Huawei Technologies

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1 Huawei Technologies

2 Expert s Forum Expert s Forum China Telecom invigorates CDMA The CDMA industry chain and accompanying trends have been subtly changing in tandem with the transformation that is influencing the industry as a whole. The entrenchment of the world s leading operator, China Telecom, into the CDMA camp has had a far-reaching impact on the entire CDMA landscape. By Chen Jinqiao 5

3 Huawei Communicate Chen Jinqiao is the Deputy Chief Engineer for the China Academy of Telecommunications Research, Ministry of Industry and Information Technology (MIIT). He is mainly involved in ICT development strategies and policy research and has rich expertise in the areas of development planning and industry policy and regulations. The CDMA status quo As Fig. 1 illustrates, the global CDMA subscriber base has been growing steadily since In 2002, South Korea s largest mobile operator, SKT, took the lead by launching world s first CDMA2000 1xEV-DO commercial services. Statistics from the CDMA Development Group (CDG) reveal that, by December 2008, 112 million global 3G (EV-DO) CDMA subscribers were being serviced by 107 EV- DO Rev. 0 and 62 EV-DO Rev. A (DORA) commercial networks, with further 41 EV- DO networks and 36 DORA networks under deployment. Global CDMA subscribers totaled 465 million at this time, accounting for approximately 12% of the global mobile subscriber base. Regional distribution indicates that the Asia Pacific region and North America feature the largest number of CDMA subscribers, with the Asia Pacific boasting 51.5% of the global total. The world s most influential CDMA operators China Telecom, Verizon Wireless, Sprint Nextel, Reliance, Tata, Vivo, KDDI and SKT are mainly distributed in China, the U.S., India, Brazil, Japan, and South Korea. North America is the home of CDMA technologies, which have long dominated the U.S. market. Verizon Wireless and Sprint Nextel, the second and third largest wireless operators in the U.S., operate on CDMA2000 3G networks, as do Bell Canada and Telus, the second and third largest mobile operators in Canada. In January 2009, the world s largest CDMA operator, Verizon Wireless, announced the completion of its multi-billion dollar acquisition of the fifth largest U.S. operator Alltel. After the takeover, Verizon Wireless inherited AT&T s place as the largest U.S. mobile operator, with 83.7 million CDMA subscribers. The most populous countries in the Asia Pacific region with the largest economies China, India, Japan, South Korea and Indonesia are also the world s key CDMA markets. India, in particular, has benefited from the rapid popularization of ultra lowend mobile phones, and since 2007, the number of its domestic CDMA subscribers has been growing at the staggering pace of over 2 million subscribers per month. In August 2007, India overtook South Korea as the world s second largest CDMA market, with more than 80 million CDMA subscribers. The Indian CDMA network operators, Reliance and Tata, rank globally in the top 20 fastest growing operators. Africa is the most rapidly developing region among emerging CDMA markets. Millions Dec-97 Dec-98 Asia Pacific Caribbean & Latin America Middle East Dec-99 Dec-00 Dec-01 Dec-02 By December 2008, the continent had million CDMA subscribers, and 2.12 million EV-DO subscribers. Situated in West Africa, Nigeria is the most populous African country with a population of 140 million, and CDMA has gained a notably strong growth momentum in the country. CDMA operators such as Starcomms and Visafone have attracted more than two million subscribers in only several years. In terms of equipment shipment, Alcatel Lucent, Huawei, and Nortel were 2008 s top three global vendors of CDMA network system equipment. By March 2009, there were 2,087 types of CDMA terminals available on the global market, including 528 varieties of EV-DO terminals and 118 DORA terminals. Terminal vendors such as Nokia and Sony Ericsson had previously avoided the CDMA terminal market, but, in July North America Europe Africa Dec-03 Dec-04 Dec-05 Dec-06 Fig. 1 Development situation of global CDMA subscribers (Source: CDG) Dec-07 Dec-08 6

