AROUND THE WORLD IN 450 MHZ

Call 2004 the year of wireless industry mergers, or mobile entertainment applications, or push-to-talk if you like. Outside of the U.S., the rest of the world is enjoying the year of CDMA450.

The protocol has become the technology of choice for many network operators building out networks using 450 MHz licenses, some of which are being newly allocated in countries across the globe. Other 450 MHz licenses have been in existence for several years but have lain fallow until recently.

The 450 MHz spectrum band was once home to analog Nordic Mobile Telephone (NMT) service and many other analog network standards, but they were outmoded with the advent of a digital wireless age built on networks operating at much higher frequencies and on a single standard — GSM.

“A lot of countries used 450 MHz years ago, but it was a world of fractured standards,” said Peter Gorham, manager of CDMA450 systems with Lucent Technologies' Mobility Solutions Group. NMT might be the most well known of those standards. However, Germany had its own system for 450 MHz based on Siemens technology, and France, not surprisingly, had an Alcatel system. In the U.K., the band was not even in use.

NMT might have been somewhat more popular because it became a technology of choice in Russia and other Eastern European countries after the Berlin Wall came down in 1989 — possibly because of Russia's proximity to Finland, Norway and Sweden, where NMT was dominant.

Ericsson claims to have business relationships with as much as 50% of the original NMT license owners, according to Peter Lancia, director of product and technical marketing at Ericsson. He said existing CDMA products can be applied to the 450 MHz band with little or no modification.

NMT eventually may disappear, though it still is reportedly popular at Scandinavian ski chalets.

“NMT was trunk radio,” said Steve Searles, vice president of CDMA/TDMA marketing at Nortel. “It was used in transportation, logging and other industries. It wasn't being used as a cross-boundary public network service.”

In the 1980s, governments in several countries began looking for a single digital standard to succeed the many analog solutions in the interests of creating seamless interoperability. They settled on GSM.

GSM's success spelled doom for an analog industry that had subsisted on multiple standards. “With the advent of digital, a lot of analog license holders lost their subscribers because commercial radio service became more useful and reliable. But they were still sitting on their licenses for service at 450 MHz,” Searles said.

“NMT is now a technology at the end of its lifecycle, and you can't really buy it anywhere.”

While GSM began to take over the world — except for the U.S., where CDMA was gaining a following — 450 MHz license holders decided that they would begin looking for options for new digital technology deployment in their bands. About six years ago, an industrywide effort to digitize 450 MHz drew major proposals both for CDMA450 and GSM400.

Though “Europe, Inc.” was forcefully pushing GSM for adoption, Gorham said, CDMA technology proved to be, quite literally, a better fit.

In most countries, the existing allocation of spectrum at 450 MHz is narrow enough that CDMA systems can offer more channels than GSM, which requires more spectrum, according to Gorham. CDMA require a swath of spectrum about 1.25 MHz wide, while GSM needs more.

GSM, however, would not be beaten so easily or quietly. Though CDMA450 has become a fairly obvious technology choice in the last few years for many owners of 450 MHz spectrum, government bureaucracy and industry political pressure has slowed some network operators in their efforts to adopt CDMA450.

For example, in some cases, opponents of CDMA450 have argued that original 450 MHz licenses were awarded only on the terms that analog technology be used. Elsewhere, GSM licensees have cried foul, insisting they were forced to pay far more for their GSM licenses — and, more recently, UMTS licenses — than CDMA450 players paid for their spectrum rights.

Though some controversy still lingers, most efforts to block CDMA450 deployment have proved fruitless. By the beginning of this year, several network operators in different countries appeared ready to deploy, and countries in several regions of the world were close to awarding new licenses for 450 MHz (see table), meaning that a spectrum band that was all but dead several years ago is alive and kicking again.

The struggle to revive the 450 MHz band may have fostered its share of controversy, but the economic reward could be entirely worth the trouble. Deploying networks at 450 MHz is much more cost-effective than deploying them at higher frequencies because base stations can't transmit as far the higher they are tuned.

“The rule of thumb is that for every doubling of spectrum, you quadruple the number of base stations you will need to cover a given area,” Lucent's Gorham said (see table on page 34).

The stark difference in the cost of network deployment means that 450 MHz network operators don't have to overcome as much network buildout debt as their incumbent competitors, likely allowing them to expand networks and launch new services on a fast timetable.

“The business case for these guys is much more favorable than it was for the previous generation of operators,” said Nortel's Searles. “A lot of business cases that wouldn't work before now can work at 450 MHz. Companies that fell out of the running can reinvent themselves as wireless operators.”

