Wireless war reaches a new frontier

The battle over wireless market share is beginning in Latin America. Droves of infrastructure vendors are heading south to duke it out and win favor among Latin America's TDMA operators, all of which are studying their plans for the next generation of data services.

The opportunity could be tremendous for big contracts that call for major technology swaps — something the vendor community needs in light of a slowing economy in the U.S. and other parts of the world.

It's evident now that a migration from TDMA technology to its wireless data predecessor enhanced data rates for GSM evolution (EDGE) won't be ready until 2003 at the earliest, and some vendors believe EDGE will never be deployed because it lacks economies of scale. Latin American operators now have two choices: migrate to a global technology like GSM's general packet radio service (GPRS) or move to CDMA. The latter is considered the more economical choice.

“EDGE is really something we don't see happening, so we're working with customers to move forward to either CDMA or GPRS,” said Mark Tharby, vice president of wireless Internet solutions marketing for Nortel Networks.

“Latin America has a couple of conflicting opportunities. Each technology has pros and cons. GSM has close alignment with global standards, but CDMA has a lot of next-generation features, and you get some economic advantages,” he added.

AT&T Wireless started the chain reaction earlier this year when it opted to deploy GSM technology alongside its TDMA network in the 1900 MHz band. It needed a quicker data play to compete with its CDMA carriers, which are launching high-speed data services known as 1XRTT. GPRS can provide AT&T Wireless with a data story by the end of the year. The company's affiliates followed suit.

Nokia and Motorola have introduced GSM base stations capable of operating at 850 MHz, the frequency most Latin American operators use.

About 75% of Latin America's operators use TDMA technology, while CDMA holds almost 25%. A small percentage of carriers have deployed GSM technology to date, but the GSM community was issued a blow when spectrum auctions at the 1800 MHz band, a shoo-in for GSM technology, failed to attract any bidders.

Cristiane Mahler, a senior analyst with The Yankee Group's Latin American wireless practice, said TDMA carriers must make their technology decisions in the coming months.

“They have to be proactive about making a decision or they could stand to lose market share to existing CDMA operators when [CDMA operators] roll out 1X technology quickly,” she said.

The CDMA community appears to have one of the largest Latin American wireless companies under its wing. BellSouth International wants to convert its TDMA systems to CDMA-based 1X technology but has yet to announce such a decision.

BellSouth's acceptance of CDMA also has played out in the U.S. market where TDMA operator Cingular, jointly owned by BellSouth and SBC Communications, is mulling a move to either GSM or CDMA. BellSouth advocates CDMA, while SBC wants to move to GPRS technology.

“We're still debating technologies,” said William Clift, Cingular's chief technology officer. “We have a direction in mind, but we want to be sure the parents are on board. There are a lot of financial considerations.”

All the while, big Latin American operators like Telefónica, which holds CDMA and TDMA properties, are watching the U.S. TDMA market to see how technology decisions play out.

“We will see a battle,” Mahler said.

Ericsson, the dominant TDMA vendor in Latin America, will try to convince its customers to move to GSM technology. And Nokia is heavily marketing its new 850 MHz GSM base stations to get a bigger chunk of the infrastructure market in the Americas. At the same time, big CDMA advocates like Lucent Technologies, Samsung and the CDMA Development Group will work hard to convince carriers that the CDMA path is the easiest and most economical path to the third generation.