Google, Android, FCC Auction, Verizon Wireless Open Access and LTE.
All are changing the wireless telecom community.
The U.S. wireless industry is undergoing fundamental changes that in the next few years will take it in directions no one can guarantee now. Pushed in part by a convergence with the Internet world, the old world order is breaking down.
Google’s interest in bidding on spectrum in the FCC’s 700 MHz auction, which starts Jan. 24, is being blamed for some of the seismic shift – perhaps helping push Verizon Wireless to declare it will open its network to more phones and applications in 2008 And AT&T to insist that its network is already open.
Verizon Wireless, which has always been one of the most walled garden operators, followed its open network decision with another one that would have been unimaginable a few years ago. It announced it would desert the CDMA community, although not CDMA itself, by using Long Term Evolution (LTE) technology for its 4G network.
LTE is the technology of choice of the GSM Association and is the cellular alternative to Qualcomm’s Ultra Mobile Broadband (UMB) and WiMAX. All three are “fork-lift” technologies in that they require building a new network infrastructure and will require multiple handset radios to be backward-compatible to today’s 3G networks. Still, Verizon Wireless made the decision to join the GSM community’s future, at least in part because of the potential for greater savings from the large LTE vendor ecosystem.
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RELIGIOUS WARS WAGING?
Verizon Wireless’s decision shows how the religious war between the CDMA and GSM worlds has changed. Both have belittled each other’s technology in the past and it hasn’t been until recently that Qualcomm participated in GSM events such as the 3GSM World Congress (now called the Mobile World Congress). The carrier’s decision to use LTE, which will be used on its new AWS spectrum or spectrum it wins in next month’s FCC auction, will be talked up by the GSM community as a victory.
Does that mean that UMB is dead in the water? Not necessarily. No major U.S. or European carrier is likely to use UMB (Sprint is using WiMAX for 4G), but Japan’s KDDI is believed to be considering it for 4G.
James Person, COO of the CDMA Development Group (CDG), says it is too early to tell what effect Verizon Wireless’s decision will have on the future of UMB, although he admits that the decision of a large carrier often influences what others will do. He says he is confident UMB will be used commercially and notes that both UMB and LTE are “discontinuous” technologies since they require a completely new network. He also points out that Verizon Wireless will continue to use its CDMA network and likely will have dual-mode CDMA/LTE devices.
The CDG and Third Generation Partnership Project 2 (3GPP2) published the UMB air interface specification this fall. The CDG says UMB will support hand-offs with cdma2000 1X and 1X EV-DO air interfaces, with peak data rates of 288 Mbps down and 75 Mbps up in 20 MHz of spectrum. LTE’s specification is still being standardized.
LTE, UMB and WiMAX all use orthogonal frequency division multiple access (OFDMA) and multiple-in, multiple-out (MIMO) antennas. Nokia announced recently that the LTE/SAE (System Architecture Evolution) Trial Initiative, which includes Ericsson and Verizon Wireless’s minority owner Vodafone, had met lab and field test goals of 100 Mbps on the downlink and 50 Mbps on the uplink.
The LTE/SAE Initiative was founded by Alcatel-Lucent, Ericsson, France Telecom/Orange, Nokia, Nokia Siemens Networks, Nortel, T-Mobile and Vodafone, and was recently expanded with China Mobile, Huawei, LG Electronics, NTT DoCoMo, Samsung, Signalion, Telecom Italia and ZTE as new members.
UMB NICHE
Gemma Tedesco, an analyst with In-Stat, says it is realistic to expect that an operator deploying any of the so-called 4G technologies will roll it out after 2010 and will do so very slowly. By that time, the 3G cellular technologies like EV-DO and W-CDMA/HSPA will have broad coverage, she says.
Tedesco says Verizon’s decision was a “bad stroke” for UMB and predicted it may become a niche technology used in smaller regions of the world.
Qualcomm maintains the Verizon news was not a surprise and that the company had not staked its future on UMB and that UMB still will enjoy a time-to-market advantage over LTE. The company says it has 1,400 patents that relate to LTE, although its patent portfolio is stronger in UMB.
Bill Davidson, senior vice president of global marketing and investor relations for Qualcomm, says the company’s long-term strategy won’t change because of Verizon Wireless’s LTE decision. Davidson points out that Sanjay Jha, COO and head of Qualcomm Technologies, recently stated that Qualcomm could put LTE and UMB into the same chip.
Qualcomm’s recent announcement of its Gobi platform, which could integrate multiple 3G technologies into one chip, is an example of what the future holds, Davidson says. “This complexity of air links plays into one of our great strengths,” he says. “We watch the market. We make chipsets based on what our customers ask of us. If they want LTE and UMB, we will look at that.”
Davidson also says CDMA as an air interface has a long life ahead of it, both for voice and data. LTE is no more spectrally efficient than CDMA, he says, although it does provide higher data rates.
“I don’t see why CDMA can’t live well beyond 10 years,” he says.
OPEN ACCESS
What Verizon’s “open access, open applications” pledge will mean in the long run remains to be seen, since the operator says any devices using its network must meet its standards. CEO Lowell McAdam was quoted by BusinessWeek that Verizon Wireless will support Google’s Android software platform on handsets, although a spokeswoman said that was more a statement of support for the developer community’s interest in Android than in a promise of support of Android handsets.
Denny Strigl, president and COO of Verizon, said at a recent investor conference that the open access pledge was taken to encourage new subscribers, which in turn will mean a lower cost of acquisition since the operator won’t have to subsidize these consumer-purchased open-access devices.
Lehman Brothers said in a research note that Verizon Wireless’s LTE decision was good news for most of the semiconductor and infrastructure companies, especially Nokia, Nokia Siemens Networks and Ericsson, which it hasn’t work with before. But the decision could hurt Qualcomm because Verizon Wireless accounts for about 45% of the CDMA handset demand in North America, Lehman wrote.
“We would highlight, however, that Verizon is likely to continue to invest in its CDMA-based network for many years,” Lehman said. “While Qualcomm’s chipset share at Verizon may move lower, devices on the new LTE network are likely to be dual-mode allowing QCOM to continue to collect some royalties.”
Changes are coming. From the very inside of the phones, to the network technologies, to open access.