Although the CDMA community continues to be frustrated by the lack of progress in the 450 and 800MHz bands across Western Europe, there are increasing opportunities for investment in the technology, Keith Dyer hears
In late 2007, the International Telecommunication Union (ITU) approved the 450 MHz frequency band for International Mobile Telecommunications (IMT) services. With CDMA licenses becoming available across Europe, especially in central and Eastern Europe, the European investment community is ignoring the benefits of CDMA technologies in the 450 and 800MHz frequency bands – losing out on valuable returns and depriving the market of competition, according to Johan Lodenius, co-founder of CDM 450 operator Nordisk Mobiltelefon Technologies (NMT).
Of the licenses recently available, one of the latest examples is the CDMA license which Slovakia has granted to France Telecom for a one time fee of only €1.4 million. Another recent example is the tender of a CDMA 450 MHz license in Bulgaria or the announced CDMA tender in Romania. A range of further CDMA license tenders are expected in the next years as regulators strive to allocate the 450 MHz spectrum, freed from former use by analogue cellular networks. CDMA licenses are typically acquired by strategic investors wishing to complement their existing networks.
The CDMA Development Group (CDG) says that there are currently over 17 million CDMA 450 subscribers in Europe – with operators spanning from Portugal, Denmark and Norway to Romaina, Ukraine and Russia. There are now 24 operators in 16 countries in the region that have deployed or are planning to deploy CDMA2000 in the 450 and 800 MHz frequency bands – the number of operators has doubled in less than two years. In total, Europe is now covered by 15 commercial CDMA2000 1X networks, 11 EV-DO Release 0 (Rel. 0) networks and nine EV-DO Revision A (Rev. A) networks.
CDMA450 is a TIA-EIA-IS-CDMA2000 (CDMA-MC) system deployed in 450 MHz which includes a family of standards developed by 3GPP2, published by TIA and approved by ITU for IMT-2000: CDMA2000 1X, CDMA2000 1xEV-DO and CDMA2000 1xEV-DV. Currently, CDMA2000 1X and CDMA2000 1xEV-DO are commercially available for the 450 MHz band and CDMA2000 1xEV-DV is being developed.
The CDG says that the advantages of CDMA 450 for license holders is that it is the only technology commercially available to these operators which allows direct transition from a first generation system to next generation services. CDMA450 is also one of the few technologies that fits into 4-5 MHz of spectrum (it requires 2 x 1.25 MHz for a single channel; can fit 3-4 CDMA450 carriers depending on the size of guard bands). Equipment manufacturers such as Airvana, Alcatel Lucent, Huawei, Nortel, QUALCOMM, and ZTE, have IMT-2000 solutions for the 450-470 MHz band, and although the range of handsets may not include household names, there are a number of manufacturers supporting the standard.
But it seems not everyone is aware of the benefits of a technology that goes against the GSM grain in Europe.
NMT recently undertook a one for one rights issue to raise funds, as the company was in need of "additional fundingThe company secured SEK 70.7 million in additional funding from its shareholders, including Orkla and Qualcomm, agrreeing a SEK 60 million loan facility. The loan facility includes the issuance of warrants to the lenders. In addition, a convertible loan of the amount of SEK 10.7 million from EnergiMidt was agreed and disbursed. EnergiMidt is a shareholder in Nordisk Mobiltelefon AB.
At the time of the announcement of the rights issue, Per Mansson, CEO, said, "Nordisk Mobiltelefon develops well and the business case remains as strong as ever. However, since network roll-out has been delayed, our need for additional funding has increased. With the proceeds from a rights issue we will have the resources to make a significant impact in the Scandinavian market."
Despite the need for funds, Lodenius told Mobile Europe that NMT, which uses technology from the CDMA2000 progression path rather than GSM/W-CDMA, is set to reach cash flow break even within two years of operation.
"That is unheard of in this industry. I think 3's investors would love to see that return, because I'm not sure when they're ever going to see their money back," Lodenius said.
Lodenius said that the operator was able to be profitable because it generated ARPUs of $50, compared to $15 for most UMTS operators (his figures). NMT only has 30-40,000 subscribers, giving it a very niche position, but it has a much higher market share when it comes to mobile broadband subscribers, which means it is weighted towards high value users.
The fact that CMDA 2000 can operate in the 450MHz and also means NMT can genuinely cover large geographic areas, Lodenius said. He alleged that the mainstream mobile operators are not meeting their license obligations with true 3G coverage. He admitted that HSDPA provides as good a performance in terms of data rates as CDMA450 using Rev O or RevA, but he added that that performance drops off substantially when a user is more than 1km from a base station. At 450MHz that can extend to 20k he said.
NMT has operations in Sweden, Denmark and Norway using frequency in the 450MHz band. Another European operator using CDMA 450 is O2 in the Czech Republic, which now has an estimated 120,000 subscribers.
The company recently rebranded itself as ice.net. The new brand, ice.net, has so far been introduced by the local operating companies in Sweden and Norway, with other markets to follow._ice.net also offers free roaming within its networks.
Lodenius said the NMT is planning push to talk services as well as location- based services, adding to its current mobile broadband and fixed-wireless telephony style services. He also said the technology lends itself very well to providing the data aspect alongside TETRA coverage for public services users. The industry is also developing multi mode chipsets that provide CDMA as well as 3GPP radio access.
Joe Lawrence, CMO of the CDMA Development Group, said there are countries in Europe where 450MHz and 800MHz spectrum is available, but is not being made available because weak regulators and incumbent providers are blocking the use of CMDA.
But Lodenius added, "I'm not even talking about the technology. For me it's about the business case. There's a good business case there that can also meet government requirements for ICT development and rural and semi-rural coverage – and it's simply being ignored."