I think the impact of QCOM/ERICY agreement on OMPT is....
really not too meaningful at this stage. W-CDMA, or 3G technology will first be deployed in Japan in two years than Europe after that. The US is really at least 5+ years away from having any meaningful W-CDMA deployment. Mostly because 2G technology in the US is far less deployed than in the other countries (i.e., carriers have not really realized any return on their existing investment and thus are not encouraged to spend more $$ to deploy 3G). Also, the US has not and most likely will not issue additional spectrum for 3G licenses like is being done in the 2.1GHz range in Europe and Japan (this spectrum already tied-up by PCS carriers like OMPT and FCC will have tough time getting it back).
So, if 3G is to be deployed, it will be done in existing spectrum which will be difficult/impossible for 800MHz cellular carriers (no capacity) and 1.9 GHz PCS carriers (i.e., OMPT) are currently spending big $$ to build-out their current 2G network and until they get adequate return-are not really incented to spend more.
However, the small upside I think exists with QCOM/ERICY announcement for OMPT is what is called "backward compatible" networks. If OMPT has enough spectrum in NYCity, it could deploy W-CDMA in only NYCity and choose to have one device be able to roam onto GSM network. So a customer may be able to get high speed 384KBs data service in Manhattan but still get 28.8 packet speeds in Connecticut with the same device when OMPT deploys GSM packet service. This would save W-CDMA build-out costs. I'm sure this is the strategy the AT&T's (W-CDMA backward compatible with TDMA) and Sprint's (cdma2000 backward compatible with current narrowband CDMA) are thinking about. But US cellular market has not shown appetite for data services like in Europe and Japan. So, I don't really see this as likely in the next few years.
So rather than worrying about 3G, I think OMPT has a simple strategy. Get as much GSM built in strategic locations as possible, get as many customers as possible and then sell to the highest bidder. At this stage, 3G is really only a strategic issue for the large operators (i.e. Vodafone, AT&T, NTT Do-Co-Mo, etc.) and the manufacturers. PCS operators have their stocks valued at less than $100/POP. Cellular operators in the same area are valued closer to $300/POP. The real asset values that will drive OMPT stock price is built-out networks and paying customers. The buying company wants the customers (to upgrade to 3G and market other telecom services) and the network (getting base stations in places like NYCity is difficult and built-out network has tremendous value) The spectrum is really only worth a fraction.
So if OMPT can find some $$ in the short-term from strategic investor-it is possible to see huge upsides from current valuations. However, lots of risk to meet those short-term financial commitments. But to those of us comfortable with taking these risks-I think OMPT can really please. |
