Vincent J Mazzola, president and CEO of Lucent Technolgies Hindustan, started his working life in 1982 at AT&T in New Jersey in computer systems. After a stint at Bell Laboratories as a supervisor of software developers, he moved to telecommunications. He then moved to Korea (which was then, he says, "emerging, particularly in wireless" and was a code division multiple access "� CDMA "� market) and later to Japan before arriving in India in 2002.
In an interview, he compares the Japanese and Indian telecom markets, talks about Evolution Data Only, the fast 3G data transmitting technology that some Indian telcos are launching, and the Indian telecom scene.
Excerpts:
Why has Lucent consistently backed CDMA? Was it a business decision because the US market was then CDMA?
The US market was CDMA in part because of Lucent. So it wasn't Lucent backing CDMA because of the US market. Lucent was involved in all the major technologies "� AMPS, the predecessor to CDMA, TDMA, GSM, wideband CDMA, UMTS, CDMA 2000. So we have a rich background in all the technologies.
We believe that CDMA is from a technology perspective superior to the other technologies in this initial 3G environment, before you go to UMTS and CDMA 2000. If you look worldwide at who has been the most successful operators, you can measure their success by the number of subscribers, profitability, average revenue per user (ARPU).
People will measure that success differently. Worldwide, some will argue that Verizon is one of the most successful operators. It has a very high ARPU and customer satisfaction measured by independent entities and consumer reports. It is exclusively CDMA and predominantly Lucent. It has announced that it will deploy a nationwide EvDO network in the US utilising for the most part Lucent equipment and also using another vendor's equipment.
So it has seen the value of CDMA from the perspective of quality of service to customers and the perspective of operating efficiency and costs.
GSM companies here argue that it is a GSM world and that even the US is shifting to GSM, with the exception of one or two companies, that CDMA is prevalent only in pockets of China and Korea and that Europe has rejected CDMA.
That's more a matter of legacy than technology adoption. UMTS is a CDMA technology, a Qualcom technology. So even the GSM operators have recognised the value of CDMA and all of us "� CDMA and GSM "� are moving forward to a CDMA platform. UMTS is CDMA, wideband CDMA (which DoCoMo uses in Japan) is CDMA.
Do you see GSM and CDMA merging? We recently interviewed Qualcom chairman Irwin Jacobs, who said that a new phone that's being launched can be used for both CDMA and GSM services.
The phones available now are, quite frankly, prototype phones and I've used them. They allow you to cross between CDMA and GSM. So that technology is available. In India, the challenge is the limited requirement for that phone. So the cost is high. Unless the demand for that phone increases dramatically worldwide, the price will not make it attractive to most of our clients here.
How does the Japanese market compare with India?
In Japan, the utilisation of wireless access to the internet is greater than by wireline. That's because of the demographics "� homes are small, people tend not to be at home very much, other than perhaps the wife.
So most Japanese don't access the internet from home but from the office. And 98 per cent of Japanese phones are for personal use; corporations tend not to buy phones and give them to employees.
Japanese, particularly those who have long commutes to work, access the internet via wireless during the commute. That has led to wireless access to the internet being greater than wireline accesss. So there is more volume over the network for wireless data than for wireless voice in Japan.
In Japan, the ARPU for voice, like in this market, continued to decline. But because Japanese operators adopted wireless data and Japanese consumers used it, they contributed to the ARPU.
In India, over the last couple of months, the ARPU has declined from $10 a month to $7.
Worldwide the revenue from voice is declining, not the volume. The volume from data is really increasing.
So in Japan, an operator like DoCoMo has been able to maintain the ARPU, if not increase it slightly, because of wireless data.
Quite a few GSM operators have argued that India is a voice market. Why would Indians switch to data?
I see similarities between Japan and India in the adoption of wireless data. The driving force is slightly different. What is driving it in Japan is the demographics.
In India, the existing infrastructure is not of consistent quality throughout. The way to quickly address the quality issue in telecommunications infrastructure, inexpensively, is by wireless.
The Indian government has recognised that "� the regulatory environment here has been very conducive to wireless. And that's because, I believe, the Indian government sees how wireless can contribute to increasing teledenisty, increasing the infrastructure within India which will benefit industry and the citizens of India.
So wireless can be used to deliver data applications. May be in another country you may have done it another way. When I sit in my house in the US, I have multiple choices of getting data "� over my cable, over the satellite dish, via wireless. In India you do not have multiple choices. You will get all those choices here within a year or two.
But you won't have those choices throughout the country. You will have it in key metro areas.
How does EvDO work and what are its benefits?
