• Investment World
• eWorld
• Catalyst
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest

R. Venkatesan
Aditi Mitra
Y. Venkataramana

WHILE there is so much talk about the two main mobile communication technologies — global systems for mobile communications (GSM) and code division multiple access (CDMA) — there is little awareness about their implications in India.

With the world becoming increasingly computer-centric — with a number of tasks such as communications, financial management, information retrieval, entertainment and even games being carried out using computer applications — it is but natural for users to expect these applications to run on their mobiles as well.

GSM

GSM technology is much hyped about because it allows for greater bandwidth, a more capable execution environment, permitting thereby the development of mobile applications.

Advantages: i) It supports a higher user base because of greater network capacity attributable to increased radio spectrum efficiency;

ii) Provides higher security to the user through user authentication and voice encryption;

iii) Digital transmission allows for greater voice clarity;

iv) It simplifies data transmission;

v) A single standard allowing international roaming between GSM networks. It works on a `one phone, one number' basis and the customer can settle bills in local currencies at home.

CDMA

When implemented in a cellular telephone system, CDMA technology offers numerous benefits to the operators and their subscribers. They include:

i) Capacity increases — four-five times that of a GSM system;

ii) Improved call quality, with better and more consistent voice transfer compared to AMPS systems;

iii) Improved coverage characteristics, allowing for the possibility of fewer cell sites;

iv) Increased talk time for portables; and

v) Bandwidth on demand.

One major disadvantage of CDMA vis-à-vis GSM is that the former does not offer international roaming. While some experts argue that CDMA is at least five-six times more spectrum-efficient than GSM, others say that both GSM and CDMA are equally good technologies.

In India, given the uncertainties in regulation — like inclusion in the one-by-six scheme of the income-tax department or need for compulsory identification to get pre-paid subscription — a well-defined CDMA offering might find more takers and, initially at least, this could erode the GSM subscriber base.

The success of CDMA depends on the operators' ability to capture the low end of the market through affordable handsets. If successful, they will be to grab the high end of the market as well by offering CDMA's better data capabilities.

It is estimated that, in India, CDMA subscribers in 2003 would be six million, two-thirds of the size of the cellular market. The resurgence of CDMA regionally (and globally) will help create economies of scale for handset producers. The latest to launch this technology is Reliance, in collaboration with Qualcomm.

Competitive strategy

GSM users may have obtained the first mover advantage, but competition from CDMA is likely to be intense. The first mover advantage comes from three primary sources — switching costs, technological leadership and/or pre-emption of assets.

As adoption of CDMA would involve switching costs for GSM users, CDMA-based service-providers, especially the late entrants, will have to make the switchover as attractive as possible for customers.

GSM operators, on the other hand, cannot afford to be complacent because, if a bulk of their customer base gets eroded, there would be `tipping' problems, where users would gradually switch over to the larger base to reap the advantage of connectivity.

The turf war

The ongoing battle is, no doubt, likely to benefit the customer.

The operating conditions of the two services are very different. For example, a private basic service operator using IS-95 (CDMA) pays nothing to BSNL for a local call, but a GSM operator has to pay up. Ideally, the terms for operating the two services should have been the same — GSM by mobile operators and IS-95 by basic service operators. To get around this problem, the IS-95 (CDMA) system has been christened Wireless in Local Loop (WiLL) in India.

WiLL

In a developing country like India, there is a big demand for telephone services from both new businesses and residential use. WiLL has the following advantages:

Wireless technologies hold promise to rapidly provide thousands of new subscribers with high-quality telephone service at a reasonable price.

Existing landline operators can extend their network with WiLL.

Cellular operators can capitalise on their current network to deliver residential service with WiLL

New service providers can quickly deploy non-traditional WiLL solutions to rapidly meet the telephony needs. The unique features and benefits of CDMA make it an excellent technology choice for fixed wireless telephone systems.

In India, the issue is not whether WiLL should be allowed. It is whether CDMA-based WiLL can be used by fixed-line operators on terms and conditions not of mobile licences but of fixed-line basic licences. The basic licences, among other things, come with vastly different and much more favourable interconnect terms for fixed-line operators, which cellular operators do not enjoy.

CorDECT

India's very own WiLL, CorDECT, jointly developed by Analog Devices Inc., Midas Communication Technologies (P) Ltd, TeNeT group and IIT Madras, is a product designed to be affordable for the common man and to provide all the services expected of a state-of-the-art telecom network.

The capital and operational costs for running the CorDECT system is low. The system's components are designed to work in harsh environment without air-conditioning and requires low infrastructure support. As the power consumption of the CorDECT exchange is very low, investments on UPS and diesel generators would also be low. These and other features make CorDECT the most cost effective WiLL system for basic telephony and Internet access.

But will CorDECT be what C-DOT was to rural mobile telephony?

Global forecasts

Owing to declining growth in mobile subscribers, third generation (3G) entrants will find it difficulty to make inroads, even in markets that are not yet saturated. Even in under-penetrated countries such as Argentina, Hungary and the US, growth will slump by 2005-06, just when 3G services start to roll out.

The Cellular Operators' Association of India (COAI) forecasts 100 per cent growth year on year until 2005. Last year, the mobile market grew 93 per cent, with the total subscriber base touching 3.42 million.

(The authors are with NCAER. The views are personal.)

Article E-Mail :: Comment :: Syndication

Stories in this Section
Crop shift confusion

Copyright © 2003, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line