CDMA market: The rise of a small giant

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