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Telecoms - Why CDMA Operators Are 'Leaving Town'(AllAfrica Via Acquire Media NewsEdge) WITH the phenomenal growth in GSM services, Nigeria's telecommunications sector is burgeoning and creating jobs; but it would appear that, rather than widen, the competition space for investment among operators is narrowing down. The Code Division Multiple Access (CDMA) operators are leaving town for the all-pervasive GSM technology. Not clear whether they have left for good, it does not appear that the likes of Starcomms, Multilinks and Reltel (later Zoom Mobile) would launch a comeback to recapture part of the market. Or so it seems. Some experts attribute the trend to the fact that CDMA, which uses code to achieve multiple accesses on the same frequency channel is becoming obsolete; yet, others think that investors in the CDMA platform that offers cheaper services and could actually be more efficient, are weary of taking the plunge with GSM operators into the stormy ocean of investment in infrastructure. Apart from Visafone, which is still holding on strongly, other CDMA operators have either abdicated or were acquired by some of the GSM operators. VGC Communications falls into this category. Irrespective of the fact that virtually all other CDMA operators failed, Visafone succeeded against odds; and its success stems from a massive and aggressive acquisition of other regional CDMA operators. With good coverage, Visafone, which maintained a good operational system is still doing roll out. Another likely advantage is good financial base. Its founder, Jim Ovia, the former CEO/MD (and now chairman) of Zenith Bank Plc, has been in charge of the company. Again, Zenith bank provides a very good customer base, while the company at some cost uses the infrastructure of the bank. It therefore, means that Visafone has some buffer in the bank, in terms of customer base and financial backbone. Even if all the external subscribers are not there, the bank will still be there, meaning that Visafone may not go under like other CDMA operators. BUT the Universal licence regime of the Nigeria Communications Commission (NCC), which allows operators to operate on whatever technology with just a single licence could be blamed for the dilemma of investors in CDMA technology. Of course, challenging the investment capacity of some of the GSM operators could be an uphill task. Akinlabi Akinbo, the chief executive officer of Infotek Ltd, said the CDMA technology uses code to achieve multiple accesses on the same frequency channel. "The base station sends out the information signal in an information laded spread spectrum signal (which is a unique set of information signal as defined by frequency) to all the receiver in an area. The phones use code to identify the information content meant for the receiver out of the whole pack." When compared with GSM, which uses Time Division to share information signal,(there is a time difference on the same frequency channel), Akinbo said the CDMA is not an inferior technology. Asked to share his thoughts on why the technology appears to be going into extinction, he said he GSM operators are merely more aggressive in rollout and control of market share, a development that appears to have run CDMA operators (like Starcomms, Intercellular, etc) out of town. For instance, Starcomms at a point resorted to 'broadband (Internet) services,' but appears to be giving up on it as well. GSM is an international technology covering more than 70 percent of the world, while CDMA is situated more in North America, a situation that has made roaming possibility on GSM higher. "From personal observation of the industry trend, Akinbo said, "it appears that GSM operators are more aggressive in their roll out programmes and in achieving a better coverage as compared to CDMA. Most CDMA operators in Nigeria are based in major cities, while GSM operators cover rural areas." Experts believe that CDMA technology has a better frequency spectrum management option when compared to GSM and also costs less with better data handling option. Of the two technologies (GSM and CDMA), one marked difference is the use of subscriber modules (SIMs) by GSM handsets, while CDMA handsets require programming by the operators. But it could be possible to use SIMs for CDMA handset as well. In the area of Quality of service (QoS), CDMA holds a better promise, in terms of spectrum management, meaning a more efficient use of spectrum and easier frequency planning. QoS issues include dropped calls, fade calls and poor call quality, among others. And experts believe that CDMA does better in that regard, as the operating frequency channels are lower than GSM. While GSM platform in Nigeria operates on 900 and 1800 MHz, CDMA operates on 850MHz. It (CDMA) will thus deliver a stronger signal on the same distance range from the base station. The energy consumption of handsets on CDMA platforms is also lower compared to GSM handsets, simply because, according to experts, 850MHz frequency has a longer wavelength and travels further than 900 and 1800 MHz frequencies. In terms of economy, CDMA handsets are cheaper and call rates are also cheaper Yet, the question of CDMA going into extinction in Nigeria remains real, considering the technology-independent regime of the NCC, the regulatory agency, which now provides the platform for universal mobile licenses. Under the subsisting licensing regime, operators (GSM or CDMA) only need to acquire the spectrum and roll out with the appropriate