Amongst the top technology providers globally, Qualcomm has established a significant presence in India. Having introduced the $25 handset, the company intends to merge affordability with upgraded capabilities. tele.net spoke to Roberto Padovani, chief technology officer, Qualcomm, during his recent visit to India, to discuss future technology trends and the company’s key focus areas. Excerpts from the interview…
What are the key technology trends coming up globally?
3G technologies are likely to dominate the telecom landscape for the next five years and beyond. There is still a lot of scope to improve these technologies. Standards such as CDMA2000 and WCDMA are still being developed. New products are likely to hit the market in the next two years. Another key area of focus is the level of integration of many technologies like wide area network, local area network and short-range technologies like Bluetooth and 802.11 on the chip. All these technologies need to be integrated into the same device. This will drive the convergence of customer electronics and cellular phones with many applications.
Where does India stand vis-a-vis other Southeast Asian countries in terms of technology adoption?
The success story in India is outstanding in terms of customer growth. Most of the growth so far has been driven by voice communications at the entry level. As we go forward, there will of course be more entry-level devices for voice communications, but the level of capabilities on the devices available at affordable prices in India will increase substantially. For instance, devices with features like cameras, video, music and other applications, that we see in other regions of the world, will be available here soon.
India and China are comparable. As a matter of fact, the growth in India is faster than the growth in China in terms of new subscribers. I do not see a big disparity between the two markets. In terms of penetration, India is catching up very quickly with China.
How do you see the evolution of CDMA technology globally and within India? What timeframe are you looking at?
Currently, we are witnessing a rapid growth in the evolution data optimised (EV-DO) user base, which has doubled and has close to 70 million subscribers. With respect to commercial deployments, there are currently 59 Rev. 0 networks. The deployments of the upgrades to release EV-DO Rev. A are beginning in Japan and the US. Almost 18 networks have deployed CDMA Rev. A. The bigger deployments of Rev. A will be undertaken by KDDI in Japan, Sprint Nextel and Verizon Wireless in the US, LG Telecom in Korea, and a few others operators.
The year 2008 is going to be a big year for Sprint Nextel. The company is going to launch its push-to-talk service on Rev. A, and will begin to transfer its customers from older technologies on to its CDMA networks.
From 2009 onwards, voice over internet protocol (VoIP) deployments on Rev. A are expected, in conjunction with the upgrades of the core network to IMS multimedia systems. However, the release of Rev. B is a little more uncertain. Though there is some interest from a few operators, most operators are extremely focused on the release of Rev. A upgrades. Rev. B is likely to be deployed later.
Moving on, devices that support 4G technologies like ultra mobile broadband (UMB) could be available in 2008-09. However, it is still too early to tell. These technologies will take time to implement. For instance, companies will want to trial the technology by the end of this year. The business cases for these technologies will also have to be studied. All in all, there may be a question mark on whether UMB will be deployed in 2009 or 2010, or even beyond that.
In India, we can expect network launches after the 3G policy is announced. EV-DO Rev. A, which is compatible with Rev. 0 and Wi-Max, will be deployed by CDMA2000 operators. Similarly, on the GSM side, high speed data packet access (HSDPA) will be deployed by WCDMA and GSM operators.
Assuming that the spectrum policy is released in the second half of this year both for Rev. A and HSDPA, and all the operators’ plans are in place, we can expect Rev. A and HSDPA launches next year in India.
What is Qualcomm’s role in technological innovation and adoption, globally and in India?
We are aiming to play a very big role in technology evolution and will continue to improve technologies in the 3G space. Going forward, we will also develop technologies in the 4G domain. Subsequently, we will actively develop products for such technologies and will continue to push the envelope by trying to integrate more capabilities in devices. In addition, we are targeting to lower costs and other entry barriers for devices and networks. And thanks to the efforts of Qualcomm’s India team over the past two years, we have accomplished introduction of handsets in the $25 range.
