Look Ma, no wires
Forget what you think fixed-line telephony means. There’ll be no web of telephone poles spanning SA for Neotel and no irritating phone lines attached to the corner of your house. Instead, its physical infrastructure will look a lot more like a cellphone network, at least for the first few years.
Neotel is introducing technology new to SA to do that. The range of different standards at work will radically expand the techno-lexicon that already dominates communications technology. Get ready for "CDMA", which will be the core technology standard in the same way as GSM is to cellphone networks.
The hard part is linking up homes and businesses to its core network – that is where high capacity fibre-optics will operate. But the stretch from users to that network will be done wirelessly. So Neotel’s network will look and operate like Vodacom’s and MTN’s, particularly in residential areas.
The wireless links mean fewer cables on the streets and an easier way for consumers to join the network (no technician needed to install a line). It’s also much cheaper and quicker to deploy than fixed lines. Pravir Dahiya, the executive head of networks at Neotel, says getting permission from municipalities to dig up streets and string cables would take too long. And wireless is less susceptible to cable theft – a problem that costs Telkom many millions of rand a year. But it does have its disadvantages, most notably bandwidth limitations.
The company will, however, build an old fashioned-looking wire network in high-density areas. But it will use a fairly new technology – Metro Ethernet – similar to the data network you would find in a large office building, but spread over a metro area. This will be focused on companies that require reliable broad-band Internet access that can cater for high demand.
Much of Neotel’s core infrastructure – the fibre-optic network – comes from Transnet. The links between cities will be leased by Neotel from state-owned InfraCo, which now houses Transnet’s long-distance links. Neotel will have exclusive access for the next four years. It is also buying the telecom assets of Transnet subsidiary Transtel, consisting of thousands of kilometres of fibre-optic cables in the major cities. The company will still need to deploy more fibre to build its core network, which it has begun doing.
To link to the network, Neotel will use two different network standards, depending on demand for broadband access. The basic network will support voice calls and Internet access at slow speeds – the equivalent of dial-up access. The technology to do that, called CDMA2000, was developed in the US. A higher-speed wireless access network will use WiMax, a technology backed by companies such as Intel and Motorola.
Dahiya emphasises that CDMA2000 is not an ideal broadband solution as it supports only 3 Mbit/s per base station, and this bandwidth has to be shared by all users within tower range. "It’s good for dial-up customers – customers who are not into ADSL," he says. "CDMA will provide only voice and a little data for users who want to do a bit of e-mail."
Neotel will use the 800 MHz frequency to build its CDMA network. The relatively low frequency means it does not have to build as many base stations as it would if it were using a higher frequency.
For consumers who demand a service equivalent to Telkom’s broadband ADSL standard, Neotel plans to build another access network (deployment will begin later this year) using WiMax.
Neotel’s WiMax network will use the 3,5 GHz spectrum, which means it will need to build more base stations. Higher frequencies have a smaller footprint.
Though both WiMax and CDMA are wireless technologies, Neotel cannot allow a call to transfer from one base station to another. That would fall foul of its licensing conditions, even though it wouldn’t take much of a technology change for it to be possible. But handing over calls from one base station to another is the sine qua non of cellphone networks. That means consumers won’t be able to use a WiMax or CDMA handset from Neotel to continue a call while driving on the highway. Consumers will be able to move around their house while on a call, and probably slightly further afield, but further mobility will not be possible.
Neotel’s CDMA2000 network is likely to enjoy greater take-up among consumers. It will be cheaper than WiMax services and provide greater coverage. The technology is similar to the technology on which mobile operators Vodacom and MTN have built their third-generation (3G) cellular networks.
Neotel has selected its technology partners to help it build its network. They are Siemens, Juniper Networks, Cisco and Huawei, which will provide the core network, and Motorola, which has been commissioned to design the CDMA2000 radio network.
CDMA technology is fast becoming the standard for emerging markets. Former MTN CEO Paul Edwards says there are about 325m CDMA subscribers worldwide, including more than 200m in China. Almost 200 operators in 85 countries have adopted CDMA, many of them in emerging markets in Asia and Africa. Edwards is now a director of the 13-member Africa CDMA Forum.
CDMA, Edwards says, is more efficient than GSM networks because it can handle more concurrent conversations using the same frequency allocation. That means CDMA operators don’t have to spend as much money on infrastructure. This is ideal in emerging markets where average revenues per user (Arpus) are lower than in developed countries. It means that operators can profit from low-Arpu customers, Edwards says. "The next 800m subscribers will be in emerging markets, so CDMA is the technology of the future."
Edwards points out that even GSM operators have embraced CDMA by using W-CDMA to build their 3G networks. GSM, he says, is now considered an old technology, though the large number of GSM networks worldwide and ongoing enhancements to data services, with technologies such as GPRS and Edge, mean that GSM still has a lot of life left in it.
But, says Edwards: "GSM technology has got to the point where it is reaching its maximum potential."
Today, many more CDMA licences are being issued by African regulators than GSM licences. Edwards expects there will be more CDMA operators than GSM operators in Africa by 2010.
Nigeria has been one of the most active CDMA markets, where a "big bang" liberalisation led to the licensing of dozens of private telephone operators. The largest, StarComm, which operates a CDMA2000 network, expects to sign up its millionth CDMA customer next year.
CDMA handsets are still more expensive than fixed-line phones but offer (limited) mobility without the need for expensive wiring or the need for technicians to install the service.
The Africa CDMA Forum, of which Neotel is a member, has been created to give CDMA operators negotiating power with equipment manufacturers. Edwards hopes the forum will help drive down the cost of CDMA handsets as operators pool their buying to negotiate lower prices. Low-end handsets are already available for about US$40 and this is likely to fall further, he says.
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