CDMA CONGRESS TRUMPETS EARLY SUCCESS STORIES

Despite the economic downturn plaguing the telecom industry, executives were celebrating in Hong Kong last week at the 3G World Congress, the largest annual showcase for the CDMA community.

Third-generation networks have finally arrived, data demand is becoming apparent and at least one CDMA operator is beginning to pull ahead of competitors using alternative 3G technologies, something the CDMA community is hoping to replicate around the world.

“A fundamental shift is happening,” said Perry LaForge, executive director of the CDMA Development Group in an interview. “Japan is the first example.”

As of last Monday, Japan's No. 3 wireless carrier, KDDI, had signed up 829,000 subscribers on its third-generation 1X network since its April 1 launch. KDDI is adding 10,000 new subscribers per day, said Hideo Okinaka, general manager of the carrier's strategic technology planning department. By comparison, Japanese powerhouse NTT DoCoMo has added 112,300 customers on the W-CDMA network it launched on Oct. 1, 2001.

The company is targeting several million subscribers by the close of this fiscal year, which ends March 31, 2003. Because its existing network only required software upgrades, it was able to roll out service rapidly and offer a significantly wider coverage area than competitor DoCoMo. Fifty-four percent of Japan's population was covered the day the company launched service.

“Because of the mature technology status, we were able to get handsets at the same size, the same weight and the same cost that we did with CDMA,” said Okinaka.

While the primary focus has been on DoCoMo and its successful i-mode strategy, other carriers are beginning to look to SK Telecom to port its 1X applications. The company is in discussions with several GSM operators to move various wireless Internet applications it has created, said Myung S. Lee, vice president of SK Telecom.

The CDMA Development Group announced 15 commercial 1X networks around the world that support more than 10 million subscribers and 124 different 1X devices that include handsets, smart phones, air cards and personal digital assistants. But CDMA operators still face difficult decisions on pricing data offerings low enough to stimulate demand.

“Usage will be gated by pricing,” said Irwin Jacobs, chairman and CEO of Qualcomm. “We will have to become better at pricing.”

While most carriers plan to try per-megabit pricing, wireless data won't take off without flat-rate plans, said Rob Glaser, chairman and chief executive officer of RealNetworks.

Carriers worry about the impact flat-rate pricing plans on network performance if data users load the network. Sprint PCS said it plans to offer buckets of megabits when it launches its nationwide 1X network in the U.S. this summer, despite the fact Verizon Wireless has introduced an all-you-can-eat plan to enterprise customers for $100.

“The U.S. has successfully marketed large buckets of minutes,” said Bill Blessing, senior vice president of business development and strategy with Sprint PCS. “We'll offer different amounts of data megabits with different volume levels. This still protects us from abuse on the network.”