Menu Style

Cpanel

22October2018

CDMA trials in Africa show strong potential for cost reduction without compromising on quality

The first technical trials for Code Division Multiple Access(CDMA) in South Africa in 2009, organised by Qualcomm and Ericsson and in association with MTN and Transtel, show that the 3G CDMA technology has the potential to bring cost-effective, high-quality voice communications and high-speed data connectivity to both the urban and rural populations of Africa. In Africa, the challenge for CDMA however remain with the GSM which is the de-facto global standard as it is also dominant in the rest of the world. GSM is by far the most widespread cellular technology in Africa offering voice communication facilities to millions of people who are not able to receive a reliable landline service.

Entry of CDMA technology to the Nigerian market recorded good success

In Nigeria, CDMA based system of telecommunication entered the industry on the fixed wireless platform. Their boom rode on the failure of NITEL on its fixed telecom infrastructure. The subsector was characterised by about 13 CDMA operators including the likes of Multilinks Telkom, Starcomms, Reliance Telecom, and had a combined subscriber base of 8.6 million users. Multilinks and Starcomms were leading industry players with renowned performance excellence in data services alongside the fixed wireless services. They operated on regional licenses that allowed them to sell data services in addition to fixed wireless telecommunication services. The introduction of the unified access services licenses (UASL) in 2006 removed their geographical barriers in addition to permitting them to compete both in the fixed and mobile telecom market.

The CDMA mobile made an impressive entry into the Nigerian market and with the entry of Visafone, the subscriber base grew astronomically from just 380,000 in 2007 to more than 6m by the end of 2008 - and from a mere 1% to 9.6% of all mobile lines in just one year. Throughout 2008 and the first half of 2009, the CDMA operators continued to grow in importance, led by Starcomms , with the total CDMA market share growing to more than 10% by the end of 2008. 2009 saw much slower growth for the CDMA operators and by June 2009 their share of the market had only risen to 10.9%.

Increased investment in GSM operation in the second half of 2009 reversed the influence of CDMA

By the third quarter of 2009, Nigeria’s CDMA operators as a group actually lost around 229,000 subscribers. Active subscriber base began to decline while the prominence of the GSM operators strengthened as network roll out expanded further inland into the country. Unfortunately, the CDMA operators were unable to match the level of investment in network expansion that their GSM counterparts embarked upon.

According to Pyramid Research Country Intelligence Report on Nigeria in 2008, mobile CDMA service accounted for an estimated 6.3% of the market’s US$8.6 billion in total revenue, and was expected to grow to 11% by 2013. It was also expected that barring major changes in market conditions, CDMA operators will grab 20% of mobile subscriptions by 2014. However, the current performance trend of the industry does not support this projection. Of course there were major changes in market conditions which further depressed the ability of the operators in the CDMA segment to grow.

In term of cost to users, CDMA operators are very competitive

A major advantage that Nigeria’s CDMA operators have is that they are able to offer lower on-net and off-net call rates than GSM operators. In addition, the fact that they have considerably fewer subscribers reduces the strain on their networks; resulting in better service quality than the average GSM operator. The CDMA market segment also benefitted from the introduction of cheap and partly subsidised mobile handsets that appealed to the low end of the market. Visafone for instance, launched its operation with handsets that were selling for prices as low as N2,000.00 in 2008; handsets that ended up in the hands of many first time users of mobile phones. Given the relatively low on-net and off-net call charges and cheap handsets, a number of existing GSM users also adopted CDMA lines as alternative mobile phones. Visaphone’s subscriber base grew from 60,000 at inception in March, 2008 to 2.25m at the end of 2008. 

  • Written by The Analyst
  • Hits: 355

GSM will eventually converge with the CDMA technology

In the economics of resource distribution, availability supersedes affordability. After the evolution of the telecommunication sector in Nigeria, the inability of the CDMA operators to make available this technology despite its acclaimed advantages over the GSM sustained the stunted growth of the CDMA telecom subsector space in Nigeria. According to an industry player, the current poor showing of the CDMA subsector is the result of the failure of the pioneer CDMA operators to roll out as aggressively as the GSM operators before the competitive pricing caught up with the industry.

Today, with only about 5 million active subscribers, a number that is declining, it has become harder for operators in the CDMA market space to benefit from scale efficiency in costs per user while average revenue per user is falling. The success factors are painfully linked to the ability of the existing players to put a CDMA phone or CDMA technology dependent devise in every hand and household. While this is a tall ambition, it is not insurmountable.

The Code Division Multiple Access (CDMA) Technology

Code Division Multiple Access (CDMA) is a "spread spectrum" technology, allowing many users to occupy the same time and frequency allocations in a given band/space. CDMA assigns unique codes to each communication to differentiate it from others in the same spectrum. In a world of finite spectrum resources, CDMA enables many more people to share the airwaves at the same time than with alternative technologies. According to the CDMA Development Group (CGD), CDMA promises better security, fewer dropped calls, and more efficient infrastructure than the GSM technology because of its unique technology features. Unfortunately, with the exception of the United State of America (USA) where the use of CDMA exceeds that of GSM technology, its adoption globally has been muted, with only 575m subscribers worldwide. It is estimated that there are over 5 billion GSM subscribers globally.

According to CDMA operators, GSM will eventually converge with the CDMA technology

It has been argued on two fronts that the CDMA technology is better than the GSM technology. CDMA phones have slightly more refined methods for handling off calls from tower to tower such that the occurrence of drop calls is lower on CDMA platforms than the GSM platforms. Secondly, in CDMA technology, data and voice are separated from signals using codes and then transmitted using a wide frequency range. Because of this, there is more space left for data transfer. It is one of the reasons why CDMA is the preferred technology for the 3G generation, which involve broadband access and the use of big multimedia messages. 14% of the worldwide market on 3G goes to CDMA. However, while GSM phones can send and receive data packets while making a call, most CDMA networks may not be able to. It has been argued that GSM will migrate to CDMA since CDMA is more advanced and it has been chosen as the 3G generation technology.

CDMA can compete favourably with the GSM technology despite some drawbacks

CDMA is the primary mobile technology competitor for GSM and is typically referred to CDMA Evolution-Data Optimised (EV-DO). It is designed to deliver high-quality voice and high-speed data. It is an efficient wireless technology for circuit-switched voice communications and it supports packet data speeds of up to 153.6 kbps in a single 1.25 MHz radio channel. Over the years, CDMA technology has matured with the introduction of a number of new technology advancements that have enabled increased capabilities, an enhanced user experience and improved economics, including new speech coders, advanced antenna techniques, interference cancellation and the aggregation of radio channels. It however has a major drawback: it doesn’t support simultaneous voice and data transmissions. The newest revision of EV-DO called Revision B (Rev. B) however makes concurrent voice and data usage possible.

Another drawback is the fact that while GSM phones use a chip called a SIM card which can be removed and inserted into other GSM phone, the CDMA phone’s chip is locked to one network, and can only be switched to another with the cooperation of both the old and new carriers if you change provider. However, the CDMA standard utilises something similar to SIM (Subscribers Identification Module), called the RUIM (removable user ID module). CDMA phones can potentially draw more power than GSM handsets, shortening their battery life.

  • Written by The Analyst
  • Hits: 358

Connect