GSM has nothing as fast as the speeds and the capacity of EvDO. EvDO allows you to have very large data applications that can be delivered in an wireless environment. You can have television broadcasting delivered. But people think of television as content. EvDO has capacity that is sufficient to deliver that type of content.
Some operators in India will explore this. Qualcom and Lucent are promoting it. There are operators that look at this as a means to deliver major applications to the end user.
Other than cricket matches, why would anybody want to watch television on a very small screen when they can watch it at home on a larger TV screen?
It depends on the individual. If you can buy one thing that, in fact, may be subsidised and that device can give you broadcast television content, it can give you data applications such as the ability to do banking, to interface with the government and the ability to make phone calls, why do you need other devices?
For a CDMA operator to add EvDO is no cost. The beauty of EvDO right now is the CDMA operator has data capability. But when someone is making a data call, whether you use a laptop or some other device, you are competing for network facilities. But when you do EvDO, that's dedicated. An operator can provide a greater bandwidth, at higher speeds and manage voice versus data access much more efficiently.
We can take an existing CDMA network, put a carrier in there, enable it with some software and that operator has EvDO capability.
Are you saying that GSM has nothing comparable to EVDO?
Absolutely nothing. When you go from GSM to UMTS to wideband CDMA, that's another technology and network. Within the current evolution of GSM, you get GPRS, you go to EDGE. EDGE doesn't have speed. EvDO has much greater capacity and speed.
How many companies in India are adopting EvDO?
Reliance Infocomm is. C. Sivasankaran is applying to the government for an ISP licence, not a CDMA licence, to supply data to companies.
Reliance will do a trial with Lucent in EvDO and we are in the planning phases. Reliance, Qualcomm, Lucent . And we're dealing with some content providers. The Tatas are discussing it right now but once they deploy their network, they would be looking at it.
Each of these companies wants to do different things with EvDO. What Reliance wants to do with EvDO is different from what Sivsankaran wants to do which is different from what the Tatas may do.
Is Lucent providing EvDO to the defence services?
We are working with more than one government, for CDMA and another project. We are supporting the Indian military for telecommunications. The reason the military would be interested in CDMA technology is because it is more secure. We discussed EvDO with the military. They are looking to deploy some CDMA first and then EvDO.
Where do you see the Indian telecom market in the next three to five years?
Spending in India has been modest. Everyone has a slightly different view about capital expenditure. In electronics and the equipment (switching, routers and so on), the capital expenditure is about $3 billion.
In Australia with its small population, it is $4 billion, in China it is $25 billion. So it is still relatively small here. And it is not growing dramatically.
You have tremendous growth in areas like wireless and broadband, while growth has declined in circuit switching. But it is still relatively modest for the next couple of years.
For the next three years, growth in some areas will be significant and other areas it will decline.
Are you implying that there's increased spending on wireless systems but less capital expenditure on fixed line phone systems?
Yes, the spending is very selective. And my data tell me that the spending will continue to be on wireless and broadband.
So in the next 10 years will you get far more mobile phones than fixed line phones?
Over the next three years, expenditure in those areas will quickly grow. After that, capital expenditure by operators will really take off.
Including fixed lines?
Yes. Because by then, there will be serious investment in voice over internet protocol. Now companies are only dabbling in it.
Will Lucent set up a plant in India?
Lucent has a plant in Bangalore and is evaluating the possibility of setting up a wireless equipment manufacturing facility in India. A study is being done on this.
Indian telecom equipment manufacturers are doing badly. They claim they don't have a level playing field, that it's easy to import telecom equipment and so on. Would you tie up with any of them?
We do use local partners and some of those partners are particularly aligned with the government. We use them less in manufacturing than as integrators. They may take Lucent's products and somebody else's products and intergrate them to provide a deployment solution to the government.
From the manufacturing perspective, we haven't used anyone. We are not precluding that. I'm in discussions with two companies here about the possibility of doing that.
If there is a particular market segment or a technology segment we could better address by partnering with a local company, we will do that. But local companies have to compete. The government has created an environment that benefits operators and the Indian consumer. It's an open market. To those people who say that the Indian market isn't open, I will tell them that in telecom it is not true.
Glossary
2G
- TDMA: Time Division Multiple Access is 2G technology. Much slower speed than 3G technologies
- CDMA: Code Division Multiple Access, developed by Qualcomm
. - GSM: Global System for Mobile Communications. Digital cellphone technology for voice and data.
2.5G
- GPRS: General Packet Radio Service.
3G
- EDGE: Enhanced Data GSM Environment
. - W-CDMA or UMTS: Wideband CDMA (also known as Universal Mobile Telecommunications System)
. - CDMA2000 1xEV-DO: Delivers data on a separate channel.
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