The Hindu Business Line : `Unfair demand'

`We are not aware of any such problem (of interference) with CDMA technology. All these claims about inefficiency are merely a tactic in order to get more spectrum.'

T.V. Ramachandran

NOW that eWorld has the opinions of a CDMA expert (see interview with Dr Pitampalli), would it be fair to carry only that side of the debate? Surely, the GSM folks deserve a voice. And who better to give voice to their woes than T.V. Ramachandran, Director-General of the Cellular Operators' Association of India, the apex body representing the GSM players? In an e-mail interview, he answers thus:

Ratan Tata recently stated that in the case of 3G (or third generation telecom services), the Government should charge a fixed entry fee as opposed to no entry fee. Your views?

First, as the present mobile licences permit all types of mobile services, the question of an entry fee does not arise. The question then remains how the 3G spectrum should be priced.

However, while determining the principles for spectrum pricing, it is important to keep in mind the mobile objectives before the Government and the industry. The Government has laid down a target of 250 million telephone subscribers, of which 180-200 million are expected to be mobile subscribers. A bulk of these additional subscribers will come from the rural and remote areas where the price of the service will be the key deciding factor.

3G spectrum offers around 4-5 times the voice capacity of 2G spectrum and 3G could thus be a key tool that could be used to deliver extremely affordable voice and drive teledensity in rural India. But this advantage of 3G will be completely negated if a high upfront fee is imposed as this will correspondingly raise the cost of service. Consequently, this will also jeopardise the target of reaching 180-200 million mobile subscribers by 2007. The model that has worked for India is the one based on usage and/or deferred revenues and a similar approach should be followed for 3G as well, where the Government should look to earn revenues as the sector grows.

This would also be in consonance with present spectrum practices, where operators pay annual usage charges for the spectrum that is allotted to them.

GSM operators have to pay usage charges on an incremental basis (of 2-6 per cent of Adjusted Gross Revenues) depending on the bandwidth that is assigned to them. However, this incremental approach is not followed for the CDMA operators who continue to pay only 2 per cent usage charges, irrespective of the spectrum that is allotted to them. To ensure a level playing field, it is important that the same yardstick be applied to both GSM and CDMA players. Further, the usage charges are too high and need to be capped at a modest level of, say 2 per cent, within which the incremental approach may be adopted.

Is it true that the transition from CDMA 1X, that operators in India currently use, to CDMA's 3G — called EV-DO — is much easier to make compared to that by GSM operators? If so, then it would require lower capital investment. Given this, how would you create a level playing field for both GSM as well as CDMA operators? In this context, and as a corollary to the following question, CDMA folks insist that once GSM folks upgrade to WCDMA, then their efficiencies automatically go up and that that would be the reason not to look at technology efficiency.

The GSM and CDMA technologies have different paths laid down for their evolution to 3G services. The investments made by operators to evolve to the next generation are a function of both the technology they adopt as also the economies of scale that their technology/standard commands in the global market.

GSM is the predominant global mobile standard in both 2G as well as 3G services. In 2G, GSM accounts for 75 per cent of the market and 80 per cent of the new subscriber additions. In 3GSM (WCDMA) too, despite a late start, 3GSM overtook the number of CDMA 2000 1x EVDO subscribers in July 2004 and presently there are over 78 3GSM networks on air with over 30 million subscribers, accounting for around 70 per cent of the 3G market. As a result of these huge economies of scale that are available to GSM, the technology is fast leveraging this advantage in its upgradation to 3G networks. And, a level playing field between GSM and CDMA means ensuring that both standards and technologies are assured of a simultaneous and concurrent evolution to 3G.

The overall superiority of a technology is a summation of several complex attributes and the sheer dominance of GSM in the global market clearly establishes its awesome global superiority. In terms of one characteristic i.e. erlang (subscriber) capacity, CDMA characterises a five times higher spectral characteristic vis-à-vis GSM. This means that spectrum available to CDMA operators has five times higher subscriber capacity than GSM spectrum. CDMA operators in India have been given an equivalent of 25MHz GSM spectrum. For a level playing field it is important that GSM operators too be allotted 25MHz spectrum to match up to the equivalent spectrum that has already been allotted to the CDMA players.

Further, this higher capacity of CDMA spectrum cannot be ignored. Given that spectrum is a precious resource, it is imperative to ensure its efficient utilisation.

But the CDMA folks insist that on a per-BTS basis they are more efficient but that that doesn't help since they can't reuse spectrum on 6:1 basis like the GSM operators do.

This claim is absolutely false and incorrect. As per the CDMA's own claims, they have a five times higher subscriber (erlang) capacity both at 5MHz allotments and at 10MHz allotments. Further, there is no constraint on CDMA operators setting up equal number of BTSs as the GSM operators. There are enough examples of CDMA networks in Bangkok, Hong Kong, Seoul, Tokyo and St. Petersburg, where CDMA networks have set up base stations at distances of 300 metres and less to cope with the heavy traffic requirements of the Central Business Districts.

They also talk of interference being higher with CDMA technology thus reducing overall efficiency. We are not aware of any such problem with CDMA technology. In fact we find it quite surprising that the CDMA operators, who only a few years ago claimed all kinds of superiority over GSM in order to gain an entry into mobile services, are now making all kinds of inefficiency claims. Technical calculations as also the averments of CDMA stakeholders on their Web site and even in Court, establish the higher subscriber (erlang) capacity of CDMA vis-à-vis GSM. All these claims about inefficiency are merely a tactic in order to get more spectrum so that they can corner this valuable resource and gain an unfair financial advantage over their competitors.

Other countries, with such a problem, that have resolved this issue? The CDMA folks quote examples of the US, Korea and Japan that have all granted equal spectrum to all players.

In most countries, operators have paid separately for spectrum and are allotted the full spectrum the moment they sign the licence. They enjoy equal spectrum because they have paid the price for it. In India, it's different. This resource has been bundled along with the licence.The initial allotment under licence is 4.4MHz for GSM and 2.5MHz for CDMA (please note unequal spectrum). Additional spectrum is made available only after allotments have been optimally used, according to a subscriber-linked roadmap laid down by the Government separately for GSM and CDMA operators.

Here, CDMA operators cannot claim rights to equal spectrum, but must adhere to the terms of their licence and the spectrum guidelines. The reference by the CDMA operators to Korea and Japan is interesting because both these countries have opted for 3G in the IMT 2000 2.1GHz Core Band, which is being strongly resisted by the CDMA players in India. GSM and CDMA players co-exist in Korea and Japan harmoniously in the 2.1GHz band.

bharatk@thehindu.co.in

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