TOKYO-Yoshiaki Shioda, senior manager for NEC, recently visited Kirgiz, a republic south of the Commonwealth of Independent States, to help local people get connected with each other.
In Kirgiz, only one out of every 100 people have access to a telephone, and locals occasionally have to walk long distances to even make a call. NEC is providing PHS-based wireless local loop (WLL) systems to help people who need basic telephone services in developing nations like Kirgiz.
As of October 1998, NEC’s PHS WLL served 350,000 people in 11 nations: Argentina, China, Colombia, Guatemala, Indonesia, Ivory Coast, the Philippines, Tanzania, United Arab Emirates, Uruguay and Zimbabwe. In addition, the firm’s systems are being tried in 14 other nations by an estimated 500 people.
The Japanese government supports the expansion of PHS WLL into the global market. This is partly because PDC, Japan’s second-generation cellular standard, is used only in Japan, meaning Japanese carriers and vendors have been limited in exploring the world market. In addition, the PHS market in Japan has been gloomy. The number of PHS subscribers has plummeted since a high of 7 million last September.
Two of the three PHS carrier groups were forced to change their corporate structure, though both have managed to continue to provide their services. As one attempted resolution, NTT DoCoMo is releasing a dual terminal that can be used for either cellular or PHS. The dual service is called “doccimo.”
PHS carriers and vendors formed the PHS MoU Group in 1996, a year after PHS services were launched in Japan. The group has standardized the PHS WLL system based on the Association of Radio Industries and Businesses’ (ARIB’s) RCR STD-28, the PHS air-interface standard, and promoted PHS WLL, private PHS systems and public PHS systems throughout the world. Due to the group’s efforts, PHS has been adopted in about 20 countries and is being tested in many more.
NEC’s market role in WLL
WLL deployments have been spreading around the world, although at a slower speed than initially expected.
Market analysts two years ago predicted the WLL market would explode. However, serious worldwide recession, badly affecting Latin America and Asia, robbed the market of its momentum. NEC’s Shioda said many of the firm’s contracts in those regions were canceled or postponed last year.
However, Shioda strongly believes the market has already hit bottom and will rebound this fiscal year, which for NEC began 1 April.
In 1999, NEC hopes to maintain its 10-percent stake in the world’s WLL market. Consultant group Pyramid estimates the WLL market in the world will total 2.7 million lines in 1999.
NEC’s PHS-based Digital Cordless Telephone System (DCTS) WLL product comprises base stations, cell stations and 2-wire fixed terminals (a 2W-FT includes a 2W-FT unit, a 1.9 GHz directional antenna, an AC adapter and a battery). One cell station can provide services to up to 90 users within 10 kilometers in radius.
Shioda said WLL is the optimal solution for developing countries because WLL requires less time and money for system construction and is easier to manage.
Though it is cheaper compared with conventional fixed-line systems, NEC systems still cost US$600-US$700 per line, depending on the network design and needs. NEC systems are not as cheap as some other cost-oriented competitors because NEC puts an emphasis on high quality, Shioda said.
What makes NEC’s product line unique is that it also offers a product called a Digital Radio Multiple Access Subscriber System (DRMASS). Unlike with a traditional DCTS WLL system, with DRMASS transmission between the home/business and the subscriber unit is via fixed-line. From the subscriber unit, the transmission is then via wireless using a network of stations and repeaters. Using this architecture of repeaters, the system can provide service to customers within 500 kilometers in radius-even in mountainous areas.
As of October 1998, NEC had provided 1,200 DRMASS systems to 30 countries. An estimated 600,000 people are using the system. Shioda said by combining DCTS and DRMASS, NEC is providing the optimal solution.
Other PHS vendors
Since PHS was developed and initially implemented in Japan, many other Japanese firms are providing PHS WLL. However, a couple of non-Japanese firms are also providing such systems, saying they chose PHS technology for their WLL products because PHS is cost-effective and provides high voice quality.
U.S.-based ArrayComm has been providing PHS WLL systems in Latin America and Asia since last year, fully utilizing its IntelliCell technology.
The firm’s PHS WLL system, called IntelliWave, is being used on a commercial basis by Smart Communications in the Philippines (2,000 subscribers) and by a local operator in Guangzhou, China (1,000 subscribers). In addition, the firm has just completed construction of a system in the United Arab Emirates and is promoting trials in Malaysia and Brazil.
Although ArrayComm is still small and has just kicked off its commercial implementations, the firm see huge potential for WLL.
“In developing nations-for instance, in Latin America-the telephone penetration rate is as low as 12 percent,” said John Coultas, manager of global business development for ArrayComm. “They are making an effort to double the rate in five years. But even if it happens, the rate is still low. Those who don’t have an ordinary telephone have to use wireless. This is the market we are focusing on with our WLL products.”
The IntelliWave systems currently being used and tested around the world were manufactured by ArrayComm. But the firm is shifting its development and manufacturing to Japan’s Kyocera Corp.
ArrayComm is repositioning itself as a supplier of technology, explained Coultas. “We will supply our technology to vendors, and they will develop and manufacture products.”
Kyocera will ship the first PHS WLL products incorporating ArrayComm technology this fall.
The WLL market is actually quite competitive, with approximately 30 vendors struggling to win a slice of the market.
But David Nowicki, director of ArrayComm’s Japanese division, said his firm is very competitive because it has a strong, advanced technology. ArrayComm’s IntelliCell technology lets operators use limited spectrum more efficiently, he explained.
DDI Pocket, the leading PHS carrier in Japan and a subsidiary of Kyocera, last fall began introducing adaptive array antennas based on ArrayComm’s technology. As of April, DDI Pocket had 3,000 such antennas-mostly in densely populated areas.
Competition from CDMA
NEC occupied 30 percent of the world’s WLL’s market in 1995-96, according to some estimates. However, that share slipped to 10 percent in 1997-98.
Shioda attributed the significant drop partly to the bad economy. However, he also pointed out that other WLL systems, such as CDMA WLL, are expanding at a more rapid speed than PHS WLL.
According to an estimate by research and consulting firm The Strategis Group, CDMA WLL’s market share will expand from 10 percent in 1998 to 32 percent in 2001, while PHS will expand more moderately from 7 percent to 12 percent.
To cope with the situation, NEC has launched a study of CDMA WLL.
Motorola, Lucent and several others have launched CDMA WLL services. Adicom Wireless, a U.S.-based start-up, offers a CDMA WLL system that has been implemented in China and is being trialed in Malaysia and Poland.
NEC’s Shioda admits mobile carriers and venders are now looking at CDMA as the next-generation technology for WLL.
But partly because CDMA technology is still more expensive and partly because there are huge potential markets for simple, voice-based telephony services, PHS WLL should continue to have opportunities, particularly in develo
ping nations.
Returning from Kirgiz, Shioda said his trip was productive and that many local people told him they want to get telephone
service. However, since neither the nation nor local businesses have enough money, Kirgiz will have to seek some funding from either the World Bank or the Overseas Economic Cooperation Fund. “It is one of the most toughest part of our business,” he said.