What has been Qualcomm’s biggest milestone in the past five years?
In 2001-02, EV-DO was introduced. For the first time, it was proven that broadband and IP networks were feasible and efficient. This was a very big accomplishment. I am also very proud of the way the MediaFlo technology has developed over the last few years. This is a real success story with the technology starting on a clean sheet of paper about three years ago and now being commercially deployed. We must also give credit to the efforts that made entry-level handsets available in developing markets. This was another major accomplishment.
What will be Qualcomm’s key focus areas in the next couple of years?
There will be a substantial amount of R&D expenditure on developing devices for 3G networks and conducting trials. Moreover, we will focus further on the newest addition to our high-end devices, the Snapdragon platform. This is a powerful combination of multiprocessors and digital signal processors for mobile and battery-operated devices. Snapdragon will be sampled in the second half of this year, so devices using this platform will probably be introduced towards the end of the next year.
Moving forward, we are not only looking at bringing broadband, but will also target both the price of broadband and the affordability of computing devices. In a price-sensitive country like India, this will enable significant growth for portable devices.
In your opinion, how cost-effective would it be for an operator in a developing country like India to move to 4G, given that 3G networks are likely to come up by end-2007?
In my opinion, 4G is still in its infancy. Even five years down the line, the volumes and the economies of scale are going to be on 3G networks. In terms of overall performance and spectral efficiency, there isn’t a significant difference between an advanced 3G version and a 4G version. Though UMB can provide 280 Mbps, these are peak data rates. In fact, it takes multiple antennas to reach these data rates. In reality, what is considered is the average number of bits that a technology can transmit from a tower. That is what drives the economics, and not peak data rates.
3G has the scale, the volumes, the reach and backward compatibility with 2G networks. While operators will trial 4G technologies, the business case for these is still somewhat up in the air. 3G will be the dominant technology going forward. This is the global trend. In countries like India, we expect that 3G launches using EV-DO Rev. A and HSDPA are a more logical path for operators. Technologies like Rev. B or advanced HSDPA continue to improve and there are softer upgrades.
The time for 3G is now and the time to continue evolving 3G is still ahead of us for another five to 10 years. For example, there is an evolution path for 3G itself from Rev. A to Rev. B and beyond, and from high speed packet access (HSPA) to HSPA+ and beyond. However, in terms of the business case that will work for a pricesensitive market like India, the momentum and the volumes, both on the network and device side, are clearly with 3G.
What are the key concerns for a market like India, in terms of technology adoption?
The first thing is to ensure that an adequate amount of spectrum is available for all technologies so that they can compete. Primarily, it must be ensured that operators’ business cases work. With massive network rollouts, tens of thousands of base stations have to be upgraded. So, addressing the financial viability is a key factor in technology adoption.
With respect to devices, there must be a balance between capability and affordability. This does not entail just making the cheapest phone, because even in a market like India, consumers want better capabilities.
What was the process involved in developing low-cost chips for handsets in India?
Making a device affordable through chipset technology is not an easy task. Previously, four chips were used to make a handset functional, whereas today, we have integrated everything onto a single chip. The single-chip solution was quite a success story. It utilised a lower geometry in the manufacturing process so that worldwide fabrication facilities could produce the silicon cheaper. The chip is low cost, uses less power and is smaller. Consequently, handsets have become thinner, more efficient and cheaper. Handset providers can build common platforms that not only address the lowest end, but also the higher tiers. CDMA chipsets are fitted into phones whose prices range from $25 to $700.
What kind of investments do you make in R&D? Do you intend to scale this up?
In fiscal year 2007, we will spend close to $1.5 billion. Our R&D expenditure is close to 18 to 22 per cent of our total revenue. In terms of percentage of revenues, we will probably continue to spend the same amount unless some specific event occurs which necessitates a big increase in R&D expenditure. In terms of the absolute dollar amount, the investment in R&D will grow, but not in terms of percentage of revenues.
