Slacker, AWE's purported move from TDMA to UMTS is probably a long way off. What has been neglected in the discussion is the impact of the parent AT&T spinning off AWE, and that includes spinning off all the debt related to AWE. The sheer size of the debt means that it will be difficult to upgrade services to 3G and still charge rates that will be competitive with the performance/cost advantages of Sprint PCS, Verizon, and several smaller CDMA service providers, including LEAP Wireless.
I think one key factor that many people are missing is the effect of debt service costs on near term expansion of AWE services. It is likely that AWE will simply maintain its relatively slow, inefficient voice services, with relatively slow and limited data access for the next two or three years at least. Meanwhile, the Deutsche Telecom takeover of VoiceStream will lead to equally large debt problems, and equally slow upgrades to 3G. The bottom line is that Sprint PCS, Verizon, and the other CDMAOne service providers have the most efficient system and the lowest cost upgrades to 3G. Competition (in the U.S. at least) will make the big difference, with both AWE and VoiceStream and other TDMA/GSM service providers eventually losing business or being forced into expensive, debt producing upgrades.
QUALCOMM shareholders should look forward to the gains from chip sales and royalties from the operations of existing CDMA systems in the U.S. and overseas. Too much worry about whether the non-CDMA service providers will adopt some form of CDMA, and when, is resulting in nothing more than . . . too much worry. Analysts are downgrading QUALCOMM along with other telecom equipment companies simply because they do not differentiate between the future costs for CDMA providers, compared with TDMA/GSM. They see the overall situation through the eyes of GSM companies, and because of that are unable to identify any advantages of the present situation in favor of QUALCOMM.
Art Bechhoefer |
