Will we get 3G services this year?

Zatni Arbi, Columnist, Jakarta, zatni@cbn.net.id

More than a year ago, I interviewed Bintang Juliarso, Qualcomm's former country manager for Indonesia. We talked about Code Division Multiple Access (CDMA) technology, what helped it survive the dominance of the Global System for Mobile Phones (GSM) as the standard for cellular phone networks, and what prospects it might have in Indonesia going forward.

An expatriate living in Bandung -- apparently himself a telecom consultant -- responded very harshly to my article, which I had written based on my interview with Mr. Juliarso. I always value feedback from my readers, but unfortunately this person's Letter to the Editor sounded so arrogant and bullyragging that I chose not to reply to it. He was actually one of the frequent letter writers in the column, and what made me even more disappointed was that he was one of the writers that I had admired. In his letters, he always demonstrated a deep understanding of telecommunications technologies and their business aspects.

I agreed with him when he said that the industry would choose a technology not because it was sexy but rather because of the economies of scale that enabled it to serve more customers, charge them less and earn more profit. At the time, he was just moving to another country, and in his parting note -- appearing in the letters' column a couple of days after he commented on my article -- he wrote, "Be careful when talking about access method. I have friends here and they will gladly forward to me any such articles. You have been warned."

I was warned. So, when I was recently offered the chance for an exclusive interview with Dr. Irwin Mark Jacobs, Qualcomm's founder and CEO, I took the chance as I wanted to see whether I was really wrong in writing about CDMA's future in Indonesia, which had triggered the bad side of this expatriate friend.

Besides, if a CEO of an S&P 500 and a Fortune 500 company like Qualcomm is in town, something must be brewing.

The race for 3G: CDMA, which is a digital system, builds on the analog cellular phone infrastructure, which we still have in use in Indonesia, Komselindo being one of the few operators.

On the other hand, GSM, which is based on Time Division Multiple Access (TDMA), is digital from the ground up. Originating from Europe, GSM is used in 70 percent of the world today, while CDMA is doing well in only a limited number of places, including South Korea, China, Latin America and parts of the U.S.

The story about CDMA becomes more interesting when we look into the future, where cell phone users will demand applications such as data communication, continuous access to the Internet, position location and streaming audio and video. All of these applications will require a lot of bandwidth, which can only be provided by the Third Generation, or 3G. During the interview, Mr. Jacobs showed me and a colleague from Business Indonesia his tiny, next-generation cell phone, which was already equipped with a video camera. Certainly it was not a GSM cell phone.

The 3G of CDMA, developed by Qualcomm, is called CDMA2000 and it will become available around the middle of this year in the U.S. Interestingly, the GSM group has decided to adopt Wide- bandwidth CDMA, or WCDMA, as the standard for their 3G services.

WCDMA is not the same as CDMA2000, and the reason Qualcomm is so upbeat is that, because it is available today, its 3G has a two-year lead over WCDMA.

"CDMA2000 offers a performance that is as good as or better than WCDMA," explained Mr. Jacobs. "CDMA2000 uses the existing bandwidth and has a much easier upgrade path from CDMA. It is also available commercially today. In Korea, this 3G CDMA is already being used by five million subscribers."

The beauty of CDMA2000, according to Mr. Jacobs, is that it will not take very long for the operators to make it available. On the other hand, GSM operators are still stuck with the 2.5G, i.e., GPRS, which is the bridge between 2G GSM and 3G.

So, Qualcomm is currently in discussions with a number of local operators that have the 800 MHz frequency slot to see whether they are interested in offering its 3G CDMA to Indonesian subscribers.

If things work out, we may have 3G services -- fast data communication, continuous Internet connection, etc. -- by the end of this year.

The only problem faced by the operators will initially be the availability of handsets, as the experience of China Unicom has shown. China Unicom introduced CDMA services, but business was very slow because vendors -- including China's own handset makers and Korean LG and Samsung -- were waiting to see the market response to the new service. However, as the service is also being rolled out this year and next year in other places in the region, including Australia and New Zealand, we may not have the problem that China Unicom had.

Another attraction of the CDMA standard is the Binary Runtime Environment for Wireless (BREW), which is a platform that enables applications to run on all devices that use CDMA. This platform allows developers to develop applications using a developer kit that they can download from Qualcomm's website. It is a layer platform stacked on top of the individual operating system of the devices, making them all work like tiny computers. This, of course, will open up new opportunities for Indonesian developers who can create applications for the local market.

Currently, we have chronic and difficult problems with our telecom infrastructure. Forget about the quality of our PSTN (Mr. Jacobs told us that he was able to get a speed of only 24 Kbps with his modem from his room at the Grand Hyatt), the six million fixed phone lines for a population of 210 million is a crippling situation in the information era. Our cellular phone population has been growing much faster, and it may have already exceeded the number of fixed-line telephones in the country. Yet, our progress is paltry compared to what has been accomplished by China, where mobile phones are reportedly used by 140 million people today.

So, whichever technology, whether GSM or CDMA-based, can rapidly multiply the number of Indonesians that can be reached by phone at any time should be more than welcomed.

Compatibility should not pose a serious problem. In South Korea, progress has been made to enable people with a GSM phone to use their SIM card in a rented CDMA handset for roaming purposes, so that they still can keep their phone number, voicemail and other services. This service, which used to be impossible, has been introduced in time for the influx of soccer fans during the FIFA World Cup event there.

Whether it is GSM or CDMA, we will grab it if we can have faster and more reliable connection speeds. And data communication is one of CDMA's strong points. "One of the possibilities that we see in Indonesia is the use of a CDMA-based fixed wireless network that connects all the Internet cafes," Mr. Jacobs commented. So, we do have a couple of things to look forward to as a result of his visit here.