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To: EJhonsa who wrote (28)	11/14/2000 12:15:39 PM
From: tero kuittinen	Read Replies (3) \| Respond to of 9255

There have been two major surprises this year regarding 3G, Eric. First was the Brazilian decision to implement GSM-1800; the main reason for this expensive roll-out was the wish to get into the GPRS and W-CDMA pathway. The second was the decision of the Korean operators to implement W-CDMA. In both cases, the surprise was this: W-CDMA is hideously expensive compared to the 1x overlay on IS-95 and future cdma2000 upgrades. In Brazil, not only do the operators need to build W-CDMA from the scratch - they also need to build GSM-1800/GPRS from the scratch before they can start the 3G build-up. So why would both Brazil and Korea make this highly counterintuitive decision to go after W-CDMA - even though they both had a "natural", low-cost alternative in 1x? Why are two of the Top Ten markets in the world abruptly veering towards W-CDMA - even though they know about the initial sticker schock? Anatel and Koreans have presented three possible explanations: 1. Economies of scale for GPRS and W-CDMA handsets is going to swamp all competition. Not only are these handsets going to be affordable and shipping in tens of millions of units relatively rapidly - but there is going to be superior variety and choice derived from more than a dozen brands offering competing models. The R&D expenses poured into GPRS and W-CDMA tower over anything being spent on rival technologies. 2. True, affordable global roaming can only be achieved through GPRS and/or W-CDMA. 3. cdma2000 may not live up to expectations. Taker your pick. One of these explanations - or some combination of them - sheds light on the Brazil and Korea decisions that seem inexplicable if you only stare at the initial network expenses. This is what makes it so hazardous to build predictions on rooting among pure engineering specs - the real world choices are often based on commercial considerations. Economies of scale in phone production and global roaming are issues that can't be easily quantified. But they obviously are hugely important to mobile operators making their strategic decisions. I concede the point that 1x overlay is far cheaper and clearly superior to other alternatives when it comes to pure network performance. But I don't think that's what mobile operators see as the most important issue when they make standard decisions. If AT&T and Cingular need expensive tweaks to their current networks - and even if handsets would need modifications for current flavors of GSM and GPRS - that decision would still be a smaller risk than what Brazil and Korea are apparently willing to accept. Tero