When PCS PrimeCo L.P. announced earlier this month plans to build its personal communications services networks using Code Division Multiple Access technology, CDMA developer Qualcomm Inc. received its first major U.S. customer and coverage in more than three-quarters of the country.
AirTouch Communications Inc., U S West Inc., Bell Atlantic Corp. and Nynex Corp.-the companies comprising PrimeCo-intend to deploy CDMA-based wireless service not only in the partnership’s 11 major broadband PCS markets, but in each of its own cellular markets. Plans call for voice, vehicular fax, data and short messaging services to be offered.
In recent months, manufacturers have displayed greater confidence in CDMA and a willingness to provide equipment at reasonable costs, said George Schmitt, the venture’s president and chief executive officer.
“Right now, all of the leading manufacturers of CDMA are in a tight horse race to get our business,” declared Schmitt. “The manufacturers who match our requirements will win.” The field has narrowed to AT&T Corp., Motorola Inc. and Northern Telecom, Schmitt said.
John Ledahl, director and principal analyst at San Jose, Calif.-based Dataquest Inc., believes AT&T and Northern Telecom are the likely winners because they are fierce in negotiations on pricing and delivery. PrimeCo indicated it would reach a decision within the next few weeks. Qualcomm also is bidding as a manufacturer.
Dallas-based PrimeCo views being first to market as “extremely important,” commented Daniel Sutherland, president and chief financial officer for PrimeCo’s Southwest region, both as a provider of CDMA-based wireless services and in being first to offer PCS services in individual markets. Sutherland said PrimeCo will be in service by third quarter 1996 and fully commercial by the end of that year.
However, the first carriers deploying CDMA technology likely will face a brief lag in commercial deployment to work the bugs out of their systems, Dataquest’s Ledahl predicted, adding that lag time could be between six months and a year. However, Ledahl believes CDMA will be the dominant digital technology going into the next decade.
Qualcomm’s narrowband CDMA has greater capacity for upgrading than do other present digital technologies, asserted Schmitt, a key factor in PrimeCo’s technology evaluations. CDMA will best adapt to future broadband spread spectrum technology, Schmitt added.
Earlier this spring, San Diego-based Qualcomm began shipping to licensees its second-generation Cell Site Modem chip, supporting data rates for both 8 kilobits per second and 13 kbps PureVoice speech vocoders for cellular and PCS applications. The company also has available its CDMA handset chip. Two more versions of the handset chip are scheduled to be shipped later in the year and early in 1996, both supporting faster data rates.
Since rumors of PrimeCo selecting CDMA began earlier in the month, Qualcomm’s stock has climbed more than 37 percent to $34.75. Qualcomm’s stock settled a little to close at $32.75 on June 13.
PrimeCo expects to provide dual-mode phones-compatible with both CDMA digital and analog networks-for customers traveling outside the PCS network’s coverage, said Jim Petit, vice president and chief technical officer for the venture. These phones could enable cellular customers to use the PCS network as well, added Petit.
Ledahl expects Oki telecom of Suwanee, Ga., and/or Qualcomm will manufacture the handsets.
