CDMA market: The rise of a small giant

Burhanuddin Abe, Contributor, Jakarta

That CDMA is now rising has become evident. Following South Korea, China and Japan, Indonesia is now witnessing increasing popularity on the part of CDMA.

Since the arrival of Telkom Flexi two years ago, the number of CDMA-based cellular telephone subscribers has continued to increase. Today there are over two million subscribers to CDMA operators such as Flexi, Fren, Esia and StarOne.

Telkom (Flexi), Bakrie Telecom (Esia) and Indosat (StarOne) operate a fixed wireless access or services like the fixed telephones you have at home, while Mobile-8 (Fren) is exploring the market of cellular telephone services (without roaming) that cover Java island.

Undeniably, the relative superiority of CDMA technology over GSM/GPRS technology has become attractive to cellular telephone operators. In addition, CDMA technology will also allow a bigger profit for operators because this technology enables a bigger capacity as more users can converse simultaneously.

In view of the fact that the CDMA technology being developed today is the telecommunications technology that meets the third generation (G3) technology standard, it will be able to meet the needs of subscribes for quality of voice and pictures, and also the speed of data transfer.

Unfortunately, various superior features of CDMA are yet to be seen in their optimum, in part because this technology is still relatively new and the areas it covers are yet as large as those controlled by its predecessors, GSM/GPRS.

Nevertheless, CDMA operators are quite optimistic about the future. Some time ago, for example, the service business director of PT Telkom, Suryatin Setiawan, said there would be a boom of technology-based services in 2005, particularly because handsets had become cheaper and more easily available.

Massive promotion by operators in various forms -- rate discounts and pulse bonuses, bundle selling with handsets and other gifts, show the operators' seriousness in developing the CDMA platform.

To develop Flexi, for example, Telkom has teamed up with telecommunications giants Samsung, Motorola and Ericsson for the construction of 3G-CDMA20001x infrastructure. Telkom is upbeat that it can provide 1.5 million to two million telephone connection units (SST) per year through Flexi.

Meanwhile, Mobile-9, which is determined to be a CDMA cellular operator, has teamed up with Samsung to build the 3G-CDMA20011xEV-DO infrastructure. Thanks to this cooperation, the Fren service will offer a greater variety and possess a very fast connection speed of up to 2,400 kbps. Like Mobile-8, Bakrie also has adopted 1xEVDO by forging a cooperation with Nortel Networks.

It seems that CDMA has a bright future, not only because Telkom (Flexi) and Indosat (StarOne) are also GSM license holders but also because the government has set a target of providing more telephone connections to the public. Three operators developing fixed wireless -- Telkom, Indosat and Bakrie -- will of course enjoy a very big opportunity.

For the period from 2005 to 2009, the National Development Planning Board (Bappenas) has projected a minimum increase of 18,823,556 telephone connection units. Various reports have said that 68.18 percent of telephone connection units will come from Telkom, 17.27 percent from Indosat and 14.55 percent from Bakrie Telecom.

For Mobile-9, it has the opportunity to be the market leader in the cellular CDMA platform because this operator, which has launched Fren, is the sole player providing a pure CDMA cellular service. Besides, in its operation, Mobile-8 has fostered strategic cooperation with Qualcomm as its CDMA technology provider partner and Korea Telecom Freetel (KTF) as its partner for the provision of Operation & Maintenance (O&M) consulting services.

Other GSM cellular giants like Telkomsel, Indosat and Exelcomindo are yet to show signs that they will develop their GSM/GPRS to become wideband CDMA (WCDMA/UMTS). There are many reports that they prefer to upgrade their GSM to EDGE, which is lower than CDMA2000 1x in terms of technical capability. For Mobile-8, this situation is both a blessing and a challenge, particularly in how to penetrate the market amid the domination of GSM, which boasts 30 million subscribers.

Surely, the increasing popularity of CDMA has made the market for handsets and their accessories more active. If you go to cellular telephone trade centers, you can find something that you would not have seen last year.

The vendors no longer just offer GPRS and camera phones but also CDMA handsets from such brands as Nokia, Motorola, Ericsson and Samsung, or newcomers such as Sanex, Audiovox and Haier. Besides, you can also find brands that you have never heard of before such as Modottel, Alcomm, Daxian, Growell, Netac and Sierra.

Nokia, for example, has launched the CDMA series 6019i and 6016i with dual bands. These series complete the lineup that Nokia recently released, such as the Nokia 6225, 6015, 3205, 3125, 3105 and 2112. In terms of design, Nokia 6019i and 6016i are quite simple and tend to resemble the Nokia 6610 GSM. They have complete features like those that G3 handset have, such as a WAP browser.

As G3-standard handsets, these two series, launched in early February, possess the GPS (Global Positioning System) feature as a response to the CDMA technology capability of implementing location-based technology, a cell phone function that is yet to be fully developed in Indonesia.

Meanwhile, Motorola has launched A860, a product that is operated for both CDMA and GSM platforms. This handset uses a band in the GSM frequency of 900/1800 MHz and the CDMA frequency of 900/1900 MHz. Of course, this is a breakthrough for cellular telephone users, particularly for those who have used these two platforms. Just by having A860, a subscriber can easily access his two numbers from one button.

Most importantly, A860 is very suitable for subscribers with high mobility because it has global roaming capability. Whether you are in Bangkok or Paris, a connection can be easily established and the voice will remain clear. The Brew application, which Qualcomm has developed, enables a user to transfer data easily, download multimedia, access maps, conduct transactions and surf the Internet.

Not to be left behind, operators are busy with their co- branding or bundling programs that involve certain makes. Flexi, for example, has teamed up with Nokia, Sanex and a few other makes. Fren is bundled with Samsung, and Esia with Sanex. It is worth noting that co-branding or bundling always offers an attractive price.

Aside from enjoying pulse bonuses, rate discounts and free subscription, a subscriber can also buy a handset at a price far lower than the market price. Although the variety is limited, these bundling programs are quite popular. Esia and Sanex, for example, have launched their package called "Untung Guede, Banjir Hadiah" (Big Profit, Lots of Gifts). It offers two types of Sanex cell phones, namely Sanex 5010 and Sanex 7210, along with an Esia SIM card worth Rp 20,000.

Several operators have now started to introduce the application of CDMA2000 1xEV-DO with a peak performance of up to 2,400 kbps (2.4 Mbps) to fulfill the needs of upper-end users, particularly as regards the traffic of big data packages and downloading of multimedia materials.

Anyway, the success of CDMA operators in penetrating the market will be very much determined by how relevant this service is to subscribers and how much it costs. It remains a question whether CDMA will continue to lie dormant or will become a giant that will shortly rise. -- The writer is a Jakarta-based freelance journalist