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Technology Stocks : 3G Wireless: Coming Soon or Here Now?

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From: Eric L8/29/2008 1:46:52 PM
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Canada: 3G CDMA to 3GSM HSPA Technology Flip for Winter Olympics

Canadian operators are taking an international approach for the country’s Winter Olympics, to be held in Vancouver in 2010. Telus Mobility and Bell Canada are planning to overlay their CDMA networks with HSPA, enabling them to support GSM/HSPA handsets, rather than leaving all this traffic to arch-rival and leading GSM carrier, Rogers Wireless. The two CDMA operators spent over C$1.6bn between them on AWS spectrum in the recently concluded auction, and are likely to use this to support their HSPA plans.

>> Canadian CDMA Giants to Use New Spectrum for HSPA

Caroline Gabriel
Rethink Research
24 July 2008

arcchart.com

While China is racing to install TD-SCDMA networks in time for the Beijing Olympics, even though almost no visitors will be able to use them, Canadian operators are taking a more international approach for the country’s Winter Olympics, to be held in Vancouver in 2010. Telus Mobility and Bell Canada are planning to overlay their CDMA networks with HSPA, enabling them to support GSM/HSPA handsets, rather than leaving all this traffic to arch-rival and leading GSM carrier, Rogers Wireless. The two CDMA operators spent over C$1.6bn between them on AWS spectrum in the recently concluded auction, and are likely to use this to support their HSPA plans.

The plan is another sign of the gradual defection of CDMA operators and the acceptance that the GSM family of technologies is now the mainstream roadmap. Many, like world’s largest Verizon Wireless, will wait until the 4G stage to jump ship, moving to LTE or potentially Wi- MAX – and consigning Qualcomm’s own OFDM-based next generation CDMA, called UMB, to oblivion. But some will look to move even earlier with 3G or even 2G overlays. Although this entails supporting two networks for the 2G or 3G phase, this can make sense in a rapidly growing economy where new capacity is needed – some Indian operators are looking to add GSM or W-CDMA in order to gain additional frequencies. Also, support for GSM/W-CDMA/ HSPA delivers the benefits of economies of scale, global roaming deals and the efforts of many of the leading device makers to create HSPA products.

The plans by Telus and Bell Canada, both of which have been under heavy pressure from the aggressive quad play activities of Rogers, were revealed in a research note issued this week by UBS Investment Research. Analyst Maynard Um wrote, in a note on Qualcomm: “The move is reminiscent of Vivo’s shift away from CDMA [in Brazil], which caused quite a sentiment stir for [Qualcomm] due to CDMA market deceleration concerns (but the market actually continued to grow). Unlike Vivo, which moved to GSM, Telus/BCE will overlay HSPA, where Qualcomm should benefit.”

Although great rivals, Telus’ and Bell’s mobile units are to some extent forced to make technology decisions in concert, since they are so heavily dependent on roaming on each other’s networks in order to compete with Rogers. Telus is heavily built out in the west and Bell in the east. Both now seem highly likely to evolve towards LTE for the 4G phase, which would also make sense in terms of US roaming with Verizon and AT&T, both also committed to LTE.

The picture is complicated by a joint venture between Rogers and Bell Canada, Inukshuk, which is using WiMAX to create a national broadband wireless network that has deep ties with Clearwire in the US. Rogers has been particularly enthusiastic about WiMAX, both to fill gaps in its fixed network as it tries to become a quad play leader, and for future mobile broadband applications. This raises the possibility that Rogers might adopt WiMAX instead of, or more likely alongside, LTE as part of its 4G strategy. Most likely, it will emulate Sprint Nextel in continuing to expand and upgrade its own cellular network while keeping its mobile broadband WiMAX activities in the separate joint venture, targeting a new breed of customers and applications. Whether it proves viable, long term, to have bitter rival Bell Canada as the partner in that venture is more doubtful. The main part of Rogers has been deploying W-CDMA/HSPA since 2006. ###

- Eric -
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