The European investment community is ignoring the benefits of CDMA technologies in the 450 and 800MHz frequency bands – losing out on valuable returns and depriving the market of competition, according to Johan Lodenius, co-founder of CDM 450 operator Nordisk Mobiltelefon Technologies (NMT).
NMT recently indertook a one for one rights issue to raise funds, as the company was in need of "additional funding"."
At the time of the announcement of the rights issue, Per MŒnsson, CEO, said, "Nordisk Mobiltelefon develops well and the business case remains as strong as ever. However, since network roll-out has been delayed, our need for additional funding has increased. With the proceeds from a rights issue we will have the resources to make a significant impact in the Scandinavian market."
Despite the need for funds, Lodenius told Mobile Europe that his company, which uses technology from the CDMA2000 progression path rather than GSM/W-CDMA, is set to reach cash flow break even within 2 years of operation.
"That is unheard of in this industry. I think 3's investors would love to see that return, because I'm not sure when they're ever going to see their money back," Lodenius said.
Lodenius said that the operator was able to be profitable because it generated ARPUs of $50, compared to $15 for most UMTS operators (his figures). NMT only has 30-40,000 subscribers, giving it a very niche position, but it has a much higher market share when it comes to mobile broadband subscribers, which means it is weighted towards high value users.
The fact that CMDA 2000 can operate in the 450MHz and also means NMT can genuinely cover large geographic areas, Lodenius said. He alleged that the mainstream mobile operators are not meeting their license obligations with true 3G coverage. He admitted that HSDPA provides as good a performance in terms of data rates as CDMA450 using Rev O or RevA, but he added that that performance drops off substantially when a user is more than 1km from a base station. At 450MHz that can extend to 20k he said.
NMT has operations in Sweden, Denmark and Norway using frequency in the 450MHz band. Another European operator using CDMA 450 is O2 in the Czech Republic, which now has an estimated 120,000 subscribers.
Lodenius said the NMT is planning push to talk services as well as location- based services, adding to its current mobile broadband and fixed-wireless telephony style services. He also said the technology lends itself very well to providing the data aspect alongside TETRA coverage for public services users. The industry is also developing multi mode chipsets that provide CDMA as well as 3GPP radio access.
Joe Lawrence, CMO of the CDMA Development Group, said there are countries in Europe where 450MHz and 800MHz spectrum is available, but is not being made available because weak regulators and incumbent providers are blocking the use of CMDA.
But Lodenius added, "I'm not even talking about the technology. For me it's about the business case. There's a good business case there that can also meet government requirements for ICT development and rural and semi-rural coverage – and it's simply being ignored."