The Telecom Ministry has sought details from various CDMA operators, including Tata Teleservices and Reliance Communication, for offering high-speed Internet services without paying for spectrum.
This move comes after protests from GSM lobby, which makes it clear that these dongles (through which EVDO services are being provided) are a big threat for 3G GSM services, for which the GSM operators (including Tata and Reliance which also offer CDMA services) paid huge sums to acquire spectrum.
The CDMA operators are offering these services on 800 MHz band of spectrum for which they paid much lower amount – Rs 1658 crore, as it was given for 2G services. This means that they are able to price the services better. Moreover, CDMA is also better in terms of spectrum utilisation and that is a technological advantage that these operators have got.
CDMA operators started to offer these high speed data cards or dongles in 2008 itself much before the 3G spectrum was made available to the GSM operators.
Though CDMA operators are offering speeds of only 3.1 Mbps compared to the maximum speed of 21 Mbps by the 3G GSM operators, these services are popular as there are unlimited options starting at Rs 750 only and even the per MB charges are lower.
Moreover, the coverage is currently better for CDMA operators due to early mover advantage. Tata Teleservices has coverage in more than 350 cities and Reliance is present in more than 500 cities and MTS is present in 200 plus cities. While these numbers will be surpassed by 3G operators soon (given what they have claimed).
CDMA offers a distinct advantage as even where EVDO is not present, CDMA 1X (which is the 2G technology) offers better speeds than the GSM equivalent with speeds up to 126 Kbps speeds.
Moreover, none of the GSM players managed to get nationwide spectrum in the 3G auction held last year. Airtel has the maximum number of circles under its 3G services (13) whereas the three CDMA operators have a nationwide coverage.
The success of the CDMA dongles can be judged from the fact that MTS, which is the newest and the smallest CDMA operator, is said to be adding more than a lakh EVDO dongle customer every month and has already crossed a million mark. Tata Teleservices has 42 percent market share and is adding even greater numbers and so is the Reliance Communication which is the biggest player in this arena.
For operators, these numbers are very exciting as the dongle customers are high value customers with revenue per user being much higher than the mobile customers.
CDMA players are already upgrading their networks to EVDO Rev B, with MTS already rolling out service in Jaipur where it is offering speeds in excess of 14 Mbps, getting closer to the 3G speeds (most 3G GSM devices support only 7.2 Mbps speeds). Even Tata Teleservices and RCom are working on the Rev B networks.
If indeed spectrum auction happens for CDMA based 3G services soon, these operators will have more room to play and will have faster networks sooner than later, as in the current situation they fear they will run out of spectrum if they launch faster Rev B network.
CDMA operator will also be able to roll out faster network quickly as they have to make very little changes in their existing infrastructure for this upgrade.
However, CDMA services in the country are also facing multitude of problem which is resulting in less than optimal utilisation of their potential, and major among them being shift of focus by Tata and Reliance to their GSM services. Lack of open market CDMA handsets and poor perception among consumer about CDMA technology are major issues among others.
And these problems might derail the success so far achieved as and when GSM services start to become cheaper and GSM operators roll out networks in major cities (which is happening at much greater speeds than CDMA).