Freedom of choice for CDMA users

Written by Nikita Upadhyay | Nikita Upadhyay | Updated: Aug 28 2009, 03:23am hrs
Open-market handsets (OMHs) are all set to erase the thin line between two major technologiesCDMA (code division multiple access) and GSM (global system for mobile communications). The handsetsa CDMA Development (CDG) initiative would hit the Indian market soon. For starters, OMH support CDMA technology but dont bind users to an operator. Unlike traditional CDMA handsets, users can switch a CDMA operator without changing the device. The first commercial OMH device will be available in the coming weeks, with more becoming available by the end of 2009, said Perry LaForge, chairman, CDG.

For an easy understanding, CDMA handsets are operator-specific and a subscriber cannot switch on to another operator with the same handset. A GSM handset has no such restrictions. But with an OMH, a user can change the CDMA operator, by buying a removable user interface module (R-UIM), just like SIM in GSM, from a new operator.

Operators like Shyam Sistema Teleservices (SSTL), Reliance Communications (RComm) and Tata Teleservices (TTSL) are supporting these handsets as it would give them a wider choice of devices. As it is not the core business of CDMA operators to launch devices, India ended up having less variety of CDMA handsets. GSM has 75% of the total mobile subscriber base in the country, but CDMA base is limited to a marginal 25%. While the CDMA technology has been proven to offer faster data throughputs over other technologies, the fact that the handset is tied to the service provider has hampered its growth. OMHs will help overcome this drawback, said Naveen Mishra, manager, communications research, IDC India.

RComm, TTSL, SSTL, Virgin Mobile India, Qualcomm and up to 40 device vendors, distributors and OMH card vendors are working with CDG as part of OMH special interest group. Qualcomm will offer customer support, engineering, testing and marketing resources to all stakeholders in the OMH ecosystem, which includes operators, OMH SIM vendors, handset OEMs and distributors, said Nakul Duggal, senior director, engineering services group, Qualcomm.

OMH will increase the variety of CDMA handsets, improve their time-to-market, expand the number of distribution channels and reduce inventory risk. OMHs allow the mobile ecosystem to leverage CDMA technology by enabling additional high-speed data applications and services, making it easier for subscribers to adopt them, notes LaForge.

India is the first market where these handsets have been successfully tested, followed by Indonesia and Bangladesh. Going ahead OMHs will be introduced in Southeast Asia, China, Africa, Middle East, East Europe, Russia and Latin America. The new OMH cards will be more capable than existing SIM cards because they not only store a subscribers identity data but they also store the network configuration and service configuration data for multiple OMH operators around the world. This will allow CDMA operators to focus on their core competenciesnetwork efficiency and servicesand continue to drive growth in the mid and high segments through a combination of data offerings (high-speed Internet access, 3G broadband data applications, location-based services, etc) and devices. Subscribers with higher-tier CDMA devices have greater propensity to use value added services, which would give operators like us the flexibility and efficiency to expand voice and data services and thus generate higher ARPU (average revenue per user), said Lloyd Mathias, president, business development, VAS & CMO, TTSL.

Since operators will only need to purchase and store the OMH cards and not the devices, OMH will lead to better economies of scale from volume aggregation efforts and lower inventory costs. Handset manufacturers now have to make the handsets specific to each operator. In the case of OMH-equipped handsets, the mobile manufacturers can launch products in the open market, using their own sales and distribution channels. This will facilitate handset-makers to build single-ID handsets enabled with R-UIM that supports multiple networks and operators along a variety of devices, said Prem Kumar, CEO, Fly Mobile.

Also these handsets do not contain any element or operator-specific information. So they need not be tested on every network before launch; this will help reduce the resources and time-to-market for these handsets. Nokia, LG, Huawei, ZTE, Samsung and Haier are expected to launch OMH in the coming weeks. Initially, SSTL plans to add 10 new open market handset models, besides offering 16 other handsets.

Typically, the operators will need to make investments in procuring, provisioning and distributing new versions of R-UIM cards from which the OHM obtains operator identity and service configuration. Samsung is bringing the first OMH handset, named Mpower 699, which will be supported on Tata Indicoms network through R-UIM cards.

The CDMA subscriber base is expected to grow by three million a month in India. Worldwide, the CDMA ecosystem is expected to support around 500 million subscribers. The rural mobile subscribers are expected to increase to 167 million in 2010 (83% CAGR). According to a study, around 50% of net additions by 2010 will come from rural India.

The subscribers will definitely welcome this technology as it gives them the much wanted freedom and quality. It will also intensify competition, so the consumer will ultimately benefit, says Vsevolod Rozanov, president & CEO, SSTL. While offering mobiles with better and higher features, OMHs will also increase the cost of handsets for the end user. Currently, the operator subsidises the handset cost to acquire customers.

OMH will make CDMA technology more flexible and user-friendly. The operators need to provide the OMH ready R-UIM cards for users to make it a real success, said Anil K Kaushik, executive VP, Fly Mobile.

CDG estimates the next 100 million subscribers will be added within the next two-to-three years. Since OMH targets rural subscribers looking for low handset and service costs and urban subscribers looking for advanced data and voice servicesWeb browsing, emails etc, it will definitely expedite the next 100 million subscribers, feels Mathias.