CDMA spending plunges

Worldwide spending on CDMA gear by wireless providers plunged in the second quarter, largely due to cutbacks in spending by Sprint-Nextel in the U.S., according to Dell’Oro Group.

And in a cautionary note to major CDMA equipment makers such as Nortel Networks, Alcatel-Lucent and Motorola, an analyst has warned the situation isn’t going to get better in the next 12 months. “For the time being CDMA vendors exposed to North America are going to take a hit,” said Dell’Oro mobile infrastructure analyst Scott Siegler.

Sprint’s CDMA capital expenditures was down nearly US$1 billion in Q2 from the same period a year ago, he said. As as result, North America’s share of the global CDMA equipment spending fell from three-quarters to two-thirds.

Looked at another way, in the second quarter of 2007, CDMA gear accounted for 20 per cent of the provider wireless spend, with GSM taking the rest. A year later, CDMA accounted for only 10 per cent of the spending.

While a drop in CDMA carrier spending has been ongoing for some time the sudden plunge in Q2 was unexpected, he said. This was partly reflected in Nortel’s recent financials, which said carrier network revenue had dropped two per cent over the same quarter a year ago and 15 per cent from the first quarter.

Part of the reasons is that North American CDMA carriers, including Bell and Telus, have finished upgrading their networks to Rev. A of the standard.

Looking ahead, Sprint is concentrating its capital spending on its new WiMAX Xohm network, Siegler said. Some $US100 million of its capital expenditures in the next quarter will go going to Xohm.

At the same time, there are persistent reports that Bell and Telus will shift their networks to the GSM standard. Telus has confirmed it will eventually move from CDMA to LTE, but not whether it will use a GSM intermediate step. Verizon, the other CDMA provider in the U.S., is going straight to LTE.

Overseas the situation for CDMA isn’t getting better. Three large Indian carriers – Reliance, Tata and BSNL – continue to invest in CDMA equipment. However, Siegler noted that BSNL has both CDMA and GSM networks and is about to spend US$6 billion on GSM gear. Meanwhile Tata and Reliance are in the middle of adding a GSM overlay to their CDMA systems, with both expecting to offer nationwide GSM coverage by the end of the year.

One bright spot is China, where the wireless divisions of several providers are CDMA-based. At the moment, however, they are in the middle of restructuring and won’t increase their spending until next year.

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Howard Solomon
Howard Solomon
Currently a freelance writer, I'm the former editor of and Computing Canada. An IT journalist since 1997, I've written for several of ITWC's sister publications including and Computer Dealer News. Before that I was a staff reporter at the Calgary Herald and the Brampton (Ont.) Daily Times. I can be reached at hsolomon [@]

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