency delivered by CDMA2000 1X translates to significant capital savings, since fewer base stations are needed in comparison with rival technologies that are less efficient.

Operator experiences confirm the increased amount of voice traffic that a CDMA2000 1X network can deliver. Operator SK Telecom in South Korea reports its commercial use of CDMA2000 1X has boosted network capacity by 70%, to more than 231 Erlangs in 10MHz of spectrum. Likewise, one U.S. operator reports it has achieved 80% capacity gains on its CDMA2000 1X network. Many analysts now acknowledge that CDMA2000 has, and will continue to have, the most voice capacity of all 2G, 2.5G and 3G solutions. For example, recent independent research from Deutsche Bank and U.S. consultancy Forward Concepts reiterate that even the most conservative estimates firmly place CDMA2000 as the leader in voice capacity.

In addition, CDMA2000 relies on the same ANSI-41 core network as TDMA, unlike GSM, which uses a completely different core network called MAP. Operators with both TDMA and GSM networks must deploy complicated MAP/IS-41 gateways. Plus, they can expect higher learning curves and operating expenditures while dealing with the new MAP services environment. On the other hand, migrating from TDMA to CDMA2000 preserves operator investments in the existing core network. By staying within the ANSI-41 service creation environment, operators can ensure service transparency for end users and a smooth migration to CDMA2000. Further, the reuse of ANSI-41 network elements guarantees substantial cost savings due to having a common MSC and HLR and common servers for SMS, VMS, WAP and other value-added services. Operators also will have a common Network Management System (NMS) for both networks.

CDMA2000 - offers greater product selection at lower cost

There is even more positive news on the device side for operators taking the CDMA path because CDMA technology is marked by rapidly declining phone prices and a growing abundance of devices. A 2002 study by The Shosteck Group revealed that cdmaOne phone prices are expected to continue to fall, reaching a price point of $53 by 2005. CDMA2000 1X handset prices will decline even faster, falling to $58 by 2005.

The news is not so good, however, for WCDMA/UMTS phones, which are expected to remain three times more expensive than CDMA2000 handsets. One reason is that CDMA2000 products leverage the entrenched base of cdmaOne products and share a common design and components, while WCDMA phones are fundamentally different from the GSM handsets that are their predecessors.

Another crucial difference goes to the very heart of the handset, with the bill-of-materials (BOM) figure expected to be substantially more for WCDMA evices simply because of the WCDMA air interface design. The BOM amount includes the costs of various items such as the baseband processor and radio frequency (RF) and intermediate frequency (IF) components. While there will likely be a common cost curve for most components included in WCDMA and CDMA2000 devices, the baseband processor and related costs differ radically between the two platforms. Specifically, the wider bandwidth of the WCDMA carrier channel means the Rake receiver and searcher must be more complex than the baseband processor for CDMA2000, resulting in more complexity and cost for WCDMA handsets. Teardown comparisons of commercially available WCDMA and CDMA2000 handsets have already revealed the total silicon die area of an average WCDMA model is as high as seven times that found in a CDMA2000 handset.

GSM and CDMA BOM Comparison

Moreover, meaningful volumes of WCDMA handsets are not expected to develop until 2004 at the earliest - making for few economies of scale - and selection of WCDMA models will likely remain quite limited in the immediate future. But there are already at least 210 CDMA2000 terminal products available in the global market, and more are being added monthly.

The GSM migration path also raises the specter of clumsy multimode phones, not necessarily just for roaming but possibly for operation within a single operator's network. If the full GSM migration path is taken, a TDMA operator can expect to need phones that include modes for TDMA/GSM/GPRS/EDGE/WCDMA.

CDMA2000 including CDMA2000 1X and 1xEV-DO and 1xEV-DV are backward compatible with any cdmaOne, meaning subscribers with legacy CDMA handsets continue to receive their standard services even while the network is upgraded and enhanced handsets enter the marketplace. CALA operators that sill have significant analog coverage, particularly in rural areas, can also leverage the numerous dual-mode CDMA handsets that already support analog.

