Rediff News on 15/06/06

India's largest CDMA mobile operator Reliance Infocomm, a subsidiary of Reliance Communications, has expressed a desire to exit CDMA technology and migrate entirely to GSM's 1,800 Mhz band, sources in the department of telecommunications (DoT) told FE.

"We believe that Reliance may completely switch over to GSM services," a DoT official said. Reliance indicated this in its application to the DoT last week, seeking spectrum to start GSM-based services across the country, apart from Delhi and Mumbai. The DoT has asked Reliance to submit its entire GSM plans.

osing Reliance could be a major blow to Qualcomm since it accounts for nearly 8% of the global CDMA subscriber base of 318 million. Reliance's 20 million subscribers are also nearly one-seventh of CDMA users in the Asia-Pacific region. CDMA's rival GSM has 2 billion subscribers world-wide.

The second interpretation, however, is that Reliance has indeed decided to risk the cost of migrating to GSM to avoid a higher cost of operations in the future. Reliance, which has nearly 20% of the domestic mobile market, would find it increasingly difficult to compete with GSM players if it is not able to bring down handset and call charges when the domestic subscriber base touches 500 million in 2010.

A rival CEO, however, believes Reliance will move to GSM and is likely to strike a network management deal with Nokia-similar to Bharti's deal with Ericsson and Nokia-which is based on revenue share on subscriber ramp-up rather than upfront investment in network capex.