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GSM rebrands 3G service but claims victory over CDMA prematurely

CDMA2000 ahead of 3GSM

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The GSM Association has rebranded its 3G technology as 3GSM to avoid confusion with CDMA, and is claiming resounding victory over the Qualcomm-controlled rival. This is somewhat premature.

Few doubt that, eventually, the GSM upgrade paths to 3G – which embrace GPRS, EDGE and W-CDMA – will be more dominant than the 2.5G and 3G versions of CDMA, CDMA2000 1xRTT, EV-DO and EV-DV. But the CDMA upgrade path has been far simpler and smoother than the GSM one, so at this stage it is ahead in terms of live 3G networks and actual subscriber numbers. And the delays and technical hiccups in W-CDMA have served to enhance the appeal of CDMA and to guarantee it a longer and stronger life than would have been predicted a few years ago.

The GSM Association, the industry body behind the cellular standard, said this week that 85% of the world's operators have committed to W-CDMA. Its chief Ron Conway was on the offensive – or perhaps the defensive – slamming Australia's Telstra for choosing recently to upgrade to CDMA2000 1X EV-DO for its Mobile Loop services. By 2008, its users will be unable to roam in other countries, he claimed.

He was keen to reassure carriers that the key technical problem with 3GSM, the incompatibility of handsets with GPRS and GSM, was "on the way to being fixed", though this fixing process has already dragged on for far too long.
But despite teething problems, the installed base of GSM will ensure the success of 3GSM in the medium term. It has 850m subscribers worldwide, compared to 150m for CDMA, according to researchers at ABI. At this point, however, CDMA2000 is ahead. Of the 20 live 3G networks in the world, the CDMA-based ones have higher subscriber levels because there have been fewer technical problems, more rapid development of attractive handsets and more appealing pricing.

For instance, SK Telecom in South Korea has 1.5m EV-DO subscribers, compared to under 1m on NTT DoCoMo's 3GSM system, which is of a similar age and scale. And rival Japanese carrier KDDI has 10m subscribers on its 2.5G and 3G CDMA 1x services, branded 'au'. SKT says its network delivers real world data rates of 700Kbps and its subscribers spend an average of $22 per month each on data options, compared to $5-7 per month on the carrier's 2.5G 1xRTT network.

Reinforcing the strength of CDMA2000 – even if this proves shortlived – Verizon Wireless has launched its BroadbandAccess EV-DO service in San Diego and Washington DC. This data-only network requires a special PC card, priced at $150, and costs $80 monthly flat rate, with real world sustained data rates of 300-500Kbps (the theoretical rate is 2.4Mbps). Verizon claims it downloads files 20 times more quickly than GPRS and five times faster than EDGE. EV-DO services remain expensive, although the US' first such network, Monet’s in the Midwest, is half the price of Verizon's, and prices are sure to come down under pressure from other services including Wi-Fi – although typical 802.11b hotspot data rates are about the same as EV-DO's real speed.

Verizon is also testing 1xEV-DV. However, Sprint PCS told the Washington Post that it has an opposite strategy for high speed data services, with no plans to roll out EV-DO for at least two years. Instead, it is focusing on its newly announced Wi-Fi service, based on building its own hotspots and leasing those of Wayport. Sprint said this is a more "fiscally prudent" approach as there is little infrastructure investment involved, and it claims Wi-Fi is faster than EV-DO for most data applications.

This decision leaves Verizon Wireless with the broadband cellular data market to itself for a while, apart from small players like Monet. Two major factors will affect the eventual pattern of 3G. One is China, whose government is still hesitating to make final decisions on licenses. If it opts for the third 3G standard – TD-SCDMA, developed by Chinese companies and Siemens – Conway claims this will be easily integrated with GSM-based networks.

It is expected that China will issue licenses for at least two of the three 3G networks, and will make its decision in the second quarter of next year. Exclusion of either CDMA2000 or 3GSM would be a major blow. However, it is certainly not a foregone conclusion that China will reject CDMA2000. Growing demand in Japan and South Korea – and in China for 2G CDMA services – is keeping the Qualcomm technology in the race. Subscribers to CDMA in Asia-Pacific increased by 18m to 63m in the year to 30 June, with over half of these on 2.5G or 3G systems, say researchers.

The second factor in 3G's fate is, of course, whether 3G networks take off at any significant level at all, or whether they will be marginalized by Wi-Fi/WiMAX and by the advent of IP-based 4G.

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