Operators also must consider the issue of product availability in general, especially for the 800 MHz market. According to information from The Shosteck Group and EMC Database, there were 104 cdmaOne and 34 CDMA2000 models for single-band 800 MHz and dual-band 800 MHz/1900 MHz. However, only 10 GPRS 1900 MHz models had been introduced and no GSM/GPRS 800 MHz devices were available. The first GSM/GPRS 800 MHz/1900 MHz device has been promised to reach the U.S. market in December 2002.

This gap in product selection is not surprising when one considers that at the time this data was collected there were 23 manufacturers creating 800 MHz cdmaOne devices and seven developing 800 MHz CDMA2000 devices. There were zero vendors offering 800 MHz GSM/GPRS products, only nine offering 1900 MHz GSM devices and two offering 1900 MHz GPRS devices.

The Shosteck Group also has tracked promised delivery dates for a host of GSM handset platforms, including GAIT (GSM/ANSI-136 Interoperability Team), GSM800 and EDGE. All of these products had been, or still are, late to market by varying degrees. The history of EDGE provides an excellent example. Vendors initially announced EDGE products would hit the market in 2000. That didn't happen. Then a story in a February 2002 issue of a leading wireless industry newsletter quoted speakers and interviewees at the 3GSM World Congress in Cannes, France, who pledged that the first 800/1900 MHz EDGE terminals would arrive in the United States and Canada by mid-year 2002, while terminals for the European market would arrive by the end of 2002. However, it wasn't until November 2002 at the COMDEX show in Las Vegas that the first EDGE handset was even unveiled for testing, at which time initial commercial availability was predicted for Q1 2003. Provided this device ships on time, it will still arrive more than six months later than the time period envisioned by the speakers in Cannes, continuing the poor track record of delivery dates for GSM-related products.

Further, among the promised devices of the GSM evolution that have made it to market, most offer quite limited selections and quantities. For instance, AT&T Wireless has only a single GAIT handset to offer customers who want to back up their GSM service with TDMA coverage. Such narrow consumer choice is a critical problem. But an even larger issue is the fact that limited volumes of devices supporting GAIT platform which lack widespread acceptance outside of North America will logically be unable to leverage purported GSM economies of scale, thus resulting in higher prices to end users.

CDMA - opens access to key roaming markets

Of course, low prices and plentiful product selections help operators attract subscribers. But when it comes to wireless, another overarching issue is geographic coverage.

Because the South America region has long been considered a TDMA stronghold, it is sometimes easy to overlook the fact that 28 operators in 15 CALA countries currently provide CDMA services to 26 million subscribers. Further, five Latin American operators - Centennial de Puerto Rico, Telefonica Celular and Telesp Celular in Brazil, Smartcom PCS in Chile and Movilnet in Venezuela - have already launched high-speed CDMA2000 1X networks. Another eight CDMA2000 1X networks are expected to roll out in the region by the end of 2003; three of them are TDMA operators migrating to CDMA2000. On the present course, cdmaOne/CDMA2000 will represent 37% of the CALA market in 2005.

With over 80 million subscribers and networks in key roaming markets in South and North Americas, TDMA operators migrating to CDMA2000 can share in roaming revenues across the region. cdmaOne/CDMA2000 networks are also found in Europe, the Middle East, Africa and, of course, Asia Pacific with more than 55 million CDMA subscribers.

CDMA2000 is the first 3G technology to be deployed in Latin America

As CDMA2000 adds to its growing portfolio of operator success stories, it becomes increasingly clear that this 3G technology has kept its pledge to deliver the world's most cost-effective, spectrally efficient solution for both voice and data services while keeping subscribers happy with a tremendous choice of reasonably priced access devices. The promise of CDMA2000 is real: The technology is here and now, providing a clear migration path that will take operators into a lucrative and successful future.