CDMA's second innings in India

When Reliance Communication and Tata Teleservices announced plans to launch GSM based cellular services everyone thought that it was the end of story for CDMA in India. However recent announcement from State owned BSNL and new entrant Shyam-Sistema, that they were rolling out pan Indian CDMA network, has given a new lease of life for the future of this technology. To be fair ever since CDMA was launched in the country it has had a bad deal, thanks to the strong GSM lobby and also the way it was brought into the market by Reliance and company. In its desperation to break into the mobile market, Reliance argued that CDMA was a more efficient technology which can offer mobile services at half the amount of spectrum than what GSM operators use. It was pegged as a low cost poor man's mobile. Both arguments were pushed hard to build political consensus to allow CDMA to enter the Indian market in the face of objections from the strong GSM lobby. The fallout of the two arguments was that a) CDMA operators got much less spectrum compared to GSM operators which meant they had to pack in almost double the number of subscribers in the same amount of spectrum and b) the poor man's mobile image pushed away the high end users to GSM which meant that CDMA operator's average revenue per user was dismal compared to the GSM counterparts. The third reason is that for a long time CDMA was playing catch up to the different variety of handsets available on GSM platform. CDMA handsets were also expensive compared to GSM handsets and in a price sensitive market that spelt doom. All these factors made the CDMA business look unviable compared to the more popular GSM platfrom. Even now not much has changed except for maybe availability of cheaper CDMA handsets. But what is driving some of the operators to use CDMA technolgy is in fact GSM's popularity. Most of the existing operators and new players are clamouring for GSM spectrum. While there is huge demand, the Government does not have enough for all. That could leave out a few aspiring mobile companies without spectrum for a year or two. For a company like Shyam-Sistema that's a wait that they cannot afford. Therefore moving into the CDMA segment is their biggest bet of getting a quick entry into the fastest growing mobile market. Of course the perception about the CDMA as being a low end mobile users platform could now work to its advantage given that it is only the rural and semi urban areas where the new roll outs are likely to happen. CDMA technology has also proven to be a better bet when it comes to data services and therefore high end users can be tapped by offering third generation mobile services whenever that is permitted by the Government. CDMA seems to be set for another innings in the country but it will have to weather the onslaught from the strong GSM operators.