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Technology Stocks : COM21 (CMTO) -- Ignore unavailable to you. Want to Upgrade?

To: lml who wrote (1099)	9/27/1999 5:56:00 PM
From: Techplayer	Read Replies (2) \| Respond to of 2347

lml, Thank you very much for your effort to educate me/us on this. It is very interesting reading. Is CMTO able to license this technology in any way? It seems that this would be important for integration with legacy networks. If it really works as well as intended, it would seem to give TERN an advantage. thanks again, Brian

To: lml who wrote (1099)	9/28/1999 9:28:00 AM
From: Happy Harry	Read Replies (1) \| Respond to of 2347

I am aware the QCOM owns and licenses CDMA for wireless as discussed in 9/27 Fortune but was unable to link it to cable internet. S-CDMA appears to be something different but again I do not pretend to have all the technical answers. Sorry, I was not aware that this link was so busy that it was not open to people with "dumb questions".

To: lml who wrote (1099)	9/28/1999 3:42:00 PM
From: Mark Laubach	Read Replies (8) \| Respond to of 2347

The "S" is for Synchronous, in S-CDMA. The version of spread spectrum coding that TERN is using depends heavily on being able to maintain a very precise modulation symbol transmission timing in the system. Normal CDMA doesn't have this requirement. So what does S-CDMA really buy you? This modulation has slightly better characteristics for surviving certain types of "narrow band" noise interference over QPSK. It does so via a very complex coding control system that adjusts the number of "spreading codes" being used and the amount of transmitted power. Said differently, to overcome narrow band interference, the S-CDMA protocol will reduce overall channel data capacity in order to maintain bit error performance and it does this in steps. Said differently, S-CDMA will perform (i.e. get some data through, even at ridiculously low channel data rates) down to lower "carrier to noise ratio" levels, also called "signal to noise ratio". CNR, also known as the "noise floor", is the single most important measurement that tells the noise "health" of the upstream cable plant. The noise is composed of many contributors. However, they can be generally classed into narrow band interference and broadband interference. Broadband interference can kill any protocol because it wipes out wide swaths of RF spectrum and it comes from many sources. Narrow band interference, takes much narrower slice of RF spectrum, and comes from many sources also. Noise rises and falls in power, is temporal in nature (varies in time), and also can be related to the temperature of the cable plant. Two-way cable modem operation requires that the cable operator maintain the plant's CNR to acceptable levels of all noise contributors, otherwise the broadband interference will knock out anything. Once done, you will always be able to run one to several QPSK channels in the cleaner portions of the spectrum. CMTO has been doing this for years in all coaxial cable plants. What S-CDMA might buy you is that you can run a channel in a portion of the RF spectrum that is possibly too "dirty" for QPSK, as told by looking at bit/packet error rates. Remember though, if it's dirty spectrum, S-CDMA will reduce it's channel data capacity to compensate in order to maintain acceptable error rate. It is possible to have to run the data rate so low such that only one or a handle of cable modems would be able to use the channel at a time. What does this mean? It means that TERN has a hype argument for saying they can "get more" out of an all coaxial cable plant. This is not necessarily true, but it's their pitch. Note that the economics of running a cable plant say that if you can get a cash flow going with a high speed cable modem data service, then the operator has a way of funding future growth. This cash flow can be achieve with QPSK based cable modems as well as S-CDMA based cable modems. The point is to start the cash flow going and to delay upgrades until necessary. CMTO was promoting this in its presentations at trades shows long before TERN started hyping it as their own. It's a business economic reality for all coaxial cable plants. So why upgrade to Hybrid Fiber-Coax? 1) it does improve the upstream noise floor, 2) it can dramatically increase the number of downstream TV channels that can be offered, depending on what type of plant is being upgraded (note this is the real cash cow for operators), 3) it "pushes" more bandwidth closer to the user, 4) the electronics are much more manageable (remotely too) than previous all coaxial plants, 5) the HFC architecture can be exploited to provide a much more reliable cable plant through better electronics and fiber path redundancy. So why is TERN so popular? I dunno. Personally, I find it odd, but here are some observations. There's a general fear in the industry about reliably providing two-way operation. The S-CDMA argument and hype addresses the FUD factor from this alone. It's clear as cable modem operations are turned up, that the FUD goes away. For example, some cable operators are perfectly happy with DOCSIS 1.0/1.1 modulation on the upstream. Also, twice TERN gave out warrants for stock as part of its cable modem deals. First with Shaw (as documented in TERN's S-1) and then again with Rogers (as told not too long ago in the press). This is a significant portion of Canada (and each are members of CableLabs). What do warrants do? Well, the operator gets to buy shares of TERN stock, at say $1 each (or other amount) essentially for every cable modem it buys. Given the increase in TERN's stock value, Shaw and Rogers have likely been able to significantly fund portions of their operations and upgrades. You'll have to go back through TERN's public filings to find out more about these deals. Also recall mention of this in the WDR report on TERN a little while ago, because these warrant deals significantly impact shareholder value. Hope this all helps and is otherwise illuminating. Mark