CAUTION: Long and rambling post follows!
Dave, I am a little surprised at your wireless views, but I don't expect you to see the same future that I see. You have every right to believe whatever you want. If you had said "explain one more time why you believe X means Y.." or "given Y, does anyone still think X" or "I think X indicates Y.." then I could understand that you were looking for more discussion, but to state (for example) that there is uncertainty about the ability of multiple CDMA carriers to implement functional data services is...perhaps a little paranoid. Many of the issues that you seem to have a lot of uncertainty about have been beat to death hundreds of times and (in my mind) most of them have been resolved.
Mucho Mass has provided the short answers to some of your doubts:
techstocks.com
If you search a couple of the Q threads here you will find as much discussion as one could hope for on most of these issues and while there are no hard and fast answers for some of your doubts, at some point the preponderance of the evidence falls on one side or the other.
You are welcome to your views and I can question how your fundamental doubts can be compatible with being a shareholder. I know many QCOM shareholders have sold at some price hoping to buy back for less. Some have even returned to these forums to bad-mouth QCOM afterwards when the shares just kept climbing "out of reach." I was hoping you are not one of these and I think that possibility (however remote) is what caused me to bring up the shareholder issue.
Now to add a little meat to the discussion (but still just broth).
OF COURSE my investment in QCOM is predicated on CDMA's spectral efficency so I'm not ignoring the pressures that ATT is likely to face when confronting SPrint and AIT/Vod, the cost and evolutionary disadvantages that GSM/TDMA face when compared to CDMAone/2000, I just don't think the "conversion" is anything like the slamdunk that some intimate. I'd love it if someone could explain why I'm wrong, that's really what I'm looking for out of this discussion.
Spectral efficiency is only one of many advantages of CDMA that need to be considered. I really don't know where to begin since you have been present for most of the discussion over the last two years. Are your doubts due to your early expectation that CDMA would totally dominate within an unrealistic time-frame and when this didn't occur, any doubts you had, strengthened? Or maybe the fact that TDMA based networks are still being deployed has added to your doubts? Let's take a step back to keep things in proper perspective. CDMA has only been deployed commercially for a few short years and, with the exception of Korea and Hong-Kong, CDMA has not been widely deployed except in the last year or two. Technologies as complex as entire wireless networks take time to spread since wireless technologies are dependent not only on handsets, base-stations, chips etc, but also CDMA engineers, land-use issues, spectrum, investment capitol and many other things. Of course some of these issues can be dealt with concurrently, some can not. Also consider the incredible growth rate and the speed at which all of these issues need to be scaled up to keep up with rising projections, more capital needed, more trained engineers, etc, and it is a wonder that we have come so far so fast.
Also, don't make the mistake of assuming that the persons choosing which technology to deploy are neccesarily making the best long-term decisions in each case. These decisions are made in a tense atmosphere with many conflicting agendas tugging and coloring the facts.
So if you have been a Q shareholder for two years it may seem like things are moving very slowly. But I feel like things are moving at the speed of light and am constantly amazed at the rate of deployment and advances that have been made.
As for ATT switching to CDMA, they have deployed TDMA in a booming market which allows them to pay for their infrastructure at an accelerated rate so they should be able to remain competitive with CDMA operators simply by cutting their rates in sync with (or faster) than other operators. Since most subscribers have service contracts and the market is booming, the timing of these rate cuts may not be very sensitive. They won't have to switch to CDMA for a very long time if they don't care about maximizing profit. As long as there are subscribers willing to pay a fee that is sufficient to cover billing and network operation expenses, ATT can just cap subscriber levels and realize a profit flow on their investment, new subscribers would be denied service and would subscribe to networks that still had capacity to sell.
But how would ATT shareholders feel if the booming wireless market was producing ever decreasing returns while other carriers were using the same amount of spectrum to create ever increasing returns selling wireless services to a growing market demanding ever increasing amounts of wireless connectivity? ATT will convert to CDMA to be responsible to shareholders. I feel it is their interest to prolong this another 6-18 months while equipment manufactures gear up to higher volume productions creating lower infrastructure costs associated with volume efficiencies. By waiting a little longer they may also be able to deploy equipment that is even easier to upgrade to next generation services or, more likely, move directly to HDR and 1XRTT. In the meantime they can continue to profit from their TDMA networks. So, HDR really is the next big revenue stream for Qualcomm.
Do we need 2MPS wireless connectivity? Probably not, HDR offers most of what most subscribers will demand for some time into the future. Don't under-estimate this length of time though - It wasn't very long ago that I thought an 80MB hard-drive would hold all my data for the rest of my life. The demand for wireless is not going to level out and that alone gives TDMA limited time. I'm not going to spend time debunking EDGE and GPRS now since in a year or two the true nature of these technologies will be well-known. I do not think they stand a chance of being competitive with HDR.
