In the juggling act between GSM and W-CDMA, dilemma is beautiful.
But it is a terrible kind of beauty because both vendors and carriers must decide how much of their resources to devote to GSM without jeopardizing the promise of W-CDMA.
Today, GSM provides the main revenue stream, yet in the advertising and public-relations campaigns of vendors and carriers, W-CDMA, also called UMTS, takes prime position. UMTS is the mainstay of conferences, symposia, workshops and standards bodies. It is the future, the big pie in tomorrow’s lush sky.
But without GSM, W-CDMA has no ground on which to stand. According to the GSM Association, GSM subscribers soared to 1.268 billion globally at the end of last year. The protocol’s subscribers grew by 26 million in the fourth quarter of 2004.
But the vendors and carriers cannot lose sight of the modest momentum coming the way of UMTS. The GSM Association said it has confirmed 64 commercial launches of W-CDMA networks and 51 commercial EDGE networks, adding there is a growing list of W-CDMA-EDGE networks that deliver third-generation services. It said it has identified 116 W-CDMA and 64 EDGE-enabled devices in the market.
These facts provide enough momentum to snag the focus of companies in pursuit of greater revenue streams and differentiation.
“It is a lot of additional work to establish a significant footprint of 3G without taking eyes off the 2G ball,” commented Eric Updyke, vice president of marketing and strategic planning for Nokia Networks in the Americas.
But GSM is making some of the work easier by the momentum it still generates for demand in some of the developing countries also known as emerging markets.
In China with a big carrier like China Mobile, GSM is racking up millions more subscribers. In Latin America, Africa, Middle East and some other Asian strongholds like India, GSM is raking in money for carriers and vendors.
In the advanced economies, saturation may be the motif, but GSM is still robust. Not so much in terms of subscriber growth, although that exists in modest terms. Carriers in the GSM space have to compete against each other. In North America, for instance, the merger of AT&T Wireless Corp. and Cingular Wireless L.L.C. has imposed on the biggest operator the burden to be efficient and to succeed against a significantly lesser player like T-Mobile USA.
But the problem with GSM is not always between GSM operators. The power of CDMA is not discounted, according to analysts and market watchers. With the emergence of Cingular as the numero uno of the carriers in the United States, former market leader Verizon Wireless feels pressured to put the heat on the GSM player.
So, while Cingular may want to move to UMTS, it has to tackle its play on the GSM arena.
“The GSM business still has considerable growth,” said Alan Pritchard, vice president for GSM and UMTS for Nortel Networks Ltd., adding that Cingular understands it has to make the most of its scale but also of its efficiency. “There’s a tendency to focus on UMTS and all the excitement there,” remarked Pritchard. “There’s a lot of work to be done with GSM.”
One of the challenges with 2G is to improve not only the voice quality but also coverage, explained Jeff Key, vice president of strategy and business development for the network signaling group of Tekelec Inc., which has expanded its activities from test and measurement to the softswitch business.
Pritchard and Updyke said carriers of GSM services are now looking at efficiency, network optimization and capacity enhancement. Pritchard said the pursuit of efficiency would compel carriers to install more base stations in dense urban areas. T-Mobile USA already is focusing some resources in the New York area. He refers to Nortel’s BTS1800 dual-mode platform, which can support radio configuration with 27 radios.
“Operators are looking for a cost play to run the networks more profitably and support high-traffic demand,” he said. He explained that it’s not just the addition of radios to cell sites that makes the difference, but carriers also have to update certain parts of the cell sites and optimize the base stations deployed.
Updyke identified the need for vendors to make available compelling low-cost devices for GSM subscribers.
“Network infrastructure is one part,” he remarked, “but devices with form factor and miniaturization is another, and it’s a big challenge.”
He said as the demand grows for the services, so does the demand for sleeker devices. Such devices could create a chicken-and-egg situation because sleek devices could trigger demand as well.
All of this is happening as UMTS draws raves among industry players peering at the future. One impetus for carriers like Cingular is the move by Verizon to EV-DO technology with a plan to migrate further to EV-DV technology. This ratchets up the research-and-development investment for the GSM players for what industry players are now calling the triple play, which includes data, voice and video.
“Psychologically, data is no longer an icing on the cake,” said Key. “It’s the cake.” He also said the pressure to move has been reinforced by High-Speed Downlink Packet Access, also known as Revision 5. Internet Protocol Multimedia Subsystem also will come with this protocol, he said. Major vendors like Lucent Technologies Inc., L.M. Ericsson, Motorola Inc. and Nortel announced IMS trials and partnership at the 3GSM show just concluded in Cannes, Frances.
But this drive to 3G networks also helps GSM, according to both Updyke and Pritchard. IMS and packetization helps improve the core network for GSM subscribers, they explained.
On the chip level, digital signal processors are handling both 2G and 3G traffic, explained Sandeep Kumar, strategic marketing manager, noting that it brings economy to wireless players.
“People do more with less and do it more effectively,” referring to his company’s next-generation DSP. Pritchard referred to the coming of GSM/UMTS devices.
UMTS is a different air interface from GSM, but within the core network, the two are enjoying synergy, explained Pritchard.
“The global scale is helping GSM and driving costs down,” he said.
