TORONTO-The move was surprising but not totally unexpected. After many denials, U.S. carrier AT&T Wireless finally announced last November it is switching from TDMA wireless technology to the rival European-developed standard GSM technology. Moving in lock step, Rogers AT&T Wireless of Toronto, Canada’s largest mobile provider, said on the same day it too is converting to GSM technology.
How does the future bode for TDMA in third-generation (3G) networks when major players such as AT&T and Rogers are abandoning the ship? The prospects cannot be deemed rosy. In fact, the Washington, D.C.-based Strategis Group predicts GSM/General Packet Radio Service (GPRS) will overtake TDMA as the second-most prominent cellular standard in the United States within three years and continue to widen the gap through 2007. Strategis estimates GSM wireless technology in the United States will increase from 7 percent of the market in 2000 to 31 percent in 2007. Globally, the battle seems to have already been won by GSM. It has more than 452 million subscribers, while TDMA and CDMA technology have only about 100 million subscribers combined.
“Look, the wireless industry is always changing, but we still think the future looks bright for TDMA. People forget that TDMA is the number-one technology in the Americas. And as carriers move to GPRS, they are going to continue supporting TDMA, because it is their cash cow and will remain so for quite some time,” said Chris Pearson, executive vice president of the Universal Wireless Communications Consortium (UWCC), a trade organization that promotes TDMA.
Interoperability and convergence are the catch words for the TDMA camp. The UWCC is collaborating with the GSM Association to allow their services to work transparently on either standard and to foster dual-standard handset development.
“We expect manufacturers to have compatible phones by the fourth quarter of this year,” said Pearson.
GSM and TDMA interoperability, via the GSM/ANSI-136 Interoperability Team, otherwise known as GAIT, has been in progress for the past two years.
“GSM and TDMA are more of a partnership than competitors,” said Adam Guy, senior analyst in North American Mobile Wireless Research for Strategis. “TDMA will survive primarily as a voice technology.”
But others have their doubts. “What’s going to happen to TDMA?” asked Iain Grant, managing director for the Brockville, Ontario-based Yankee Group in Canada. “Well, museums come to mind.”
He pointed out that AT&T Wireless denied three or four times that it was moving to GSM/GPRS, but suddenly became a convert after NTT DoCoMo injected US$9.8 billion for a 16-percent stake in the U.S. carrier. DoCoMo, of course, espouses wideband-CDMA (W-CDMA), the 3G version of GSM technology.
For its part, AT&T Wireless is putting a technical spin on its reversal. It said its long-standing plans to initially upgrade its networks to a TDMA version of Enhanced Data Rates for Global Evolution (EDGE), a TDMA-based evolutionary technology designed to boost existing speeds, were derailed because EDGE equipment is not yet available. AT&T stresses it is putting a GSM/GPRS overlay on its existing structure at a cost of about US$1.7 billion and will continue indefinitely to support TDMA handset customers.
North of the 49th parallel, Rogers AT&T Wireless Rogers plans to invest US$260 million during the next three years on GSM/GPRS technology. This is about US$130 million more than the carrier initially expected to invest in upgrading its network with TDMA equipment.
“The GPRS applications will let us leapfrog the Canadian competition. We’re stealing all this technology from AT&T Wireless & DoCoMo and will be able to launch data capabilities faster than if we stayed on our current course,” said Charles Hoffman, Rogers’ chief executive.
AT&T Corporation of New York holds a 16.6-percent equity stake in Rogers, and British Telecommunications, a GSM adoptee from day one, also has a 16.6-percent minority holding.
Other possible defections are rumored. Cingular Wireless, the number-two wireless carrier in the United States, is apparently contemplating making the switch from CDMA to GSM. Unlike AT&T Wireless, Cingular already has GSM operations in a number of markets, including California and San Francisco. There is speculation that other U.S. carriers Verizon Wireless and Nextel Communications are also wavering.
Handset manufacturers are straddling the great divide by making different versions of their phones to support the various wireless technologies. But given the huge economies of scale with one standard, it is logical to assume most phone makers are quietly cheering for GSM/GPRS adoption.
Jim Harper, 3G business development manager for Nokia’s U.S. division, said the world’s number-one phone maker has no plans to curtail its TDMA models. “But it’s safe to say we make a lot more GSM phones. That merely reflects the market realities,” he said.
Even in Latin America, where TDMA rules, there are worrisome signs. In Brazil, where 10 out of the 15 operators have TDMA networks, regulators are in the process of auctioning GSM licenses. “There’s not that much of a case for TDMA in Latin America anymore. The top-hat version of EDGE is just not robust enough for TDMA allegiance,” added Guy.