4 Expert s Forum China Telecom invigorates CDMA 2008, Nokia and Qualcomm entered a detailed agreement covering patent authorization. At the end of 2008, Nokia announced its re-entry into the CDMA terminal field, which was positive news for the entire industry given the terminal giant s global market share of about 40%. CDMA industry evolution The network evolution strategy of the world s major CDMA operators is becoming increasingly clear in terms of 4G-oriented technologies. Verizon Wireless, KDDI, SKT, and China Telecom have all selected LTE as the basis of their future developmental direction. In September 2007, Verizon Wireless and Vodafone jointly announced that LTE would underpin their next generation mobile network system. The reasons for choosing LTE were threefold: Firstly, LTE has received extensive global support, including from equipment vendors. Secondly, the new generation IP-based core network is open and acts independently from access technology, which allows operators to select new air interface technology. Thirdly, air interfaces have evolved from CDMA- to OFDMbased during the evolution to 4G, meaning that DORA can be evolved to LTE. During the Mobile World Congress (MWC) in February 2009, Verizon Wireless announced that it would begin deploying LTE, with plans to roll out LTE services in part of the US market by Qualcomm is a key player in the global CDMA industry. However, the company ceased Ultra Mobile Broadband (UMB) R&D in November 2008 to focus on LTE. UMB technology, which was led by Qualcomm, had received no support from CDMA operators, thus negating its potential from an evolutionary standpoint. The industry chain perspective contends that UMB occupies an apparently weaker position than LTE. Most operators have opted to evolve from their existing networks to the LTE FDD mode during the shift from 3G to 4G. China Mobile recently expressed its wish to advance from the TDD technology standard to the LTE TDD mode. Evidently, LTE has become a roadmap for technological development that, by reaching its logical conclusion from different routes, seems positioned as the leading technology set to unify the global mobile communications market within five years. The position of operators has in turn cemented the direction of equipment vendors. Huawei, Ericsson, Nokia Siemens have invested huge amounts in developing LTE. Different views exist, however, as to when the industry will be able to transit LTE into mature commercial application on a massive scale. Most people hold that, 2010 will see its inception in a limited capacity, but global-scale commercialization will not be realized before It is therefore worth studying whether or not a transition period, occupied by CDMA2000 1xEV-DO Rev. B (DORB), exists between DORA and LTE in the context of CDMA network evolution. Backward compatibility and smooth upgrades are two of the most prominent advantages offered by CDMA network technology. DORB, the successor of DORA, represents a milestone in CDMA technologies and comprises three major goals: Firstly, DORB is designed to support 20MHz bandwidth allocation with up to MHz carriers in the forward and reverse links. Secondly, DORB will further boost spectrum utilization efficiency by integrating 64QAM modulation technology into air interfaces to allow a single carrier peak rate of 4.9Mbps, with the forward rate reaching 73.5Mbps within 20MHz. Finally, DORB is able to support the allocation of both adjacent and non-adjacent carriers. DORB is currently under development, and some time is required to satisfy commercial application conditions, which has led CDMA operators to favor DORA for 3G network construction. DORA networks can smoothly evolve to DORB through software upgrades. Both Huawei and Alcatel Lucent have announced plans to launch their commercial versions of DORB in 2009, which will give CDMA operators enormous flexibility and costefficiency during subsequent evolution to LTE. China Telecom revitalizes CDMA 7

5 Huawei Communicate Apparently, China Telecom s joining the CDMA camp is great news for the CDMA industry chain. China Telecom will work together with other operators to chart the course of global CDMA industry development. While Huawei is firmly committed to providing robust support for the global development of the CDMA industry. In October 2008, China Telecom officially took over China Unicom s CDMA network and subscriber assets. As the world s largest fixed network operator, China Telecom has always expected to expand into mobile service provision. Generally, industry commentators and subscribers are most concerned with China Telecom s ability to overcome the current difficulties associated with mobile service provision and the company s strategy for adding value to the global CDMA industry. China Telecom s first step has been to unveil a business development plan that seeks to attract 100 million subscribers in three years. It has begun formulating network expansion and optimization plans for more than 300 domestic cities, and is currently implementing its equipment and terminal purchase plans. At the end of November 2008, China Telecom established its own terminal company and, on December 22, rolled out its 189 number e surfing plan to focus on highend subscribers. These steps have injected vitality into the CDMA industry and placed stringent requirements on both upstream and downstream industry players. The vast majority of the leading CDMA network and terminal vendors view the bid for China Telecom s CDMA project as a crucial battle in which failure threatens survival. This viewpoint has given rise to a range of competitive solutions, with the result that the most lucrative aspects of the project have been awarded to Chinese equipment and terminal vendors, including Huawei. As the world s largest fixed network operator and a prominent CDMA network operator, China Telecom has become the second largest full-service operator in China. What further impact will China Telecom have on the global CDMA industry chain? The following are our predictions. First of all, China Telecom s expansion has positioned it as the second largest full-service operator in China, and it is highly likely that the company will descend on the global CDMA industry chain with considerable force. The next three to five years will see its holistic expansions in terms of network capability and operational scale, and the vastness of its indigenous mobile communications market will probably transform the company into the world s largest CDMA operator. Secondly, China Telecom s entry into the CDMA field also provides tremendous market opportunities for the industry s upstream and downstream vendors. With the continued integration of Removable User Identity Module (R-UIM) into mobile terminal products, the strongest terminal suppliers are required to reequip their 2G/3G multimode terminal product lines to meet the specific needs of the single largest customer. Thirdly, China Telecom has opted for the LTE evolution-oriented network development roadmap, suggesting that industry chain entities should act decisively to shift the focus of future technological R&D onto LTE. Fourthly, the company is currently c o n s i d e r i n g w a y s o f m e e t i n g t h e international roaming demands of highend CDMA network users, and expects vendors to provide inter-network roaming products and solutions as soon as possible. Not only is this good news for CDMA subscribers, but it also provides considerable opportunities for vendors. Furthermore, China Telecom is considering collaborating with the international operators that possess technical and financial strength in the CDMA field, and this is likely to help unify the domestic and international markets. Apparently, China Telecom s joining the CDMA camp is great news for the CDMA industry chain. China Telecom will work together with other operators to chart the course of global CDMA industry development. Huawei is firmly committed to providing robust support for the global development of the CDMA industry. In the future, China Telecom will increase its reach and innovative capabilities, and is set to integrate mobile and fixed network resources to provide converged services, create new information service mode, and offer a series of products and solutions. Chinese enterprises as a whole will step up their contribution to the international communications industry in the post-3g era. Editor: Wang Hongjun Whjun@huawei.com 8