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To: Jon Koplik who wrote (19238)	12/7/1998 7:29:00 PM
From: Maurice Winn	Respond to of 152472

Jon, Regarding the 15% price erosion in cdmaOne, maybe GSM and TDMA have not had the same discounting. GSM and TDMA sellers have got customers who are expanding existing networks, so those customers are a bit stuck with GSM and TDMA and will do some expansion. cdmaOne has only been in substantial production for a couple of years now and has been growing during that time. Like other introductory technology, it starts off expensive then gets cheaper as production skill improves, early adopters are provided for and competition increases. Luna's[?] idea that cdmaOne systems are largely complete is wrong. South Korea and the USA are the only places where that is slightly true. Even the USA is so sparsely covered with cdmaOne that South Korea is the only one heading towards maturity. Even there there is a LOT of expansion and development to be done. cdma2000 will be a new level altogether. TDMA and GSM have been underway for years with substantial competition. cdmaOne infrastructure producers are competing with each other now, rather than GSM. Nortel's huge cdmaOne price cuts are indicative of where things are going. The avalanche from analog is now on. That will precipitate huge demand for cdmaOne infrastructure. Especially when the pathway to 3G is cleared. But even while the VW-40 debate rages, cdmaOne will continue to boom because service providers can't just sit on their hands for the next 3 years while the cdma2000 versus VW-40 argument is resolved. They can't just watch all their customers go away. They'll act. They'll buy cdmaOne. There should be much more than a 15% cdmaOne price erosion. More like 50% year on year. Excluding earthworks, towers, town planning wars and ancillary efforts. What is surprising is that there has been only a 15% cdmaOne price reduction. That indicates strong demand. GSM and TDMA are obviously at the end of the road. Telecom New Zealand was [I reported earlier this year] going for TDMA expansion. But they have obviously had second thoughts and it looks as though they have figured out that cdmaOne might be the better bet as they see themselves getting surrounded by it. Australia will be going cdmaOne starting next year. NZ won't be far behind. Expect bigger price falls, in both handsets and infrastructure. Expect a tsunami of cdmaOne. A collapse of analog. A one to one replacement of analog base stations with cdmaOne. Expect China to get cdmaOne underway once they have done a bit of bureaucrating, PLA sorting out, negotiating and waiting-and-seeing on prices on cdmaOne and developments on cdma2000/VW-40. Expect Japan's buildout to be rapid. Expect handset developments to be rapid. And a multiplicity of applications for a huge array of individualistic customer preferences and needs. Price decreases on cdmaOne are sure to be steeper than GSM and TDMA. And there is a lot of room for them to fall still. Mqurice PS: Welcome back Gregg. Don't worry, just bank the profits.