Tek,
Re: QCOM - CDMA - Gilder v. Frezza - The "Holy Wars" Revisited.
You will I am sure, enjoy this one. We have a Bill Frezza sighting.
For those on the thread that are not aware Bill Frezza was the single biggest CDMA basher of all time (and while he was bashing he was on Ericsson's payroll ... and so began the "Holy Wars".
I am a Gilder fan. I am not a Frezza fan, but in this article Bill makes several statements about Gilder that I totally agree with.
He makes some statements about CDMA here I agree with, but he also makes a a few misstatements or exaggeration as well.
Unfortunately, Gilder, CDG, and Qualcomm, continue to overstate capacity and spectral efficiency claims, and it makes them an easy target.
Sit back, and enjoy Bill eating a little public crow:
<< Telecosmic Punditry: The World Through Gilder-Colored Glasses >>
Bill Frezza
December 04, 2000
Internet Week
Issue: 840
Section: Gray Matter
techweb.com
Few professional futurists have as devout a following as the self-appointed prophet of the grand trends in technology, George Gilder. Founder and majordomo of Forbes ASAP, publisher of the closely watched Gilder Technology Report and author of the recently published book "Telecosm," Gilder uses his probing intellect and passionate wit to bring to life stories of the key companies and entrepreneurs shaping the contemporary telecommunications scene.;
Gilder is a delightful writer. It's hard not to admire his artful prose as you turn each page wondering what he might say next. Unfortunately, his analysis is infused with such persistent intellectual capriciousness and selective disregard for the facts that critics are often left bewildered as to his criteria for picking winners and losers. In a recent flap reported by The Wall Street Journal, James Crowe, the CEO of Level 3, suggested that Gilder dropped his company from favor after Level 3 declined to pay $100,000 to help sponsor a three-day Gilder-hosted conference. This was particularly confusing as Gilder had just a few months earlier declared that Level 3 was "poised to change the world."
Gilder first came to the attention of the telecom industry as an early booster of Qualcomm and its Code Division Multiple Access wireless technology. Bucking the established wisdom, Gilder correctly predicted that engineers could overcome the substantial technical obstacles required before CDMA could be made a commercial success. Succeed it did, in the process propelling Qualcomm into the first ranks of global telecommunications companies. Skeptics such as myself were forced to eat crow, especially after Qualcomm's stock finally caught fire last year and zoomed into the stratosphere. Partisans celebrated, predicting the demise of rival Time Division Multiple Access technologies, foundation of the GSM standard, often characterized by Gilder in his speeches as the work of a fascist European conspiracy.
But facts are stubborn things. Not only are TDMA products as commercially viable as ever, but they continue to outsell CDMA, not just in the rest of the world, where there are about 375 million GSM subscribers compared with 75 million CDMA subscribers, but in the United States as well. Though you'd never know it by talking to the pundits, less than half of the digital wireless subscribers in the states currently use CDMA. The majority use one variant or another of TDMA. And the promised quality superiority of CDMA somehow isn't reflected in customer satisfaction figures. Sprint PCS, a vigorous proponent of CDMA, continues to experience churn rates near 3 percent per month. That means each year Sprint has to replace one third of its subscriber base just to stay even! Can this have anything to do with the so-called "breathing" phenomenon that causes CDMA cells to shrink under heavy load, dropping customers at the edge? Don't expect a straight answer from Gilder.
The part that really rankles, though, is the claim of vastly superior capacity. Yes, CDMA is more spectrally efficient than TDMA and on this merit has become part of the Third Generation standard toward which GSM is now evolving. But did the marginal capacity advantage warrant fragmenting the U.S. wireless market into so many incompatible standards that Europe and Japan have left us behind in the move to data?
Here's a fact challenge for Mr. Gilder. If you can show me a real metropolitan CDMA system (not a lab demo or a lone high-site out in the desert) that today supports 20 to 40 times the capacity of analog, I'll eat this column. If not, you can eat page 91 in your book where you repeat this discredited claim prior to mocking critics for daring to question its validity. (What do you say to that, George?)
Forget about Gilder's arcane technology arguments, supporters say. This man can sure pick stocks! Let's look at a few of the companies Gilder has touted. Does anyone remember Steinbrecher? Steinbrecher set out to build a broadband software-defined base station that promised to obsolete hardware-based channelization schemes. Great concept, but failed execution. I leave it as an exercise for the reader to find out which company ultimately solved this problem. (Said company will remain unnamed as my firm is an investor, and I don't use this column to tout stocks. By the way, its award-winning products are based on GSM.)
What about Globalstar, the Qualcomm-backed satellite-phone venture? Do you think CDMA will save it from going the way of Iridium? Anyone want to bet how far free-space optics darling Terrabeam will get before it crashes and burns?
But enough Gilder baiting. I'll save the rest for the next time we share a podium.
Bill Frezza is a general partner at Adams Capital Management. He can be reached at frezza@alum.MIT.EDU or www.acm.com. <<
BTW: I think that Steinbrecher is a firm that was purchased by Tellabs
- Eric - |
