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To: Caxton Rhodes who wrote (49222)	11/28/2001 7:25:15 PM
From: Wyätt Gwyön	Read Replies (2) \| Respond to of 54805

there is a 5% royalty rate on all cdma handsets except those manufactured and sold in China. it is my understanding that this information is contained in contracts that are confidential. the precise royalty arrangements should be impossible for you to know if you are not an insider bound to confidentiality. in particular, i am skeptical that 5% royalties will apply to "value-added" components in high-end handsets such as those costing $500 or more. i am skeptical on this subject, but i don't claim supreme knowledge: if you in fact know that QCOM receives 5% even on, e.g., PalmPilot integrated units (effectively receiving an extra royalty on the PalmPilot), and if you have evidence of this, please let me know and i will surely acknowledge it. i find it hard to believe that QCOM gets a royalty on whatever value is assigned to the PalmPilot segment of a unit, but i could certainly be wrong and would be happy if you prove me wrong. the second thing i am skeptical about is that there will be oodles of people buying super-expensive handsets. a few hundred thousand, sure. but 30 million in two years from a zero base? and they all happen to be CDMA (you rightfully acknowledge that it remains unclear what is meant by NOK's "3G")? at $500 a pop? i am skeptical of this. Since when is APRU spiraling downward? w/r/t ARPU, i was speaking of the industry as a whole. i do not have any handy current references i can post, but i have read articles that described ARPU coming down from $100 to $80 to $60 to $40 and so on (this was described in some detail a year or two ago in Grant's Interest Rate Observer in a piece called "Wireless Train Wreck"). i sense a trend there. and it certainly makes sense that ARPU has to come down to achieve deeper penetration and convert the marginal nonuser, on a global basis. not to mention penetration in low-income countries like China.