The services these newly viable network operators are offering run the gamut. Some are pursuing strategies heavily wagered on mobile data services, while others are focusing on voice and some are doing both. Romanian network operator Zapp Mobile began by targeting high-revenue data customers, but now is said to be mulling a prepaid voice launch. Carriers also are offering advanced services such as mobile messaging and video, and are serving both corporate enterprise and residential customers.

To offer such services, CDMA450 operators are moving well beyond their original mission to simply digitize their spectrum, but the 450 MHz band is not limited in terms of protocol evolution. Though some CDMA450 operators started with basic digital service, they are quickly moving into the 3G realm with CDMA 1X EV-DO, and some will eventually adopt CDMA 1X EV-DV when that standard is commercially ready.

“Years ago, during the digital selection process, we pitched the technology as being an easy migration from CDMA450 to CDMA2000 3G,” Gorham said. “Many of these operators are ready for that.”

At last week's International 450 Digitalization Conference in Bucharest, Romania, Zapp, operator of the most mature CDMA450 network in the world, announced the deployment of a CDMA 1X EV-DO upgrade using Lucent's Flexent CDMA450 base station.

“The addition of 1X EV-DO places us on par with the leading wireless companies in the world, allowing us to provide state-of-the-art services nationwide,” said Cuneyt Turktan, president of the board of directors at Zapp.

Zapp reported earlier this year that it was earning monthly average revenue per user (ARPU) of about $32, which is about $20 more than GSM operators in the same markets.

Also at last week's conference, Lucent announced a new 450 MHz base station targeted at smaller footprints and in-building deployments, and said that it is supplying Russian operator SkyLink with CDMA equipment for a dual-band trial using 450MHz to cover the areas around Moscow and St. Petersburg, and 2100 MHz to cover the urban cores of these cities.

“It's the same thing a company like Verizon Wireless might do in its network — use 900 MHz as a base and 1800 MHz in the urban centers,” Gorham said.

“WCDMA [at higher frequencies] will be dominant in those urban areas,” added Ericsson's Lancia. “We don't think CDMA450 is going to take over.”

SkyLink is an example of a relatively new company that is acting opportunistically by leveraging CDMA450 and other technologies. The company actually is an aggregate of several owners of 450 MHz spectrum throughout Russia.

In a presentation at a CDMA450 conference in Shenzhen, China, earlier this year, Kirill Barov, deputy general director and technical director of SkyLink, said that the company already was seeing an ARPU of $62. Barov also said the company was heavily targeting business and corporate users, which represented about 84% of SkyLink's total customer base.

For opportunistic companies like Zapp Mobile and SkyLink, CDMA450 provides a low-cost way to reach high-end users. However, for many network operators in other parts of the world, CDMA450 is being touted as a candidate to bridge the haves and have-nots of the wireless world.

“We did a trial for [Latin American regulator] Anatel. They are worried about people in rural areas becoming disenfranchised and they want a cost-effective way to reach them,” Gorham said.

Asia is another potential promised land for CDMA450. Vietnam, Tibet and Indonesia already have 450 MHz networks, and they might soon be up and running in China.

With all of these efforts going on around the world, it's ironic that the one place you won't find any CDMA450 activity is in the U.S. There has been interest in commercial wireless in the 450 MHz band, but it is currently being used by a variety of dispatch radio services. “It's kind of a mess,” Gorham said. “The possibility for usage is there if someone wants to clear it and the FCC will license it.”

Searles pointed out, however, that market saturation also could prevent CDMA450 from taking off in the U.S. “Does America need another wireless network? I'm not sure it does.”

Even without U.S. influence, the market opportunity is luring an increasing number of vendors besides Lucent, Nortel and Ericsson, including Huawei, Nokia and others.

Between the long-time owners of 450 MHz analog licenses, and the new applicants for 450 MHz digital licenses, these vendors will have a wide array of contracts to bid on. It's becoming ever more clear an old market has reawakened, and the natural benefits of its spectrum band are meeting up with state-of-the-art network technology to influence how a new market is evolving.

CDMA 450 DEPLOYMENT COMPARISONS

Frequency (MHz)	Cell radius (km)	Cell area (km2)	Relative cell count
2500	10.0	312	24.1
1900	13.3	553	13.6
1800	14.0	618	12.2
950	26.9	2269	3.3
850	29.4	2712	2.8
450	48.9	7521	1
Source: Qualcomm and Lucent Technologies