Depending on who is doing the talking, Code Division Multiple Access technology either is venerated or vilified. While several major A-, B-and C-block personal communications services operators have committed to the nascent technology, others are wondering if CDMA is worth the wait. Part 1 of RCR’s two-part examination of this question probes those entities that have committed to CDMA and the reasons behind their decision.
WASHINGTON-Coming into a competitive market as the number five provider is hard. Having to worry about the availability of infrastructure and subscriber equipment is harder. Having to depend on a technology that has not been deployed successfully on a mass-market basis is the hardest.
Once the C-block auctions have ended, proponents of Code Division Multiple Access technology in a broadband PCS environment will be faced with deploying networks based on a system that has not been available commercially in the United States; CDMA tests in Seattle and Los Angeles have yielded less than satisfactory results, and little information is available regarding dry runs in New Jersey and Texas. CDMA systems in Hong Kong and in Seoul, Korea, reportedly are experiencing a high level of dropped calls and an undersupply of subscriber equipment. The Korean systems have been active since January, and the Hong Kong system is six months old.
So why are so many PCS licensees, including flagbearers Sprint Spectrum L.P., NextWave Communications Inc., PrimeCo Communications L.P. and GTE Mobilnet Inc., married to an idea that could cost them their “first to market” dreams, when other access technologies-Time Division Multiple Access and PCS 1900-are tried and true?
“GTE Mobilnet chose CDMA because of its 7 to 1 capacity,” said a GTE Mobilnet spokeswoman. “It will be the easiest system for us to implement. You’ll be hearing a lot of stories about what CDMA will or will not do. There has been so much testing going on that we feel confident.” Immediate equipment availability is a non-problem for the carrier, she added, because “by the time we go on line, the handsets will be available.”
“What is primary is that people think CDMA is a superior technology,” agreed David Haviland, spokesman for North American Wireless Inc., a partnership of PCS licensees. “It will take 18 months to two years for us to go on line, and any problems CDMA has will be addressed quickly by A- and B-block winners. C-block licensees will look to them for guidance.
“The potential for CDMA is superior to that of GSM,” Haviland continued. “If you plan to retrofit [from TDMA or GSM] to CDMA eventually, you should just wait and go with CDMA first to save money.”
Sprint Spectrum awarded 60 percent of its infrastructure contracts to AT&T Corp. spinoff Lucent Technologies Inc. According to Lucent’s Barbara Burgess, the manufacturing of switches and minicell equipment is going full bore, and contract commitments for later this year will be fulfilled. Lucent also is outfitting U.S. Intelco, Telezone Corp. of Canada, North American Wireless Inc., Centennial Cellular and six of 11 PrimeCo’s markets.
The most visible C-block proponent of CDMA, next to manufacturer Qualcomm Inc., is NextWave, which counts former Qualcomm personnel and the company itself as part of its management and financial team. NextWave plans to be the “carrier’s carrier” when its network is deployed, with room for any reseller to set up shop in any of the markets in which it wins a presence.
According to Jim Madsen, NextWave’s senior vice president for business development, “None of us left our comfortable, fast-track positions to not be able to pull this thing off. The 12 founders put in $5 million of their own money at the start and another $5 million [later on]. Our investors were attracted to our technical expertise, and they also feel comfortable with our management team. And we didn’t get more than 30 Wall Street investors by just whistling Dixie.” Madsen estimated that 70 percent of C-block winners will go with CDMA as their access technology.
“We will build the network, and anyone can use it,” Madsen said. “We won’t own the customer. We will generate 50,000 new jobs in the next 10 years, and we estimate a positive cash flow within the first four to five years.”
The potential time lag in both testing and equipment rollout so far poses no problem for NextWave, and the company is comfortable with coming in as the fifth wireless carrier in the market. “The network will be built to last and not to launch,” Madsen said. NextWave has contracted with Lucent Technologies for its switching gear and with a number of manufacturers for handsets. Madsen thinks many U.S. CDMA rollout delays have been the fault of some carriers, which have not retrofitted their switches quickly enough. He does, however, agree that handsets are slow in coming, but that situation will change in the near future once U.S. and off-shore manufacturers ramp up.
Barclay Jones, who heads network implementation for Sprint’s Washington, D.C./ Baltimore partner American Personal Communications, told RCR that APC has an obligation to overlay a CDMA network on its up-and-running GSM operation to ensure compatibility with the rest of Sprint’s PCS network. The radio frequency design for such an overlay will be completed this week, but it will take “months and months” of preliminary lease and zoning examination before any buildout can begin; APC also has to “compact” some of its GSM channels to accommodate CDMA transmission. While no turn-on date has been determined, Jones said CDMA should be ready to roll by the time adjacent CDMA markets, like Philadelphia, are ready to go commercial.
“This could be the best of both worlds for our subscribers,” Jones said. “We will offer both flavors. We could provide roaming packages on Sprint’s nationwide CDMA network or GSM roaming through other agreements.”
Even so, Jones said APC doesn’t feel any pressure to market CDMA aggressively until it is sure about the advantages customers will gain. Because of its ability to transmit both technologies, he said, “We feel protected, technology-wise.”
Next week: PCS analysts and carriers discuss if and when CDMA will become viable.
