Tuesday, October 16, 2007

Cellular business in the 3G era

A young executive looking for an apartment is interested in a mini ad. Unlike other mini ads we usually find in newspapers, this one contains a small bar code. He takes his cell phone and scans the bar code. The information in the bar code, after being processed by an application in his phone, appears on the monitor. It gives the young man detailed information about the apartment advertised.

Detailed information? Well, yes, as the information not only contains the size and the price of the apartment, as well as the address and the name of the owner, but also photos -- taken from several different angles -- about the apartment in question. If need be, you can have a video conversation with the owner with your cell phone and negotiate the price. If you wish to see him, you can easily look at the map on your monitor to find your way to the apartment.

All this sounds like a story in a film, but it is not. It is a reality and a common one at that. At least, it is a reality in Japan, where the telecommunications standard has reached the third generation (3G). Without 3G technology, the story above is simply fiction. With the application of the 3G standard in cellular communications, cell phone users can easily hold a video conference, find out the position of the other person in this phone conversation or look at three-dimensional pictures.

The 3G standard, which the International Telecommunication Union (ITU) released through its IMT 2000 package, has begun to change the business landscape in cellular technology. While previously, the cellular (technology) business was dominated by GSM/GPRS, since 2000 CDMA (Code Division Multiple Access) technology has begun to significantly penetrate the market.

Today, there are no fewer than 227 million subscribers to CDMA of various versions, and 150 million subscribers to 3G CDMA (CDMA2000 1x, CDMA2000 1xEV-DO, and WCDMA). CDMA2000 and WCDMA, which GSM has developed, are two of the five most popular interfaces that have fulfilled the G3 criteria consistently. Of course, CDMA subscribers are still far smaller in number than GSM subscribers. "This is because CDMA began to undertake large-scale promotion only in 2000," said Harry K. Nugraha, senior director and country manager of Qualcomm Indonesia.

Qualcomm is a pioneer of CDMA technology and launched this technology commercially in Hong Kong in 1995. Today, nearly all of 125 CDMA operators make use of Qualcomm technology. CDMA began to draw attention when SK Telecom of South Korea marked the initial launching of 3G CDMA (CDMA-2000 1x) in October 2000. A year later, NTT DoCoMo made use of WCDMA in Japan. Later, South Korea improved the system with CDMA2000 1xEV-DO, a format that is capable of speeds of 2.4 Mbps. Today, CDMA in these two countries holds a very prominent position. In South Korea it has even become a very dominant platform.

With its 3G platform, which consistently features connections at a speed of 2 Mbps for a stationary position, a speed of 384 kbps for mobile positions and 144 kbps for a fast moving position, CDMA-2000 obviously has a number of benefits, such as larger data capacity and a higher communication speed. As a result, CDMA2000 can do more faster than other cellular technologies. Using CDMA technology, an operator can provide virtual meeting services such as video conferencing, location-based service (LBS), streaming and downloading of videos and music, including TV programs, the application of peer-to-peer messaging such as instant messaging, MMS or e-mail.

Of no less importance is that CDMA2000 technology enables more users to use cellular channels at the same time. This has made CDMA more competitive in terms of price. It may be said that all over the world today CDMA 3G operators are enjoying an increase in average revenue per user (ARPU). Of course this is a promising business opportunity.

In view of the readiness of the CDMA operators in Indonesia, it seems that the future of CDMA will be as bright as its predecessor, GSM. We can see that most major operators -- Telkom (Flexi), Indosat (StarOne), Bakrie Telecom (Esia) and Mobile-8 (Fren) -- have adopted 3G CDMA2000 1x. Even today they are preparing more sophisticated technology by adopting the CDMA2000 1xEV-DO (data optimized) technology.

Understandably, the use of 1xEV-DP technology can bring peak performance for a network, which can reach 2.4 Mbps or 2,400 kbps, while the speed of GSM/GPRS technology through EDGE is only 160 kbps. On the other hand, the choice of CDMA2000, which is indeed the G3 standard, obviously shows what the operators in Indonesia will do.

Among other things, there will be many operators that will provide multimedia services for streaming and downloading: subscribers, for example, can order a recording of a soccer match between Chelsea and Manchester United that a television station aired the night before. Subscribers will also been pampered with various games that can be played simultaneously by several users.

Likewise, the Internet and the traffic of data packages will obviously be facilitated. Retail business services such as mini ads are expected to dominate the CDMA-based cellular services in future. And in keeping with the ITU requirements, the G3 technology, including the CDMA2000 1x, must also be affordable to every subscriber.

So far, the CDMA technology has been able to meet increasingly more complex needs for telecommunication technologies such as an improved voice quality, the speed of data transfer, the Internet access and multi-media features. The question is whether operators are ready to meet the needs of their subscribers, particularly with respect to making available adequate services and features. This is the right time for CDMA operators to draw up their business strategy. (B. Gunawan)

The Jakarta Post
February 15, 2005