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Technology Stocks : The New Qualcomm - a S&P500 company
QCOM 151.59-0.4%3:59 PM EST

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To: DaveMG who wrote (2185)10/11/1999 2:16:00 PM
From: Ruffian  Read Replies (1) of 13582
 
On The Road To CDMA, Geneva>

On the Road to CDMA
But how smooth will the path be for cdmaOne as a unified standard
draws nearer?
Tammy Parker, Contributing Writer

Much as all roads once ostensibly led to Rome, a plenitude of next-generation wireless paths are
heading to interface technologies based on code-division multiple access (CDMA). Yet today's
operators that are already using a form of narrowband CDMA, branded cdmaOne, face intriguing
twists and turns as they evolve toward third-generation technology that will offer high-speed data and
multimedia options.

The face of 3G is changing now that supporters of wideband CDMA, primarily based in the global
system for mobile communication (GSM) camp, and supporters of cdmaOne have agreed to work
together. However, this new commitment to cooperate on a unified CDMA standard for 3G
wireless--cemented in May when L.M. Ericsson AB (Stockholm) bought the terrestrial CDMA
infrastructure business of erstwhile rival Qualcomm Inc. (San Diego, Calif.)--has not significantly
changed the migration trail for current cdmaOne operators who want to offer high-speed data
services.

Creation of a unified, global CDMA standard with multiple access technologies will certainly affect
the final design of cdmaOne's 3G solution, called cdma2000. Nonetheless, the groundwork has
already been laid for a sequence of upgrades that are unique to second-generation cdmaOne
networks.

While the wireless data market has been less than scintillating--most wireless operators report that
fewer than 3 percent of their subscribers use data services--familiarity with the Internet and a new
generation of data-savvy users is expected to drive future growth. Allied Business Intelligence Inc.
(ABI, Oyster Bay, N.Y.) predicts a global market of 25 million mobile data subscribers by the end of
2000 and 89 million by the end of 2007. Another study from Forward Concepts Co. (Tempe, Ariz.)
forecasts the worldwide 3G terminal market will total US$1.5 billion in 2001 and grow to $9.2 billion
in 2005. Those types of figures are driving cdmaOne operators to start experimenting with data
initiatives now.

Product Variations

The cdmaOne infrastructure vendors, as well as operators, are wrestling with a variety of
standardized data initiatives and vendor-specific data enhancements. Many vendors' current
infrastructure is capable of basic circuit-switched data at 14.4 kbit/s based on a standard called
IS-95A, and some are stepping into low-speed packet-switched data. Analog faxing is also possible,
thanks to an enhancement called IS-707A.

But carriers are being cautious about forays into data. Mexican operator Pegaso PCS (Mexico City)
plans to offer at least rudimentary packet data services over its network. But Victor O'Farril, senior
manager of business development, says data users require special vertically integrated solutions.
"Therefore we expect to establish relationships that will provide the specific solutions through
third-party vendors," he says.

He adds that while Pegaso is starting out as a mobile services provider, the operator has its eye on
wireless local loop (WLL) markets, which could entail more data enhancements. "It is highly
probable that customers on our WLL will ask for the benefits of high-speed packet data," he says.

South Korean operators have been especially aggressive on data. For instance, LG TeleCom Ltd.
(Seoul) has offered circuit-switched data since February 1998 and packet mode since late 1998. Yet
many U.S. operators have been content to offer voice-only services with limited one-way Short
Message Service (SMS), although they are beginning to consider offering at least circuit-switched
data.

The more aggressive data supporters in the cdmaOne community are gearing up for a
standards-based advance in data capabilities: the IS-95B standard, which allows for high-speed
packet-switched data at 115 kbit/s and a sustained bit rate of 64 kbit/s. Operators with the oldest
cdmaOne equipment will likely need to make base-station hardware and software changes to
accommodate the new standard, but those with fairly new networks might only need software
upgrades. "If you support the maximum data rate in both the forward link and the reverse link, then
that would have a hardware impact. But there is also a suggestion that if you implement it in an
asynchronous manner, then the upgrade should mainly be software," says Yiuman Leung, senior
manager of CDMA product line management for Canadian vendor Nortel Networks Corp.

IS-95B technology combines channels to provide for faster data speeds. But IS-95B's data strength
is also its primary weakness: By joining multiple channels for data, it may reduce the channels
allocated for voice. "If you run data at high speed [using IS-95B] and are sending more bits and
bytes over the air vs. a voice call, that implies that you will use up more capacity," says Leung. For
that reason, many operators are shying away from this advance.

Asia is the first to welcome IS-95B, perhaps due to a service provider affinity for having the latest
and greatest. Youn-Kwan Kim, vice president with LG TeleCom, says his company, as well as other
Korean wireless operators, are implementing the standard even though a 64-kbit/s connection using
IS-95B could eat up as much as one-third of channel capacity.

