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Kripa Raman

MUMBAI, Dec. 26

WHILE the telecom industry in the country waits for the big burst of pan-India CDMA (code division multiple access) services from the three giants - BSNL, Reliance Infocomm and Tata Teleservices - across the country, the nature of CDMA technology has set technologists wondering whether the customer will bite or not.

This is because CDMA handsets are generally pre-programmed by the supplier with identity numbers relevant to local networks only; and this has several implications.

This means it is not only difficult to buy from the grey market and approach any CDMA operator with the phone; it would also be difficult to switch from one CDMA operator to another - say from Reliance to Tata Teleservices - unless the operator himself is willing to re-programme the phone. Otherwise the first handset would have to be discarded and a second handset purchased.

In the first place, it appears that the grey market for CDMA phones cannot be quite as effective as that in the GSM space, a minus point as far as the current scenario in India goes. The grey market for cellular telephones in India has been estimated at between 75 per cent and 90 per cent.

"The CDMA phone is not like the GSM phone where you buy one from the market and stick in a SIM card, and change the SIM card as you please," said Mr J.G. Ham, Vice-President, Overseas Markets, Mobile Handsets Company of LG Electronics, at a recent handset launch of the company here. "The operator such as Reliance, Tata or BSNL has to work with manufacturers such as us; and the phone has to be programmed and set to receive the operator's service."

LG currently has an order worth $100 million from Reliance, is working with Tata Teleservices executing monthly orders, and has also bid for BSNL and MTNL tenders for CDMA handsets. Mr Ham said specific orders for specific operators would take two or three months to execute.

However a grey market telephone may be taken to an operator who could offer to re-programme it. "But an operator can easily refuse to do this, saying the handsets are not compliant," says a representative of a handset manufacturer. CDMA operators in many countries often decline to connect handsets purchased in other countries.

As matters stand, the CDMA handset will therefore be largely sold as a bundled service by the operator along with his service as a package deal. For the Indian CDMA operator this means the opportunity to not only sell his service but also get his commission from the handset manufacturer. On the other hand, the high one-time cost for the customer and the "perception of inflexibility of use of the handset" where moving from one operator to another is problematic, may turn him off.

In India, operators are likely to tie up with banks for easy loans for their customers; the very low cost of CDMA limited mobility services in India may also tempt the customer, even if the initial costs are high.

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