Relatively inexpensive signal processing technology is becoming more prevalent in the cellular world as operators try to boost the performance of existing networks without the need for upgrading existing base stations. Soon, such technologies could find their way into homeland security, public-safety and other sectors where faster data rates are coveted.

One such technology, recently developed by Magnolia Broadband, is a single-chip solution — dubbed DiversityPlus — designed to take advantage of two separate RF signals to improve network capacity by 40%, increase geographic coverage by 50% to 60%, and double data rates from the handset back to the network.

“What's unique about our solution, you don't have to do anything with the standards, you don't have to do anything with the infrastructure,” said Magnolia CEO Osmo Hautanen. “It's a chip in the handset.”

While Magnolia initially developed DiversityPlus with the CDMA2000 cellular standard in mind, the company now is applying it to UMTS, Wi-Fi and WiMax, with other radio systems to follow. Multiple original equipment manufacturers have built demonstration handsets using the technology, which already is being used by South Korea wireless carrier SK Telecom, with large handset shipments expected by the end of 2006. However, the underlying technology has applications far beyond its initial deployments.

“It's not just handsets, it could be a whole set of vertical and consumer markets,” said Gerry Purdy, principal analyst for MobileTrax. “Homeland security, public safety, anywhere there's a need for a higher speed uplink where there's a need to send things back from the field.”

Also, the solution doesn't require any underlying changes to existing protocols. “[Magnolia is] using an extension antenna technology that allows you to leverage CDMA technology to improve performance,” said Philip Marshall, Yankee Group analyst. “In many other cases, the performance improvement requires a lot of complex system changes beyond what's in the standards.”

DiversityPlus places an radio frequency (RF) processing chip and an ARM 32-bit reduced instruction set central processing chip together in a single unit, along with Magnolia's proprietary signal processing algorithms to enhance performance. “The EV-DO specification requires a second antenna,” Hautanen said. “We use the second antenna.” By pulling in two separate RF signals at the handset, the solution provides much improved receive-and-transmit capability, according to Hautanen.

Improving performance at the handset can provide huge cost savings for cellular carriers (see table). “We hired Marconi to do [cost/benefit] calculations,” Hautanen said. “If you improve your coverage, you don't have to improve your infrastructure. It improves in-building infrastructure, improves customer satisfaction [and] you can additionally … provide higher [uplink] data rates without having to charge additional for the service.”

Carriers also don't have to pay for additional frequency licenses to support the higher data rates, he added.

One of the factors driving deployment of DiversityPlus is consumers' desire to be able to quickly upload voice and video to friends and family. “All of the wireless networks were unbalanced initially,” Hautanen said, noting the initial design of EV-DO and other 3G cellular networks provided a high-speed downlink data channel to the handset and a slower dial-up-style uplink speed.

“Now they're trying to increase the data rates,” he said. “There are more 4- and 5-megapixel cameras in cell phones, there are other applications where you need more [two-way] bandwidth.”

South Korea has been the initial proving ground and first market for Magnolia. SK Telecom, the country's leading wireless telecommunications provider, conducted extensive testing of DiversityPlus around Seoul over a two-year period. The results led to a commitment from the carrier in October 2004 to deploy DiversityPlus in new handsets, a significant deal for Magnolia given how short handset lifespans are in the country.

“The typical lifetime for a handset [in Korea] is around nine months. It can be as little as six months,” Hautanen said, adding that the desire for better reception and faster data rates should contribute to faster handset turnover.

Other rollouts are expected throughout Asia and North America, and Hautanen indicated the Magnolia has been working with one major U.S. wireless carrier. Analysts believe the technology ultimately will find worldwide demand.

“[The demand] could be the entire cellular market but focused on high-speed uplink,” MobileTrax's Purdy said. “Their technology is not exclusively uplink, but the primary notable thing is [handsets are] going to operate faster where content is created on the phone itself. That's tens of millions of potential users.”

Migrating DiversityPlus to other radio network platforms appears to have few significant hurdles. “There's some level of integration you'd have to overcome as you transfer [from cellular],” Yankee Group's Marshall said. “Naturally, being focused on RF means it is applicable to other wireless implementations.”

In South Korea, for example, DiversityPlus already is tailored to work in the 800 MHz band. “In terms of frequencies, I don't think it makes that much difference,” Hautanen said. “We have sent distributors our product. They're talking with everyone who is making every single type of wireless device.”

Hautanen has no trouble imagining Magnolia's solution appearing in a broad range of devices. “Two-way radios have been voice-centric, but you need location, you need more data. [Voice-only] devices aren't going to cut it for the police and the fire department. I think those devices in the future are going to be much more data-centric,” he said. Hautanen also envisions a mesh network component, “so you can have a roving network in a building.”

Other applications he cited include wireless computer network cards and fixed wireless terminals in underdeveloped nations.

Currently, Magnolia appears to have no direct rivals, but a few performance-improving alternatives, some currently available, others on the horizon, could offer some competition, according to analysts.

“There isn't a direct competitor doing a faster uplink chipset, but to be fair, anything with high-speed broadband is a competitor,” Purdy said. “As dual-mode phones come onto the market, if I [walk] into an indoor Wi-Fi hotspot, I can jump onto that network, and it's a whole lot faster on average than a cellular uplink. It's a situation competitor, but it's not a competitor going down the [same] highway.”

Marshall sees competition for Magnolia not only coming from substitutes such as dual-mode phones but from companies offering network optimization solutions.

However, Purdy predicted that as faster cellular uplink speeds become more important this year, Magnolia might find itself in a much hotter space as larger manufacturers decide they need the technology, which could be good for the company and its founders. “If you're a big company, you do a make/buy analysis … somebody could license [the technology]. Someone might acquire [Magnolia].” Or it could turn out to be a bad situation. “The threat is a larger company has all the resources, and they try to outdo Magnolia by a factor of two or three,” Purdy said.

Marshall speculated that Magnolia would make an interesting acquisition for a larger company. “[DiversityPlus is] an element that's integrated into another solution that would be produced by the major equipment vendors,” he said. “To operate as an independent company in perpetuity, it would need a broader-based solution.”


A cost/benefit study considered the addition of more than 2.4 million customers within the five-year study timeline leading to more than 40,000 new monthly additions generating an average traffic of 2258 Erlangs/month.

Capex Opex User terminal cost
Operating frequency 1900 MHz 2100 MHz 1900 MHz 2100 MHz 1900/2100 MHz
Greenfield network with Magnolia user terminals $807,154 $980,862 $545,171 $622,498 $787,942
Greenfield network with conventional user terminals $1,370,359 $1,665,567 $925,573 $1,124,964 $748,046
Savings $563,204 $684,705 $380,402 $462,466 ($39,895)
Percent savings 41 41 41 41 (5)
Source: Marconi Wireless and Magnolia Broadband