In what is probably the world’s fastest growing and perhaps most competitive market for telecommunications equipment and services, one of the big players has an especially bold strategy. The question is: is it legal?
Reliance Infocomm Ltd., a division of a large Indian industrial conglomerate, the Reliance Group (Mumbai), wants to take a network set up to provide customers the equivalent of plain old wired telephone service, wirelessly, and turn it into a national cellular service—but without paying the licensing fees a company in its position would normally have to pay. If it manages to get the scheme past suspicious regulators, the payoff could be huge, not just for Reliance but also for Qualcomm Inc., the high-flying San Diego, Calif., company that commercialized code-division multiple-access (CDMA) cellphone technology.
Reliance plans to link a national network of base stations, using a fiber-optic network it is building concurrently to provide business centers with fiber-to-the-curb broadband services. The network of base stations was conceived as a platform for fixed wireless phone service, using a home-grown technology called corDECT [see related story online, /WEBONLY/wonews/jul03/cordect.html]. That network now is being reconceived to double as a launching pad for ”limited mobility” services—a cellular service of limited scope—to compete locally with standard cellphone services.
The general idea is to leverage revenue on investments by having the elements do more than one task, while at the same time sidestepping the issue of acquiring cellular licenses by using spectrum already allotted for fixed wireless. Reliance has obtained licenses to provide fixed wireless in 18 of India’s 21 communications districts, embracing 95 percent of the population, and is beginning to offer service based on a variant of Qualcomm’s CDMA2000 third-generation (3G) cellphone technology.
By those means, Reliance already is offering customers limited-mobility cellular services in 680 cities and towns. The handset it gives customers, made by the South Korean companies LG Electronics and Samsung, doubles as a modem. Optimized for fixed wireless, it can also be used as a mobile instrument, though it must rely on different phone numbers when roaming far from home.
A fly in the ointment?
India’s cellphone customers are a pampered lot, with 11 companies vying to serve them [see table]. Except for Reliance and one other, the state-owned BSNL, which also has opted for CDMA, the rest rely mainly on Europe’s GSM standard.
Qualcomm’s fortunes in India seem to be riding heavily on Reliance’s business plan, though the California company has backed off from making a US $200 million investment it once said it might make in the Indian firm.
The major difficulty facing Reliance is that India’s other cellphone operators are seeking to block the plan altogether or at least force its big-pocketed parent to cough up the same licensing fees they paid. A tribunal is expected to rule in the matter this month, whereupon the loser will appeal the decision to India’s highest court.
However that plays out, Qualcomm founder and CEO Irwin Jacobs told investors in New York City on 22 May that he expected India to be a major source of revenue. He said there will be six million Indian CDMA users by the end of this year—echoing the exact number Reliance was bandying about earlier in the year.
Other Indian companies also are pursuing the limited-mobility option, notably Tata Teleservices Ltd. and Mahahnagar Telephone Nigam Ltd.
David Koilpillai, a wireless expert at the India Institute of Technology in Chennai (Madras), believes the new CDMA technology will eventually have an edge over GSM in terms of cost-effectiveness. Much of India’s GSM infrastructure was laid around 1997 and now would have to be upgraded for GSM’s General Packet Radio Service (GPRS), a so-called 2.5-generation stepping stone to full-fledged third-generation cellular technology. Newly deployed CDMA technology will have similar capabilities by definition.