It is a long time since the GSM versus CDMA battle was at its hottest, and thousands of words have been written about the whys and wherefores. While the GSM technology family has become dominant, CDMA has still managed to create a significant market of its own, with high-profile backers such as Verizon Wireless and Sprint in the US, and China Telecom in China.
By any measure, a subscriber base approaching 700 million across 122 countries and territories represents a significant success – it’s just that GSM overshadows this. And, with the CDMA operator community in the process of migrating to LTE for their 4G evolution, the technology’s longer-term future is hardly rosy.
In the last couple of weeks, there have been a couple of stories that have highlighted the probable future for the technology.
Verizon Wireless has given 2021 as a guideline date for the phase-out of its CDMA network, although with this being almost a decade away, it is not as if it is set to go dark imminently. However, Deutsche Telekom is set to pull the plug on the MetroPCS network much more quickly if its merger with T-Mobile USA goes ahead, in order to free up spectrum for use with other technologies – namely LTE.
But while CDMA’s future as a mainstream technology looks to be one of plateauing before a gradual decline, the 450MHz spectrum band is providing an interesting niche for CDMA, and is driving the current growth of the technology. And using spectrum that is largely untroubled by alternatives, it is not facing competition from a rival technology.
The 450MHz band has some obvious advantages – primarily that large areas can be covered with fewer base stations. This means that the technology is well suited for markets with a geographically dispersed population, as a lower cost method to deliver broadband data services to rural consumers.
The CDG, the trade association supporting CDMA technology, is also working to highlight the potential of CDMA450 as a way to serve M2M subscribers.
In addition to providing coverage in remote areas – essential for industries such as transportation, forestry and mining among others – CDMA450 also has the advantage of moving M2M traffic away from the mainstream mobile networks, freeing-up capacity which can be used for more lucrative consumer data services in urban areas.
The 450 MHz market is undoubtedly a niche. Not all countries have allocated it for mobile services, and with the attention focused on more in-demand digital dividend and 2.6GHz frequencies for LTE, there is little sign that it is set to become the “next big thing”.
And the list of companies supporting CDMA450 is also hardly a catalogue of the biggest names in the mobile industry. Certainly Orange has deployed the technology in Poland, and Telefonica O2 is listed as having a network in the Czech Republic, but these appear to be a case of units with the relevant licences using the technology to serve specific niches, rather than a group-level endorsement of the technology.
But, nonetheless, the technology is providing the operators with a way to serve customers that may not be addressable via the alternatives.
The fact that a CDMA450 network can be deployed with fewer base stations than a network using higher frequency spectrum has another advantage: lower capital expenditure. This means that services can be offered to consumers where other technologies are not economically viable, with fewer customers needed to cover costs.
Of course, there are still benchmarks which need to be met: Triatel, from Latvia, is mulling switching off some base stations that cannot be operated profitably – although with the company noting the presence of government users in these regions, a degree of political posturing is a possibility (Triatel said it will begin talks with the authorities in due course).
And by serving customers who otherwise do not have an alternative, price pressure and churn are less of an issue than for mainstream players.
But there are still challenges. MTS Ukraine is reported to be mulling the sale or lease of its CDMA450 network, citing the lack of supporting devices. While the CDG’s website shows a fair smattering of fixed terminals, dongles, access points and handsets using the technology, all things considered it is a somewhat lacklustre assembly.
Which leads to another problem for CDMA450: as a niche technology, with operators talking about customer numbers that would not make a mainstream operator blink (in the tens and hundreds of thousands, rather than millions), it is difficult to either achieve economies of scale, or attract mainstream device makers to the fold. Perhaps an alliance of CDMA450 operators for procurement purposes, to enable large orders to be generated, may make sense in addressing this issue.
Looking further forward, there is also the potential for LTE to be made available in the 450MHz band, which, when launched, may prove an attractive supplement to the main bands for operators looking to bolster their geographic and capacity coverage. But this is not likely to come to fruitition in the short term, creating a window for CDMA450 in the meantime.
So, clearly we are looking at a niche spectrum band, being served by a niche technology. But that doesn’t mean it cannot be profitable. Indeed, by enabling operators to serve customers who would otherwise be unsupported, it can play a role in bridging the digital divide, which can be nothing but a good thing.
After all, it’s not the technology that is important. It’s what you do with it that counts.
The editorial views expressed in this article are solely those of the author(s) and will not necessarily reflect the views of the GSMA, its Members or Associate Members