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Strategies & Market Trends : Gorilla and King Portfolio Candidates

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To: Mike Buckley who wrote (53116)	11/21/2002 2:52:15 PM
From: Eric L	Read Replies (2) of 54805

--Mike, re: CDMAMobile Wireless in 450 MHz << I still don't understand the importance of CDMA450 in the big scheme of future adoption of CDMA. Standing alone on its own, what percentage of Qualcomm's revenue could reasonably be derived from CDMA450 over the next five years? >> That is difficult to answer. It really is dependent upon whether or not additional countries (and which countries) elect to license spectrum for mobile wireless in the 450 MHz band. It also is dependent on how successful carriers who have existing 450 MHz licenses are in building out and attracting customers, and whether or not in some cases (and I'm thinking of Qualcomm backed Inquam with licenses in UK and France) are able to deviate the license from a technology point of view from Tetra to CDMA 450. Currently there are less that 2 million (mostly rural) customers of NMT-450, mostly in eastern Europe and Russia many of which could switch to GSM service but alternatively could subscribe CDMA 450 and of course CDMA 450 could attract new subscribers from GSM. Potentially the market where 450 MHz is licensed is reasonably large and many of the prospective customers are not especially mobile to the point where they require cross border roaming capability which they have (or could have to greater degree) with GSM. IF 450 MHz is licensed in China (Thailand, Indonesia, etc.) particularly in rural areas, but also urban areas, the picture changes. There could be a potentially large prospective subscriber base. There really are a lot of "ifs" here. << Can CDMA450 be leveraged to be more important than what it is on its own? If so, how? >> You might recall my comments to Uncle right after Qualcomm's Earnings CC: In addition Qualcomm is now doing exactly what Moore (in "Inside the Tornado") or his partner Paul Wieffels (in "Chasm Companion") suggest a wannabe gorilla should do when the technology whose architecture they control doesn't get chosen by the majority. They are going after new market niches where they have the capability to be a gorilla. One of these niches is limited mobility WiLL and another is mobile wireless in 450 MHz. These little niches could turn out to be big niches. Lets take the China scenario. Let us suppose that China licenses 450 MHz spectrum to China Telecom who currently is primarily a fixed line carrier. China Telecom would probably commence a buildout of a relatively large CDMA 450 network and they might cease expansion of their PAS (PDC) limited mobility network. Let us suppose that China Telecom also is granted licenses for 3G 2.1 GHz paired spectrum. They could use their new CDMA 450 core network and potentially the same MSC and base stations for a 2.1 GHz cdma2000 buildout rather than building out 3GSM WCDMA like some are speculating they will do if so granted. This actually gets a little complicated because MII in China can dictate technology choice and buildout requirements. China Telecom could for instance be granted licenses for 3G 2.1 GHz paired spectrum, AND unpaired spectrum for TD-SCDMA with a requirement to build out both within a specified time-frame. TD-SCDMA would probably dictate a 3GSM core network which could support both WCDMA and TD-SCDMA. All rather mind-boggling. Bottom line though is that cdma 450 is another arrow in Qualcomm's quiver and CDMA 450 has large potential - maybe. - Eric -

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