Limited support

Four months ago Telstra announced plans for a major mobile network overall. The decision to rip out CDMA 1x/EVDO and replace it with W-CDMA/HSDPA has caused much discussion, argument and debate.

We had many questions, most of which remain unanswered. Where will further deployments of UMTS 850 come from to generate global scale‾ Will handsets be available for Telstra at launch‾ At Telstra's November 2005 announcement, we were told that many other operators were considering deploying at W-CDMA at 850-MHz, and that as many as 13 other carriers had put out requests for UMTS 850 handsets.

But despite considerable speculation, we have seen no more announcements by any operator. Currently, UMTS 850 is still a Cingular and Telstra story. It can be argued that Cingular in itself has critical mass. However, a quick world tour reveals short-term prospects for further UMTS 850 deployment are limited.

In Europe, UMTS 850 has no future. The spectrum is unavailable for mobile (except for Poland) and developments are more likely to occur in UMTS 900/1800. In India and China 850-MHz spectrum is used for CDMA, and although it's possible operators could switch, we believe it is very unlikely.

In Australia, AAPT and Hutchison own 850-MHz spectrum. However, they are more likely to use it as bargaining asset rather than deploying W-CDMA.

Despite media speculation, we see it as a remote possibility that Telecom New Zealand will switch from CDMA. What does it have to gain‾ Little in the way of spectral efficiency, propagation or data capability improvement. The CDMA roadmap is also comparable to that being suggested by 3GPP, and all of Telecom's solutions, applications and services run over its CDMA network (unlike Telstra). Why would Telecom spend NZ$500-$800 million on an infrastructure overhaul, plus migration and other endless costs all for a few roaming business customers and potential future cost efficiencies‾

So much for more scale, but does this matter when it comes to devices‾ In data cards Telstra will have no problems. Its perfect data card already exists in the Option GlobeTrotter GT MAX laptopConnect card (recently launched by Cingular). It supports all of Telstra's local spectrum and roaming needs.

Handset issues

But will Telstra have handsets that support this vast number of frequencies‾

Some chipset manufacturers are supporting all required UMTS frequencies in one chip (850/1900/2100 MHz). Problem solved then"&brkbar; well not quite. The handset vendor still needs to enable the frequencies in the handsets with the required antennas and support, and unfortunately this is something that they aren't all doing.

We believe initially that most UMTS handset supplied to Cingular will support 850/1900 MHz only. This may change if T-Mobile wins some spectrum in the upcoming auctions at 2.1 GHz. And some high-end devices will also have 2.1-GHz added for roaming. But roaming isn't really a big deal - only 5% of Americans own a passport. Why will vendors then add costs (UMTS 2100) to handsets‾ The answer is that many won't.

Ovum's initial research suggests that some vendors plan different W-CDMA handsets for the North American (850/1900 MHz) and European markets (2100 MHz). Telstra will be able to source UMTS 850/1900 only handsets at similar cost to Cingular, but its desired 850/2100-MHz handset will only come at a premium.

Nathan Burley is a research analyst for Qvum - [email protected]