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To: pcstel who wrote (643)	2/1/2002 5:01:09 AM
From: Maurice Winn	Read Replies (2) \| Respond to of 1088

Ashley Mullen, the most effective critic of my speculations, brought up that argument a couple of years ago [that having CDMA, which dramatically increases the capacity of spectrum reduces the value of it]. But think a little bit more carefully and you'll see that Mq's Theorem is correct. If all the spectrum in the world can only handle 100 calls, with billions of capital to produce the networks to deliver those minute, it's obvious that it'll be hard to sell those 100 minutes at prices sufficient to justify $100 billion for European spectrum [3 countries anyway] and $100 billion for networks. Okay, that's a bit extreme, but it proves the point at the boundary condition. Now, go back to analogue times, when spectrum could handle 5% of what it can now. The value of a minute was no more then than it is now. The value of a minute is not related at all to the cost of production of a minute. The value of a minute is purely a function of the top bidder's instantaneous need for that minute. So, a $$billionaire about to drown when his superyacht goes down in a collision with a Korean container ship will pay $1billion to make that call. There are not many of those calls made each year, or even each decade. So it's tough to base a business on that call. At the time that analogue was rampant in the early 1990s, the value of minutes to the subscribers was still the same as today. But being expensive, few people could afford to use them, so they didn't. If spectrum could be made so efficient that 1.25 MHz could handle all needs for all people, then yes, the value of spectrum would go to zero. But that's not the situation. We are somewhere between the two extremes of $10,000 per minute if there is only one minute available [actually, I doubt that one minute could be sold for that price every minute of every day] and $0 per minute if there is infinite capacity in the spectrum. Imagine if it was not quite infinite though, say about 1 trillion minutes were available. To sell that much, the price would need to be very low, but total revenue would still beat that from $10,000 per minute for a single minute. 1 trillion x $O.001 per minute would be $1,000,000,000, which is a lot more than $10,000 and not only that, it gives a huge consumer surplus to the subscribers [including the $billionaire who gets a HUGE consumer surplus]. Here's a graph to give the same idea but on the optimum price to charge: Message 16730053 Charge too much and very few people make a call. Charge too little and huge numbers of calls are made but the revenue is low. Charge just right and revenue is maximized. The same sort of idea applies to the value of spectrum. Analogue can't produce enough to maximize revenue. Infinite capacity would earn no revenue from spectrum. 1xEV-DV makes it just right for maximum spectrum value. And guess who invented 1xEV-DV? Yes, you are right. QUALCOMM which included Allen Salmasi, and NOT Senator Hollings or the FCC. Mqurice