Qualcomm Incorporated (NASDAQ: QCOM) today announced the completion and final results of a landmark economic study of the GSM-CDMA technology. The study was sponsored by Qualcomm, and conducted by Andersen Consulting, Telemate Mobile Consultants of France and Detecon Consultants of Germany, in conjunction with several European operators, manufacturers and industry associations. The study was conducted to evaluate the economic value of GSM-CDMA technology. The enhanced hybrid technology combines the Code Division Multiple Access (CDMA) air interface with Global System for Mobile communications (GSM) networks, resulting in a cost-effective solution for GSM operators planning to significantly expand the capacity and features of their cellular and Personal Communications Services (PCS) wireless systems or for GSM operators planning new networks. The results demonstrate significant economic benefits over other TDMA-based GSM solutions for increasing network capacity.
The Executive Summary for the Economic Study Report is available to the public and is being distributed by both the consultants and Qualcomm at the GSM World Congress events this week. The complete and detailed final report is due in late March.
GSM-CDMA is an extension of GSM utilizing an IS-95 CDMA radio access in addition to, or as a substitute for, TDMA radio access in an "overlay" or "greenfield" application. It combines the spectral efficiency of CDMA with all the available features of GSM, including seamless roaming and network services. GSM-CDMA technology provides operators the flexibility to economically serve multiple market segments and offer multiple services on one network platform. In addition to being the most cost-effective network expansion solution, GSM-CDMA also provides a near-term, spectrally efficient evolution to next generation services including high-speed data and mobile/fixed convergence services.
The economic study was conducted over the last six months to evaluate the cost benefits of a GSM-CDMA radio access as compared to the standard GSM radio access under different traffic and network deployment scenarios. The consultants' team has strong GSM and wireless technology expertise as well as economic analysis capabilities. Several leading European operators and manufacturers participated actively in the study, providing input on scenario definitions, network data, technology and cost assumptions.
A steering committee consisting of ten senior executives from key European operators, manufacturers and an interested association provided guidance to the consultants and supervised the overall economic evaluation program. Some of these companies acted primarily as observers while others provided significant direction to the study. Qualcomm sponsored this major study, and was a participant along with the European contingent.
To illustrate the economic comparison of the CDMA and TDMA technologies within GSM networks, two network scenarios, "overlay" and "greenfield," were established. The same traffic and geographical data was used for both the CDMA and TDMA network designs. Using the geographical database of a typical and representative medium-sized European metropolitan area, the study group developed traffic levels for each of the scenarios, corresponding to assumptions likely to occur within the 2000 to 2005 study period.
The "overlay" and "greenfield" network scenarios do not necessarily reflect the current operators' situations, rather they are hypotheses of two market situations that operators may encounter in the medium term. The "overlay" network scenario corresponds to a capacity-driven situation, where an established operator already serves the metropolitan area with a GSM macro-cell network over a 12.5 MHz band at 900 MHz. The operator expands capacity by either adding a GSM microcell layer or a GSM-CDMA layer. The "greenfield" network scenario is coverage driven, representing a new fourth operator in the region receiving a grant of GSM 1800 MHz license with an allocation of 15 MHz. The operator deploys either a new GSM or a new GSM-CDMA network.
The cost model contains capital expenditure items such as sites, base stations and base station controllers, as well as operational expenditure items such as planning and engineering, site rental, leased lines, maintenance costs, site utility costs, and subsidization for the dual-mode handset that will be used in the GSM-CDMA network. Multiple sensitivity analyses were performed, using various model inputs. Some of these include 13 kb/s and 8 kb/s codec rates, various frequency reuse factors for GSM, a capacity-enhanced CDMA solution, various subscriber growth and Erlang assumptions, and different handset subsidy levels.
The results of this collective effort with leading European manufacturers and operators indicate that using consensus parameters for existing commercial technologies:
- For the overlay scenario, a capacity driven situation, a GSM-CDMA (13 kb/s) solution costs just 38 percent of the cumulative capital expenditure and 28 percent of the annual operational expenditure in year 2005, as compared to a GSM microcell solution (reuse factor of 12 to 15). Differences are even more pronounced when considering GSM-CDMA 8 kb/s solution.
- For the greenfield scenario, a coverage driven situation with medium-traffic demand, a GSM-CDMA solution brings more modest cost benefits of approximately 10 percent for 13 kb/s and 30 percent for 8 kb/s as compared to GSM microcells. This scenario utilised very conservative assumptions; for example, a two-decibel (dB) link budget difference between GSM and CDMA was used. It is recognised that for equivalent voice quality, a larger link budget difference is appropriate. Additionally, spectrum constraints (5 MHz only) or higher traffic demand increases the cost benefits of GSM-CDMA.
- In both "greenfield" and "overlay" network scenarios, the GSM-CDMA solution brings significant spectrum savings: 53 percent and 16 percent respectively. The extra spectrum can be used for new services, such as wireless local loop or data, or to achieve higher subscriber penetration.
The study group also evaluated the impact of technology evolution by using 1999 technology parameters which result in:
- For the overlay scenario, a GSM-CDMA (13 kb/s) enhanced solution costs just 31 percent of the cumulative capital expenditure and 25 percent of the yearly operational expenditure in year 2005, as compared to a GSM capacity enhanced solution (reuse factor of six).
Headquartered in San Diego, Qualcomm develops, manufactures, markets, licenses, and operates advanced communications systems and products based on its proprietary digital wireless technologies. The Company's primary product areas are CDMA wireless communications systems and products, the OmniTRACS® system (a geostationary satellite-based, mobile communications system providing two-way data and position reporting services) and, in conjunction with others, the development of the Globalstar low-earth-orbit (LEO) satellite communications system. Other Company products include the Eudora Pro electronic mail software, ASIC products, and communications equipment and systems for government and commercial customers worldwide. For more information on Qualcomm products and technologies, please visit the Company's web site at http://www.qualcomm.com/.
Except for the historical information contained herein, this news release contains forward-looking statements that are subject to risks and uncertainties, including timely product development and commercialimplementation of the Company's products, as well as the other risks detailed from time to time in the Company's SEC reports, including the report on Form 10-K for the year ended September 28, 1997 and most recent Form 10-Q.
# # #