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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: Mike Buckley who wrote (27153)	7/1/2000 6:11:23 PM
From: Eric L	Respond to of 54805

Re: 3G - Not a Tornado in sight for 3G Multimedia - In-Stat Report Summary A new term is introduced. 2.75G I can't afford the $1,995 for this report but I suspect that In-Stat applies it to Qualcomm's IS-2000 1xMC and perhaps EDGE. Regardless of whether a wireless data (2.5G or 2.75G) tornado is in sight or a 3G multimedia tornado is on the far horizon, I think that because of the seamless nature of the cdmaOne/cdma2000 migration path that the cdma tornado remains in full swing. CDG projects CDMA subscriber growth at a CAGR of 67%. CDMA is now well enough established that handset sales (which drive revenue will grow WELL ahead of this rate for years to come. Wireless Carriers Face a Bumpy Road to 3G instat.com Mobile telephone companies have a daunting task ahead of them to migrate from first or second generation technology (1G/2G) to third generation (3G). While 3G technology, also called Universal Mobile Telephone Service (UMTS), offers high bandwidth for new multimedia features, it could result in financial disaster for wireless providers that do not make the transition smoothly, says Ray Jodoin, senior analyst for Cahners In-Stat Group. Among the issues facing wireless carriers as they consider 3G upgrade options: * New frequencies. 3G frequencies have yet to be auctioned off in the United States. It is not yet clear which frequencies will be auctioned. Cost. The cost to upgrade will be substantial. In-Stat estimates companies that choose to upgrade in one fell swoop (not a likely scenario) would spend at least 145 percent of their original infrastructure investment. Subscriber preferences. Though 3G technology will allow subscribers to surf the Web, listen to music and watch video all at once, it remains to be seen how many customers will pay a premium for these features. * Many 2G wireless carriers will upgrade their existing networks through data speed enhancements. These enhancements may be a transitional phase to 3G and can be considered 2.5G or 2.75G. "These enhancements should provide adequate messaging data rates for at least the next five years, but will not increase subscriber capacity," Jodoin says. * This upgrade approach may yield the best financial results for wireless carriers, Jodoin says. Today's subscribers do not appear ready to pay for wireless streaming audio and video that 3G will enable. They are more likely to pay for wireless e-mail which can be facilitated by 2.5G technology. According to an In-Stat worldwide wireless subscriber forecast, 3G will begin to roll out in 2001, attracting some 52.5 million subscribers. Japan will be the first region to roll out 3G in 2001 followed by Western Europe in mid-to-late 2003. The forecast indicates that 2G and 2.5G technology will peak in 2004 and will then slowly be replaced by 3G. - Eric -