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Technology Stocks : Qualcomm Moderated Thread - please read rules before posting -- Ignore unavailable to you. Want to Upgrade?

To: techreports who wrote (17313)	12/13/2001 11:06:40 AM
From: Eric L	Read Replies (1) \| Respond to of 197214

techreports, << Eric, maybe you can answer this question for me. I'll take an opinionated stab at it. << Sprint says they have all the spectrum they need. 1x will work in their current spectrum, right? Then why did Verizon buy so much spectrum if they will use 1x and DO? >> Did you ever read the story of the "Three Little Pigs"? The answer lies therein. If you want to update the story you can weave in the three fundamental C's - Coverage, Capacity, and Cost - and you can add a fourth C - Content. Spectrum is a somewhat finite resource. When spectrum is available you go for it - if you are able to - or you lose it. Prior to the recent auctions, depending on geography, Verizon had spectrum either in 800 MHz or in 1900 MHz but in most cases not both. They had a large footprint but were week in overall coverage, particularly in 1900 MHz, relative to future needs. The auction increased Verizon spectrum in the top 25 markets by 33%, in the top 50 markets by 29%, and in their entire footprint by 19%. They obtained that increased coverage for a pittance relative to what it will be worth at the end of this decade. My sense is that Verizon Wireless wants to get as much coverage and capacity under their belt as possible before they IPO, and their wireless division becomes subject to sharper shareholder scrutiny, as PCS is now. When spectrum is available you go for it or lose it. In the end, the carriers with the most spectrum will win, IMO. << To put that in perspective, Sprint ... believes it has enough frequency for the next 10 years. >> That is what they tell the shareholders. What about the next decade? <g> IMO, no carrier in the US, regardless of technology, currently has enough spectrum for the next decade, and depending on the success of high bandwidth data services many could be strapped by the end of this decade, The lifting of the spectrum cap in the US really changes the paradigm here. At the end of this decade, I'm reasonably confident that Verizon will be around as will AWS who has more spectrum than any other carrier. I'm less confident about PCS. << Also, does WCDMA require more spectrum? Could that be why Verizon is shelling out so much cash? >> Yes. 1x requires minimum 2,5 MHx and WCDMA minimum 10 MHz. I'm not sure that is why Verizon is shelling out so much cash, but added spectrum sure gives them more flexibility for the future, should they opt to deploy WCDMA at some time (or not). In the plans they announced earlier this year (presentation linked here by Slacker) they showed two alternative future paths, one using 1xEV to complement 1xRTT and one using WCDMA. One important thing to keep in mind is that initially WCDMA was optimized for, and will be deployed in 2 GHz. It is being downbanded now for 1900 MHz, but it will be some time before it is downbanded to 800 MHz. Without additional 1900 MHz spectrum in major markets and particularly the largest market in the world for wireless voice (and potentially eventually the largest market for wireless data), the potential for Verizon opting for WCDMA is (was) minimal. This is the spectrum inventory for NYC before and after reauction and of course contingent upon FCC/Nextwave/carrier settlement: Carrier NYC Before Reauction NYC After Reauction AWS 35 MHz 45 MHz Sprint 30 MHz 30 MHz VoiceStream 30 MHz 30 MHz Verizon 25 MHz 45 MHz Cingular 10 MHz* 30 MHz* * Cingular obtained NYC spectrum in spectrum swap with VoiceStream last Fall. They are now sharing spectrum in NYC and will share full 45 MHz if Nextwave settles. At the current time Verizon's spectrum in the NYC MTA is almost exclusively 800 MHz. The 20 MHz adder is all 1900 MHz. I heard Oliver Valente say a few days back that in NYC at their busiest sites that they were only provisioning 15 MHz of their available 30 MHz of 1900 MHz spectrum. That is before 1xRTT, before smart antenna's, and whatever, but it is also before big chunks of data start flowing down a relatively small pipe. Pragmatically, I would say as a Verizon user and frequent visitor to NYC (often with people using PCS) that overall Verizon has better coverage and better capacity particularly in peak periods in the Apple than PCS even though their native subscriber base (formerly NYNEX then BAM/NYNEX) is much larger. On the flip side Verizon is bumping the wall right now capacity wise in some peak periods in some geography. Data will change the ball game. It won't change it over night, but it will change it. Verizon (employing the same technology, and alternatively another flavor of it) is most certainly better equipped to deal with that paradigm shift. All JMHO & FWIW Best, - Eric -