Tata's 3G Conundrum

1:45 PM -- Tata Teleservices Ltd. remains committed to a capital expenditure of $2 billion in 2009 and 2010, and will spend the majority of this on the rollout of a GSM network, Reuters has reported.

Tata is India's sixth largest mobile operator, offering services in 16 circles using CDMA technology. (See A Guide to India's Telecom Market.)

But like its larger CDMA counterpart, Reliance Communications Ltd. , Tata is taking the opportunity to launch GSM services. (See AlcaLu Wins Tata Deal and NSN Wins Tata GSM Deal.)

Running dual technology networks is not unique, but most operators around the world that have had both GSM and CDMA networks, such as Telstra Corp. Ltd. (ASX: TLS; NZK: TLS) in Australia, ultimately swapped out CDMA in favor of GSM.

This raises the question: Why have Tata and Reliance added GSM to their network strategies? And what will their next steps be?

The answer may well lie with LTE.

LTE provides a common upgrade path for the core networks of both CDMA and GSM, offering an obvious point of convergence for both operators. They could therefore roll out GSM for voice and data services, evolve their CDMA networks through to EV-DO for advanced data services, and leapfrog 3G to go straight to LTE to bring the two networks together. With NTT DoCoMo Inc. (NYSE: DCM) holding a 26 percent stake in Tata, access to LTE expertise is within easy reach. (See NTT Takes $2.7B Stake in Tata.)

As is always the case in India, much will depend on the availability of the right amount of spectrum in the right bands, but it'll be interesting to see what Tata and Reliance decide to do next in terms of wireless technology deployments.

— Catherine Haslam, Asia Editor, Light Reading

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