technology. Reacting to this, Akinbo, who had worked in GSM companies and now runs an IT firm, noted that the trend in the mobile communication ecosystem is maturing and tilting towards Long Term Evolution technology. He reasoned that, over the years, CDMA and GSM technologies had been evolving and there are obvious overlaps. "What I feel is that some over lapping in service provisioning is going on. CDMA and GSM will be migrating to a more advanced technology that could be unifying for the two origins of mobile technologies all over the world. So, CDMA and GSM access technologies may fade out over time,' he said. On concerns that interconnect rates (fees) could have run CDMA operators out of town because they could not muster enough market share to absorb some of the operational costs, he said the NCC had made efforts to get input from all concerned parties in their policy formulation. "I don't feel that NCC will bring up a regime of Interconnect fee that will 'kill' a segment of the mobile and fixed market. That will counter the very reason why government set up NCC. Further more, what determined the Interconnect fee must have got input from the Industry best practices as it is applicable all over the world, as well as all the concerned parties. I think that NCC is fair in the Interconnect rates, considering all the parameters that determine that. 'Since it is not the GSM operators that sets up the rates of interconnect nor do they do the approval, we cannot make the conclusion that they are running out the CDMA operators with high interconnect fee. Even if there is any error in the rate, the buck stops on the table of the regulator, which is NCC. It will be too bad if GSM operators had influenced them for an unreasonable interconnect regime," he surmised. Apart from low market share and operational costs, CDMA operators, some of whom were indigenous people, could have also fallen short of good management and operational skills to effectively compete with the GSM multinationals. Apart from Globacom, which has now become one of the biggest networks, other GSM companies, though with some local flair, are multinationals. According to Akinlabi, "One trend to observe is that almost all the current GSM operators are International brands. It is very obvious that they bring in better management structure than we have in the local CDMA operations. I think the general management and leadership problem in our country permeates every area of our national life, even in the mobile industry. "It is not that the indigenous CDMA companies could not do well like their GSM counterparts, as there is no reason to think so, I think that with good management system in place, they could have done better. We need to put in place a culture of performance and efficiency with good level of integrity and self-checks and balances. "In a situation where there is mediocrity and lack of thoroughness or integrity and good corporate ethics and governance is not the order of the day, we should expect systemic failure. When personal interest is above corporate interest in any organisation, there is bound to be failure. Corruptive tendencies lead to decay and ultimately death. We should learn a lesson from these 'deaths'. "We must commend NCC and ATCON for putting up rules and guidelines for good corporate governance and self regulatory documents. These are good pointers that we are learning our lessons and are making progress. Operational and growth issue could be an added factor. " Akinbo's position on management and corporate governance notwithstanding, it is pertinent to note that Multilinks in the wake of its crisis, had brought in South Africa's Telcom to bring in some value and advance its fortunes. Telcom SA would have brought in the needed capital as well as addressed management, operational and growth/expansion issues; yet, it was not clear whether, or not, it made much impact before packing out of Nigeria. On this, Akinbo said: "I could not say with accuracy, the cause of their exit, but I feel that what they complained about should be examined more critically and we can learn from them. Operation has to do with the day-to-day running of the company. What it entails is the proper management of issues that relates to installed equipment through the task assignments and handling of operational issues at Network Operations and Control Center (NOC) as well as management of subscriber issues. NOC is a very important component of a network management and operation." Subscribers are the source of income for the organisation while installed equipment provides services to the subscribers. These two elements must be well managed to ensure effectiveness and growth. There is also finance; it should be noted that cash flow management and finance operation are also a critical aspect of any successful, stable and growing enterprise, including mobile network operations." Although there is still opening for possible comeback, any new or comeback CDMA company must align its operations with the industry trends to make an impact. This realisation, could be the secret of Visafone's success. Presently, CDMA is not a dominant mobile access technology, even as NCC licence regime has changed to a unified system. As Akinbo pointed out earlier, GSM and CDMA technologies are maturing towards LTE and this is the evolution for the future mobile technologies. Too bad, the technology in itself may not be in vogue again for a comeback CDMA operator. Copyright The Guardian. Distributed by AllAfrica Global Media (allAfrica.com). |