With 49 million mobile phone subscribers in the country, Code Division Multiple Access (CDMA), the technology created by California-based Qualcomm, has a long way to go before it catches up with GSM, which has a user base two-and-a-half times as large. The GSM, subscriber base, in fact, has been growing at a rapid pace, with Airtel adding 1.8 million subscribers in May, compared to Reliance Communication’s 1.4 million. B.V. Raman, country head of the CDMA Development Group in India, speaks to Livemint.com about strategies to capture a larger slice of the pie.
Your share of a 160 million-strong subscriber base in the country is only 30%. How do you plan to better this number?
GSM enjoys the first-mover advantage, but you must remember they took 12 years to get to where they are today. That said, the Indian market still offers us a great deal of scope, especially in rural areas, where telecom penetration is less than 3% compared to 37-38% in urban areas.
Of the 49 million users with us today, 46 million come from the two national players Reliance Communications (28 million) and Tata Teleservices (18 million). Other major CDMA operators are BSNL, focused on Rural India and Shyam Telecom, in Rajasthan.
Our target is to move from 49 million to a significant chunk of the total available market of 250 million by the end of the 2007 and 500 million by 2010.
But where will these numbers come from?
Given the spectrum crunch in urban areas, scope to expand in that segment is limited. Market growth today exists in smaller towns and rural India. Both Reliance Communications and Tata Teleservices have wider rural coverage than the GSM operators. CDMA has also been making a conscious effort to cover several small towns across the country. We hope to improve our market share going forward.
You say CDMA is a better technology. How would you substantiate that claim?
CDMA uses the spread spectrum technology to digitize the speech data (base band) and carry it over long distances. On our platform, subscribers within a cell site can use the entire spectrum band at all times.
The technology scores over GSM, which uses the old Time Division Multiplexing (TDM). Under TDM, subscribers share the spectrum band in pre-allotted time slots, determined by the network. Also, when a Subscriber is mobile, moving from one cell site to another, CDMA Technology allows him to stay connected to more than one cell site simultaneously, before hand over takes place. The subscriber device identifies the stronger signal and drops the connection with the old site only when the connection is made with the cell site with the stronger signal. This method of hand over of a subscriber, while he is talking and moving from one cell site to another, is called the “Make-Before-Break Hand over”. This ensures there are no call drops when you are mobile. This doesn’t happen in GSM, because it uses a diametrically opposite method of handover called “Break-Before-Make”, which means that the device can stay connected to only one cell site at a time. This could result in call drops.
How does CDMA score over GSM in rural connectivity and data transfer?
The digital nature of Code Division Multiplexing allows CDMA to cover a given geographic area cost effectively with fewer cell sites for the same tele-density and similar usage patterns. Spectrally, CDMA is many times more efficient than GSM.
The cost advantage arising from this puts CDMA in a better position to offer rural connectivity than GSM. In rural India, tele-density is less than 3% and the service provider needs to cover a wider geography.
Still, GSM subscribers have been increasing steadily. Somehow, CDMA hasn’t been able to translate its superior technology into user experience…
We believe the right way to compare is to see how long GSM took to reach 49 million subscribers. They were able to achieve this number in September 2005, a full 10 years after they started. CDMA has reached this milestone in four years.
Growth curve of GSM V/S CDMA in terms of subscriber growth
One drawback with CDMA is the need to change the handset while moving from one service provider to another, even within the CDMA domain. How do you propose to address this?
Now we have CDMA handsets that are available with Removable User Identity Module (RUIM) cards, similar to SIM cards in GSM. The connection resides in the RUIM Card. With this, it is very easy for subscribers to upgrade their handsets as easily as GSM subscribers do.
Is the RUIM card available in all handsets?
Yes, even the low cost handsets are RUIM enabled these days.
What is CDMA’s biggest advantage?
Data capability. It might interest you to know that most high-end GSM users in this country carry Nokia handsets with a CDMA data card from either Reliance or Tata.
People are generally averse to changing their mobile phone numbers because of the hassles it involves in giving everyone in their social and business circles the new number. We expect that with the advent of mobile number portability, we will be able to churn some of the early adapters who currently use GSM for Voice, and CDMA for data, completely to CDMA.
The Telecom Regulatory Authority of India (TRAI) had, in fact, recommended the implementation of number portability from 1 April 2007. But the Department of telecommunications (DoT) has to allow this. The GSM lobby is resisting this for fear of losing a sizeable chunk of its high-end users.
But once number portability is introduced, our growth curve will further improve. In Japan, KDDI saw a quantum jump in subscriber base with the introduction of number portability in that country by eating into Do Co Mo’s share.
Can we expect portability in the current fiscal?
Well. I don’t know… but we would love to have this.
You say CDMA’s technology offers much more value. So why is the average revenue per user lower than that of GSM players?
By the time CDMA was introduced in 2003, all high-end subscribers, namely the early adapters were with GSM. We expect the picture to change once 3G Services becomes a reality & mobile number portability is allowed.
Today CDMA is growing much faster, in excess of 50% a year, compared to 30% in GSM.
As far as rolling out 3G services is concerned, what are your major advantages compared to GSM players?
CDMA has been working on 3G-technology right form inception. Globally, CDMA enjoys more than 70% share in 3G services. GSM has to migrate to WCDMA (Wideband CDMA) to deploy 3G, which means this migration will take them away from Time Division Multiplexing to Code Division Multiplexing. This means a significant deployment of new Infrastructure.
The Network deployed by Reliance and Tatas is already 3 G capable and can deploy 3G services & further upgrades to EVDO Rev A & B, with minimal changes, as migration within the 800 MHz band is also feasible.
CDMA 1x EVDO, Rev A which is now commercial offers higher bandwidth with a data speeds of 3.16 mega bytes per second (Mbps) on mobile devices. This will go up manifold with the advent of Rev B in 2008 & UMB thereafter.
Would the advent of WCDMA offset the advantages CDMA enjoys today?
No. For reasons enumerated above, our Networks in India are already 3 G capable, which offers significant advantages.
Due to Economies of Scale that CDMA 1x 2000 EVDO enjoys, even consumer Devices for CDMA will be available much cheaper than WCDMA devices & the advantage will continue for a few more years to come.
This price advantage will continue till 2010 & beyond.
Why did the biggest CDMA provider in India, Reliance Communications, jump on to the GSM bandwagon?
Reliance started as a GSM service provider in seven circles. It chose CDMA for their national roll out when they opted for the Unified Access Service License (UASL). They continue to grow their CDMA numbers aggressively as seen by their recent infrastructure expansion orders and also their creating a record of 1 million new subscribers in a week with their Rs777 plan for handsets.