Key operators moving away from technology: Reports

Thomas K Thomas

"The share of CDMA subscribers in India would drop to 7 per cent by 2010, while that of GSM would grow from 75 per cent at present to 93 per cent.''

New Delhi, July 21

The popularity of Code Division Multiple Access (CDMA) technology based mobile services in the country seems to be weakening with analysts predicting that the net subscriber base of CDMA may start dwindling beginning next year. According to a report on the Indian telecom sector by global consultant Credit Suisse, the share of CDMA subscribers in the Indian market will come down to seven per cent by 2010 while that of GSM will grow from 75 per cent at present to 93 per cent. The report also said that the ecosystem for GSM operators was much better than CDMA operators.

CDMA Network

"Clear development within the Indian market appears to be that the market share of subscribers GSM takes looks set only to rise. Indeed, year-to-date GSM seems to have taken some 76 per cent of net additional subscribers," Credit Suisse said. The report points out that GSM handsets were cheaper and in a price sensitive market such as India, a cost difference of Rs 500 matters. It also said that absence of SIM cards for CDMA users was also making it unpopular.

"We assume that in essence after 2007, Reliance pursues incremental growth in India through the GSM track. This would suggest that apart from Tata, there is no other significant nationwide Indian CDMA network, although Bharti and BSNL hold CDMA networks. While this may seem to be an extreme conjecture, currently we notice that in China, despite significant investment, CDMA accounts for only eight per cent of the subscriber base," the report said. It also said that spectrum constraints were also hindering the growth of CDMA services in the country.

Another report by Morgan Stanley said that in the long-term, CDMA faced a number of challenges in the international scenario as well with key operators and vendors pulling out of the technology.

Challenges

"SK Telecom and KT Freetel, who collectively represent about 10 per cent of CDMA subscribers in the world are not likely to migrate to CDMA2000 1x Release A. Their actions could damage the economies of scale for the remaining CDMA carriers in the world. VIVO, the fourth largest CDMA carrier in the world in one of the key emerging markets, Brazil, has openly discussed the potential of migrating to the GSM roadmap," said the Morgan Stanley report.

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(This article was published in the Business Line print edition dated July 22, 2006)
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