HONG KONG — The hundreds of CDMA backers gathered in Hong Kong this week found the timing of the 3G World Congress fortuitous. About two weeks into the World Cup, they could tout the real world success of 3G by pointing to Korean and Japanese telcos offering video highlights of the world's most popular sport. Up to a point.
The networks of South Korea's KT Freetel and SK Telecom are, in theory, supposed to hum along at 2.4 Mbits per second, "but 800 kilobits per second on the street is what we have seen," said Myung Sung Lee, a vice president with SK's Network R&D Center. who worked on the implementation of the CDMA 1XEV-DO data-only system. Still, the feeling among CDMA insiders is that they have scored an early goal against the dominant GSM community, which is struggling to roll out GPRS, its 2.5G platform.
But World Cup matches only last a month, and Korea and Japan are "very, very unique markets," Lee said. In short, the real work has just begun for other CDMA operators looking to use data services as a way to bolster weakening voice revenues.
Applications that are major breadwinners in Japan and Korea, such as cutesy screen wallpaper or ring-tone downloads, may not easily transfer to non-Asian markets, and, in any case, are doable on the slower CDMA 1X networks. "Do you know what one of the most popular apps is in Japan?" asked Satoshi Nakajima, chief executive officer of UIEvolution Corp., a Seattle-based software developer. "The Hello Kitty clock." During a speech to journalists, Youn-kwan Kim, chief technology officer of South Korea's LG Telecom, suggested that karaoke through a handset could be realized with the higher throughput of EV-DO.
Despite questions about the 3G business model outside of Japan and Korea, the CDMA 1X platform is gaining steam. In North America, Monet Mobile Networks, Leap Wireless and Western Wireless rolled out 1X last year. This year, Verizon Wireless and Metro PCS have come to market and Sprint PCS will do so in July. Even the Ukraine, Russia and Romania are getting in on the action with deployments this year.
Air of uncertainty
Yet despite this momentum, there was an air of uncertainty among a good many of the attendees at this year's 3G World Congress. "Skepticism is very, very high. We've spent a lot of time talking about technology and whether 3G is launched or not . . . More important than that is talking about services and new capabilities," said Dave Murasige, vice president of strategic marketing at Nortel Networks.
CDMA supporters are happy to see GPRS stumble, but they know it won't last and they don't want to squander their early lead by failing to overcome hindrances like higher handset costs. "That's been coming down," said Irwin Jacobs, chief executive officer of Qualcomm Inc., the licensor of CDMA technology. "One of the issues is quantity and the other is technology. One of the steps we are now going through is to eliminate the intermediate frequency, and go directly from RF down to baseband. That cuts out components, which reduces costs," he said.
That will be good news for China Unicom, which is struggling to not only get enough phones for its fledgling CDMAOne voice network, rolled out this spring, but is also finding it difficult to compete on price with GSM phones. Although Unicom is targeting 7 million users by the end of the year (and is sticking with that estimate), even Jacobs acknowledged that 4 million would be more likely. Analysts doubt even that.
In North America, consumers are unlikely to lead a path to 3G services as they have in select Asian markets. A lot of U.S. providers are focusing on enterprise users because businesses will often pay higher amounts per month for having data services. One glitch there, however, is that carriers aren't used to marketing, selling and servicing such data services to enterprises, "other than in the most superficial way," said David Nagel, chief executive officer of Palm Source.
"These are much more complex services, such as determining security across the network, and it requires a much more sophisticated sales force and after-sales support system. So if the industry is going to be successful selling business services to enterprise, it's going to have to solve the problem of actually creating the ability to sell to and service very demanding business customers," he said.
