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adopting new technology "as early as this year," industry sources say. The
change would effectively make all or part of Teluss CDMA network compatible
with the GSMbased systems operated by most carriers outside of North America.
The two acronyms stand for code division multiple access system, and global
system for mobile communications, respectively.
The idea "has been presented at the board level and is being actively
considered," said one source familiar with the situation who asked not to be
identified. The source cautioned that there were no guarantees Telus will go
ahead with a changeover, which analysts say could cost about $500 million.
A Telus spokesperson declined to comment.
The CDMA format is still common in North America but is increasingly falling out
of favour as the rest the world moves toward GSM. A switch would allow Telus
subscribers to roam on more overseas networks and choose from a much larger (and
cheaper) selection of cellphones built for global markets, where some 80 per
cent of cellphone users now operate on a GSM format.
Telus would also benefit by getting a slice of the roughly $500 million in
annual roaming fees that now goes to Rogers Communications Inc. At present,
Rogers operates Canadas only coasttocoast GSM network, a position it
solidified after it beat out Teluss bid to buy GSMoperator Microcell
Telecommunications Inc., the operator of the Fido brand, three years ago.
Telus executives have previously said they would prefer to stick with their
existing network, but some believe the mood within the companys Vancouver
headquarters changed after the carrier learned in late November that Ottawa aims
to promote wireless competition by setting aside airwaves for new entrants in a
forthcoming auction.
Any new wireless carrier is expected to build a network using GSMbased
technology.
"I think theres a strong argument to be made for biting the bullet and doing it
now," said Dvai Ghose, an analyst at Genuity Capital Markets. "If Telus manages
to accomplish (the switch) with a modicum of success, I think its a positive
for Telus and a negative for Rogers, which loses exclusivity in Canada."
Bell Canada Inc. is facing the same pressures with its CDMAbased network, but
that carrier is believed to be focused on completing a $51.7 billion
privatization deal.
A Bell spokesperson said the carrier is committed to the CDMA platform, citing
the technological advantages and North American coverage. CDMA has historically
claimed better capacity for voice and data communications.
Telus, by contrast, has apparently solicited multiple bids from
telecomequipment makers in an effort to explore different transition scenarios
and the costs.
The options range from a complete network swap to building some sort of hybrid
network that would run certain GSM devices.
Of course, such a strategy has its downsides.
Amit Kaminer, an analyst for consulting firm The Seaboard Group, said Telus may
be wise to sit tight until socalled 4G, or fourth generation, wireless
technologies effectively merge the two standards. That way Telus could avoid the
expense of overhauling its current "3G" network twice, Kaminer said.
The gamble is that no one knows for sure when a single standard will become
commonplace. Some analysts say Telus could be waiting as long as five years, a
lifetime in the fast moving telecom sector.
In the meantime, both Telus and Bell could face significant disadvantages in
getting hold of the latest devices.
"Its very difficult for them to compete on a product like the Motorola RAZR
when youre getting it nine months late and its several hundred dollars more
expensive," said Genuitys Ghose.
One recent highprofile example is Apple Inc.s muchballyhooed iPhone, which
was launched last June as a GSMonly device. Plans for a CDMA version have yet
to be announced, making it a near certainty it will end up with Rogers when
Apple finally decides to launch the iPhone in Canada.
Telus CEO Darren Entwistle refused to comment directly on the possibility of a
GSM switch when asked about it during Teluss thirdquarter conference call with
analysts. He did, however, acknowledge "certain advantages" relating to the
availability and cost of GSM devices, as well as the potential for roaming
revenues with "lucrative" margins.
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Source: http://telephonyonline.com/external.html?q=http://www.thestar.com/Business/article/293353
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