Which brings us back to the advantages of CDMA going beyond a simple 4:1 capacity advantage (or whatever it may be). CDMA's capacity advantage goes beyond this ratio when dealing with data since data is bursty in nature. This is particularly true for the kind of data I think you envision as being popular, little bits and pieces of data being sent and received, not a constant full-motion video/sound stream. So, if rudimentary data services become popular, CDMA has better than a 4:1 capacity advantage.
And then there is the ease of expanding network capacity by adding new cells. We have heard from Clark and Engineer recently about the difficulties of increasing capacity of a TDMA network this way. Does that sound like a cost-effective solution for ATT? At a time when wireless costs are dropping? I don't think I am fooling myself in believing that ATT will find it beneficial to switch to CDMA in the next couple of years and therefore they will. All things considered, no leap of faith is required to believe that regardless of what ATT's wireless president says to the media.
Qdog mentioned lack of spectrum for 3G services? If the spectrum is available it will be used, if not, more compelling reasons why HDR and 1XRTT will succeed since they are so bandwidth efficient. At the least, people will demand rudamentary data service and probably lots of it. Yes, TDMA can provide this but not nearly as much of it and not as cheaply.
Once again there are more and more quotes surfacing attributable to execs from the usual suspects claiming that " WCDMA" doesn't need Q IPR", that "Q has no more or less 3G patent rights than anybody else", the kind of FUD we were constantly subjected to before the Ericsson "settlement".
And we have also heard recently that actual GSM royalties for a newcomer are 15-30%. And for an inferior technology. I think W-CDMA has a whole pool of legal troubles but that won't stop HDR and 1XRTT from becoming a de-facto standard in the mean time.
Will there will be serious IPR challenges as a result of QCOM's refusal to join the patent pool, the industry aligned against Q? I'm simply suggesting that one of the things but by no means the only thing driving the coalition of forces out to deploy WCDMA is the common irritaton at having to pay Q royalties, and that the most effective way to not boost QCOM and the CDMAone carriers position might be to stick to TDMA/GSM and the economies of scale and global roaming advantages that now exist.
Economies of scale flatten when scale reaches a certain size. It is obvious to me that CDMA is rapidly approaching that size. At some point (probably in the past), the great efficiencies of CDMA (both in bandwidth and flexibility of deployment) will overide any small economies of scale that GSM or TDMA may have now. Look what happened with analog, it had economies of scale. 1999 was a year when CDMA was a new thing for many equipment and parts providers, poor designs and parts shortages prevailed. 2000 and especially 2001 and onward will see a flood of competition and volume that will result in low prices and widescale deployment of CDMA services. Of course CDMA royalties will skyrocket also. The only thing that can stop this from happening is a worldwide economic meltdown or a grand conspiracy to keep wireless services from the masses. Either scenario is rather unlikely.
Qualcomm does have some challenges ahead but adoption of CDMA is not one of them. The big ball is rolling and the superiority of that ball will allow it to gain momentum.
The near-term uncertainty is the ability of Qualcomm to maintain their dominant ASIC position. Judging by the opinions of people in the industry who speak of the difficulty of CDMA ASIC design, I am confident they will maintain this position. If their lead begins to erode, the rapidly growing royalty stream which would remain unaffected, should buffer the results somewhat, protecting long-term investors from a complete meltdown. A complete failure in the ASIC market could cause a share meltdown, but no investment with this much upside should be completely free of risks? I'm certainly not going to lose any sleep over this remote possibility.
As far as the "global roaming advantage" I think it is blown way out of proportion and has already been debunked as an important advantage. Certainly, if I lived in Europe I would buy a GSM phone but not so I could roam globally. In the U.S. I certainly wouldn't buy a GSM phone because GSM coverage in the U.S. is very poor. People choose a service based upon the coverage in the area that they spend 95% of their time. I'm surprised you still feel this is important enough to mention especially since the lack of global roaming hasn't stopped the CDMA standard from growing as rapidly as it has. If lack of global roaming was going to be important, CDMA would never have made it this far, now that it has, global roaming is just a matter of time. It's just not an issue.
Sorry this post is so long and also that I haven't fully addressed all of your doubts, but many of your concerns go right to the heart of many of the important issues that have been discussed on SI for the last three years and if you are not convinced by now that CDMA will become the dominant global standard and that CDMA carriers have the skill to implement functional data services, you might as well cash in all your chips right now. Who knows, you might have the last laugh!
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