Protocols Jockeying for Position

How quickly things change. Little more than a year ago, critics and competitors questioned when -- or even whether -- CDMA would make it to the gate. Now most industry leaders agree that third-generation wireless technology will be based on some form of CDMA.

Predictably, several third-generation proposals have entered the competition, all of which promise to usher in an era of wireless high-speed data and multimedia. To be sure, genuine differences of opinion exist about the best approach. But it's also clear that industry leaders such as Ericsson, Motorola and Qualcomm are using the third-generation debate as ammunition in the now-raging second-generation market battle.

If there is anything we should have learned from the second-generation technology war, it's that there is sufficient demand for multiple standards. The idea that we ought to abandon competition and let central planners at the International Telecommunications Union (ITU) choose one system makes about as much sense as declaring Joseph Stalin's birthday a holiday. If anything, we should be stripping the ITU of responsibilities -- many of which have been rendered obsolete by privatization and increased competition.

FOR COMPROMISES Had we let committees of experts decide such issues in the past, we would not be wrangling over competing CDMA proposals today; CDMA probably never would have been commercialized. Committees are good for working out compromises. They are even better at weeding out radical innovations.

In some cases, committee standards are the way to go. But these are rare. For example, committee-grown standards make sense when dealing with technologies so mature nobody has a passionate desire to do anything terribly different. Committee-grown standards also may make sense when compatibility between all vendors is absolutely essential, as is generally the case for dial-up modems.

Although most observers think GSM -- one of the more exquisite committee creations -- succeeded because it gave order to Europe's patchwork of incompatible air interfaces, we should not forget that GSM operators brought the first taste of competition to most of Europe's cellular markets. The Spaniard whouses his phone exclusively in Madrid probably was attracted by GSM pricing and features -- not compatibility with some network in Luxembourg.

RIGHT PERFORMANCE AND PRICE Likewise, the next-generation wireless technology, CDMA or otherwise, probably will succeed not because it was ordained by the high priests of arcane specifications, but because determined vendors delivered the right performance at the right price. With that in mind, let's take a brief look at the three CDMA-based, third-generation proposals.

Although Ericsson has resisted jumping on the IS-95 bandwagon, the company has long insisted it has excellent CDMA technology of its own. Industry representatives witnessed Ericsson's demonstration of 2-way video transmission between fixed and mobile stations in Stockholm last September. There is no doubt Ericsson has the ability to develop and produce quality CDMA solutions.

But what is not clear is how badly Ericsson wants to promote CDMA. The primary conclusion Ericsson tried to impress on industry analysts was that there is no need to abandon TDMA technologies such as GSM and IS-136; that they will continue to evolve until Ericsson's wideband CDMA technology is ready. Ericsson also appears to have scored a coup by winning the inside track at NTT DoCoMo of Japan, which has announced plans to deploy wideband CDMA within the next several years.

Qualcomm and the cdmaOne backers have responded to Ericsson's rather sudden claim as the next-generation CDMA leader. Ironically, the cdmaOne industry -- which succeeded by advocating a radical departure -- has rallied behind the conservative argument that backward-compatibility with existing IS-95 infrastructure and handsets is the first wideband-CDMA requirement. But the point is well taken; given its position in North America and Asia, IS-95 will be more than just a thorn in GSM's side. There is also no doubt that Qualcomm and its licensees possess loads of practical experience and already have developed key pieces of the wideband CDMA puzzle.

Motorola and Nortel, however, are hedging their bets. They have too much at stake in IS-95 not to support the cdmaOne industry's wideband-CDMA efforts. But they also sense that the third-generation standards battle has created an opening in Europe, and they have teamed up with Siemens and Alcatel in support of a hybrid TDMA/CDMA solution. The Frames 1B proposal specifies a 1.8MHz channel, and although it is not particularly wideband, supporters claim that it is more backward compatible with GSM.

SHIFT TOWARD DATA Is there a market for wireless high-speed data and multimedia? The answer may be found in the public switched telephone network (PSTN), which is experiencing a colossal shift toward data traffic. According to some estimates, data traffic in the United States now has eclipsed voice traffic, largely due to the longer "hold times" associated with Internet access.

CDMA promised -- and by all indications is delivering -- oodles of capacity. CDMA operators will be able to offer airtime prices approaching and even beating wireline prices. But IS-95 alone only will support data calls up of to 64,000b/s. Wideband CDMA, in contrast, promises bandwidth-on-demand: up to 384,000b/s for pedestrian users and 2 million b/s for stationary users.

THREE CONCLUSIONS Where does this leave us? I see three main conclusions. First, Ericsson and Qualcomm are, respectively, the technology leaders of the GSM and IS-95 camps. Each hopes to use the promise of its third-generation solution to convince customers to purchase its second-generation products now.

Second, Motorola and Nortel support Frames 1B because this is what many GSM customers say they want, but also because, if successful, it would free them from the yoke of Qualcomm royalty payments without subordinating them to arch-rival Ericsson.

Third, wideband CDMA is going to end, once and for all, the myth that wireless and data don't mix. Despite what competitors say, IS-95 has demonstrated significant capacity, coverage and audio quality advantages for voice. Incorporating the latest advances, wideband CDMA solutions will do precisely the same for data.

At the same time, I would not want to bet against Qualcomm. It is one of the very few companies that has figured out how to make money in wireless data (with its OmniTRACS satellite-based service). And thanks to competitors, it is being forced to confront the third-generation system challenge while it still has something to prove.