Will we get 3G services this year?

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.