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Friday, July 14, 2006 10:30:12 PM
It should be noted that for all the PR dollars spent by QUALCOMM and CDG with Bock Communications, and/or Andy Seybold's consultancy, nobody but nobody in India in a comms decision making capacity, is gullible enough to consider cdma2000 1xRTT Release ZERO to be 3G technology.
Prashant Singhal of Ernst & Young India asks ...
Is it viable for a single telco to offer GSM and CDMA services?
>> No Clarity on Gains In Long-Run
Prashant Singhal
Ernst & Young India
The Financial Express
June 26, 2006
http://www.financialexpress.com/fe_full_story.php?content_id=131786
CDMA networks in India have been a fairly recent but welcome addition to the telecom scene. Within a few years, CDMA providers have made their presence felt and have managed to capture more than one fourth of the mobile market. Today Reliance and Tatas together have 27.7% of the market. (As per May 2006.) However, GSM continues have the majority share in the market.
GSM networks add more subscribers to their base per month, in sheer number but CDMA networks have shown far quicker growth since their entry, a few years ago (In May 26.2 % new subscribers chose CDMA connections, up from 25.7% in April). ARPUs for both GSM and CDMA networks are essentially equal, and the difference is attributed more to consumer behaviours and intent than technology derived. CDMA networks, like elsewhere in the world, have proven fairly cost effective to set up and run. Telecom companies are thinking about being able to offer services in both networks, as an option, but there is not too much clarity on its benefits in the long run.
We have seen a success story of one such provider in China. Recently, China Unicom (a major telecom operator in China has moved into a CDMA network to add to its GSM infrastructure and has made its presence felt. Their ARPU increased to $6.17 from $5.8.
Telstra, on the other hand, the Australian giant, one that offers both services, has recently announced the termination of its CDMA services. Thus the global markets tell different stories and it is unusual to find a precedent of operators offering both networks, elsewhere in the world.
A major hindrance in the attractiveness of CDMA connection in a consumer’s viewpoint, is the narrow range of handsets to choose from. The CDMA technology being handset embedded makes the consumer handset bound, and this is a major disadvantage at the moment. GSM users seem to like the idea of being able to choose and change handsets as and when possible. Today, even though, it is only GSM networks that offer high end services such as VAS and 3G, there is no doubt that in the long-run, CDMA can also adapt and provide these services. Furthermore, as India moves towards a 3G era, CDMA and GSM core technologies will begin to align themselves.
CDMA, as a technology, is more spectrum-efficient. Spectrum is a scarce resource and a technology that utilised it more efficiently and creates far more capacity per frequency range. CDMA can also use existing wired networks as a platform and using WLL technology can start to supply lines without as much capital investment as what goes into setting up a GSM network.
In India, the rural market is the undisputed, ‘big opportunity’ for growth. The consumers in the Indian hinterland will not be a market that bases its purchase on services and frills. It is the basic voice telephony and essentially, being available and within reach all the time, that will be the key service and the crux of the telecom growth in this sector.
The remote Indian non-urban areas are yet untouched by telecom infrastructure but the wired network that does exist could be a great platform to base a mobile network on. It is CDMA that can take advantage of this fact. The Indian telecom market is today poised for much excitement, in its migration from 2-2.5G to 3G. If India follows the Chinese model or takes from the Australian experience, remains to be seen.
The writer is head of telecom practice, Ernst & Young India <<
- Eric -
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