CDMA taking root in Asia

The closing session of last week's CDMA World Congress in Hong Kong lent a sobering note to the three days of positive growth stories and data strategy sessions. Made up of investors, the final panel offered an outsider's view of code division multiple access, painting a picture of a technology that will always be several steps behind GSM and in questionable financial shape.

"CDMA no doubt won't outpace GSM," said Richard Kramer, executive director of international equity research for Goldman Sachs. "CDMA failed to consider one point: It's not about the perfect technology but about time to market." He argued that by the time some operators build out second generation CDMA networks - and in Asia, that schedule has been slowed by the financial crisis - they will begin to feel pressure to migrate to third generation. They also may have difficulty financing that migration so soon.

Japan's IDO, for example, has seen aggressive growth on its CDMA network, expecting to reach upwards of 3 million subscribers next year, said Eric Gan, senior analyst for Goldman Sachs. IDO's CDMA network has caused internal churn away from its personal digital cellular network, resulting in a 30% decrease in that operator's earnings last year, he said. An expensive migration to 3G on the horizon may make IDO less attractive to investors.

Despite these comments, CDMA has clearly made significant inroads to the Asian market. Korea Telecom Freetel has added 3.2 million CDMA subscribers in less than two years while Japan has 1.3 million subscribers on CDMA systems. China's Unicom will build out the entire country using CDMA, and Australia's Telstra plans to begin launching a CDMA network in the third quarter.