“We don't have many data customers, and there's no real revenue from that type of service. But we
will offer it to get a competitive edge,” he says. Kim also feels that the same reasoning is driving
Japanese cdmaOne carriers IDO Corp. (Tokyo) and DDI Cellular Group (Osaka) to offer IS-95B. He
adds that operators in Korea and Japan cannot risk waiting for another solution-1XRTT-which most
consider a more advantageous technology.

Heralding Capacity Gains

Conceived as an early evolutionary step on the ladder to 3G, 1XRTT is the initial phase of the
cdmaOne community's proposal for 3G wireless service. The standard, sometimes referred to as
IS-95C, promises real data speeds of 144 kbit/s and a sustained bit rate of 307 kbit/s. Even though
it uses the regular cdmaOne 1.25-MHz carrier, 1XRTT will likely require hardware and software
changes for the switch and base stations. Unlike the potential capacity reductions inherent in
IS-95B, however, 1XRTT is expected to double the airlink capacity, the number of available Walsh
codes and the battery life of the handset.

Among operators planning to test 1XRTT by early 2000 are Korea's LG TeleCom, Sprint PCS
(Kansas City, Mo.) and Bell Atlantic Mobile (BAM, Bedminster, N.J.) in the United States, and
Australia's Telstra Corp. Ltd. (Sydney), which is slated to commercially launch its 800-MHz
cdmaOne network in October 1999.

Telstra's 1XRTT tests are slated for early 2000.The operator is hoping data services and ready
Internet access will make its digital offering attractive to the company's 1.3 million analog
subscribers, two-thirds of whom will be regulated off its analog network by the end of 1999.

Telstra also operates a 900-MHz/1800-MHz GSM network in Australia with more than 2.5 million
subscribers. According to Greg Young, Telstra's senior product manager for CDMA, the operator is
conducting internal tests of services based on the Wireless Application Protocol (WAP) and is
planning high-speed data tests on its GSM platform. But the company is reserving judgment about
commercial introductions of high-speed data on either its GSM or cdmaOne networks until trial
results are in.

"We want to find a cost-effective way for delivering high-speed data to users," says Young. The
company, he says, needs to uncover the most prudent way to implement such service into its
infrastructure and maintain low operating costs per bit or minute. The company also will examine
billing models for data, commercial viability of data services and likely data applications.

Young admits to skepticism regarding the short-term viability of data services, given that Telstra's
9.6-kbit/s GSM data service has not generated significant growth. Like many, though, he feels data
will eventually be a wireless revenue generator once the right applications, devices, services and
pricing come together.

Other Possibilities

Questions about wireless data's take-up potential have led vendors and operators to consider other
alternatives for implementing cost-effective data services. For instance, Qualcomm developed its
High Data Rate, or HDR, solution as a new architecture for wireless systems that need an interim
solution on their way to 3G.

HDR requires the use of a separate 1.25-MHz carrier from that used for voice traffic in order to
provide a peak data rate of 1.8 Mbit/s. The technology also enables a direct connection to the
Internet or another packet network without routing through a base-station controller. Given that, an
operator might choose to implement 1XRTT for its higher voice capacity but add HDR capability as
its data solution, says Gwenn Larsson, director of technical marketing for Qualcomm's infrastructure
division, which is being bought out by Ericsson.

Qualcomm will offer HDR to other vendors, including Ericsson, for commercialization. American
operator US West Wireless LLC (Denver) was the first company to sign up for HDR trials, examining
the technology's suitability for high-speed, fixed-access applications.

In The End

Of course, the ultimate destination in the cdmaOne data migration is true 3G wireless packet data
services at 1 to 2 Mbit/s within 5 MHz of bandwidth. The technological solution for this is termed
cdma2000 Phase II, or 3XRTT, because it offers three times cdmaOne's usual 1.25 MHz channel
configuration. Some suggest that operators might skip all of cdmaOne's other data iterations in
order to wait for 3XRTT availability, particularly if it fits comfortably into a broader family of wideband
CDMA solutions.

Moving from 1X to 3X will entail significant hardware changes on the RF front end to accommodate
the transition from 1.25 MHz to the 3G bandwidth of 5 MHz, Nortel's Leung says. However, the
minute details of 3XRTT technology still need to be ironed out before the end of 1999, particularly in
light of work being done on creating a single CDMA standard for 3G with multiple access modes.

"That's going to involve a fairly high degree of coordination between standards bodies under the
guidance of the ITU," says William Bold, Qualcomm's vice president of government affairs. Recalling
the separate work done on W-CDMA and cdma2000, Bold says, "we had two processes going on
parallel tracks." But now the tracks are moving much closer together, he says, requiring close
cooperation from those driving 3G development.

Work on a common CDMA standard, even with a set of different access methods, holds the
promise of global roaming with multimode/multiband handsets and some economies of scale both in
infrastructure and handsets. And while some question the commercial viability of handsets with
multiple network access modes, others believe the next-generation vision will finally bring the GSM
and cdmaOne worlds together.

"This was a onetime opportunity to get close to a common global wireless standard," says Telstra's
Young. "And if we messed this one up as an industry, we were never going to get there again
because this was the point that we were really going to converge or diverge."
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