Despite the fact there are more than three times the amount of GSM mobile users than CDMA in Latin America, CDMA is not about to go out of fashion.
BNamericas attended the annual Latin American CDMA Conference held in Cancún, Mexico, last week and quizzed the CDMA Development Group (CDG), operators and equipment suppliers about their outlook for the technology in Latin America.
They all agreed that that the massive growth in GSM is starting to tail off and that CDMA still has a strong product to offer, especially in niche markets for rural communications, and will regain relevance as 3G networks start to take off next year.
According to CDG, there are 63mn users of CDMA2000 mobile technology in Latin America and the Caribbean, while GSM industry association 3G Americas estimated that GSM users totaled 208mn in the region at end-2006.
Regional conglomerates Telefónica, America Móvil and Caribbean holding group Digicel have all put their weight behind GSM as the technology to offer in recent years.
However, with 43 commercial operators using CDMA in 25 countries across the region, CDG is still confident that CDMA will continue to be a relevant force in Latin America for the foreseeable future. Latin America is the second most important market for CDMA1x EV-DO data services behind Asia, CDG says.
While GSM has shown the prepaid voice segment to be its forte, CDMA stands out as a platform for data applications, as borne out by many of the presentations at the CDMA Conference last week.
But this does not mean CDMA's future is limited to a niche market for data, CDG's Latin America director Celedonio von Wuthenau told BNamericas on the sidelines of the conference.
The emphasis on data services can be seen in the case of Mexican mobile operator Iusacell and sister company Unefon, which are the country's only CDMA operators. According to Iusacell's 3G products director Gustavo Guevara, the technology allows the company to differentiate its services from the dominant mobile operator Telcel by offering a portfolio of 3G services.
The services Iusacell offers over its CDMA1x EV-DO network include video monitoring of Mexico City's raucous traffic using live footage from police cameras and basic mobile broadband connectivity.
According to CDG, EV-DO is now being used by 2.6mn people across Latin America and the Caribbean.
One question on the minds of CDG conference attendees and frequently put to the operators was: "When will handset prices drop in Latin America?"
For von Wuthenau the cost of handsets has to do with economies of scale and as GSM is more widespread, handsets tend to be cheaper.
In the case of countries with larger markets such as India where CDMA is widespread, handsets are now much cheaper. Von Wuthenau also sees an opportunity for CDMA operators in different countries to form alliances that could result in stronger buying power and lower prices.
Other Niches for CDMA
One area that is proving to have ample possibilities for CDMA in Latin America is the use of CDMA 450 technology for rural areas that have little or no telecoms service.
The technology got a boost in January when Mexican fixed line giant Telmex pinpointed it as a way to roll out data and voice services in underserved areas.
According to von Wuthenau, the technology is especially prudent for Latin America because the 450Mhz band is able to penetrate physical boundaries quite easily and in addition it is widely available across the region.
However, as the 450Mhz band is unregulated it sees a lot of traffic using a wide variety of analog communications equipment that can lead to interference. Therefore if operators wish to use the band commercially, they need to invest in additional equipment to filter out that interference in order to be able to guarantee service quality to their subscribers, Telmex's VP of innovation and strategy Marco Antonio Galvan told press during the conference.
Use by the military and police, as well as two-way analog radios are some of the complications facing the band's use in Mexico, Galvan said.
But von Wuthenau does not see the interference as a limiting factor, merely something that raises costs for operators because they have to invest in additional equipment to guarantee service quality.
CDMA 450 is much better suited to rural use where interference is lower than in urban environments, the executive said.
CDMA 450 has already seen deployments in Eastern Europe and Asia, and Korean handset manufacturers Ubiquam and Zaikang took advantage of the conference to showcase their CDMA 450 handsets and fixed mobile end user equipment.
"We see CDMA 450 equipment as quite appropriate for rural areas. We think that we have the chance to provide them [Telmex] with equipment for their projects," Ubiquam's chief marketing officer Young Na told BNamericas.
Ubiquam has already deployed services in Russia, Romania and Vietnam.
The Boom of GSM
Several Latin American operators, such as Brazil's largest mobile operator Vivo, have taken steps to overlay GSM on top of their CDMA2000 and EV-DO networks.
But this is not a problem for von Wuthenau, who is confident that the explosion of GSM is on the wane.
Looking forward, von Wuthenau expects 3G services to start accounting for larger portions of growth for all operators. The fact that CDMA already has an established user base represents an advantage over the GSM-based UMTS and HSPDA 3G services that are set to compete with it. AMX for one is looking to roll out UMTS 3G services in up to 40 cities this year."
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