Qualcomm Inc (QCOM)

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Will Cellcos dump GSM with 3G rollout?
R SRIRAM

http://economictimes.indiatimes.com/articleshow/1132114.cms

TIMES NEWS NETWORK[ SATURDAY, JUNE 04, 2005 12:44:09 AM]

SAN DIEGO: Qualcomm, the San Diego based wireless giant, believes that many Indian cellular operators will dump the global system for mobile communications (GSM) technology and adopt the code division multiple access (CDMA) standard as they start rolling out high margin and exotic third-generation mobile services in the country, CEO-elect Dr Paul Jacobs has said.

The battle between CDMA and GSM, which generated much heated debate and controversy in India when the Reliance group and the Tatas rolled out their CDMA services some time ago, will eventually be resolved in favour of the former as the industry moves onto providing next generation services.

“CDMA is more efficient, cost-effective. It is the best for providing 3G services as many operators in Europe are discovering,” he told a group of Indian reporters on Wednesday in his sprawling office complex in San Diego, California.

Bharti Tele-Ventures, the country’s most valuable domestic phone company, and Bharat Sanchar Nigam Ltd, the state-owned telecom giant, are both believed to have chosen CDMA for their proposed 3G services.

Bharti, Qualcomm officials believe, will use the WCDMA (where W stands for wideband) technology, for its $ 1bn 3G services roll-out.

The 42-year-old Dr Jacobs, who takes over from his father Dr Irwin Jacobs as CEO of the $ 5bn Qualcomm on July 1, believes that the transition from GSM to CDMA for those providing 3G services will happen in different ways in different countries.

“What we are seeing in Europe is that companies are investing in 3G using CDMA, and then migrating other consumers onto it and then reforming their existing spectrum,” he added. The global tussle between CDMA and GSM, he believes, has decisively moved in favour of the former.

Numbers appear to back up his assertion. Qualcomm’s revenues, which rose 27% to $ 4.9bn in ‘04, could soar in the coming years as the company has a stranglehold in the global market for operators using CDMA technology. Its cash and cash equivalents are now about $ 8bn.

Indian operators are not the only ones mulling a shift to CDMA. Vodafone, the world’s largest mobile phone company by subscribers, is accelerating the roll-out of wireless 3G services and so are Verizon and Sprint, two of the largest US operators.

In India, Reliance and the Tata group are the only ones using the CDMA technology with a total subscriber base of more than 10m.

“GSM by definition has to hit the wall. Their volumes are only in the low unit category. Across the world, the revenues from WCDMA handsets are rapidly overtaking GSM/GPRS handsets. There are some applications that GPRS cannot handle such as high-speed graphics and multimedia,” says Jeffrey K Belk, senior vice president, marketing Qualcomm.