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Technology Stocks : Qualcomm Incorporated (QCOM) -- Ignore unavailable to you. Want to Upgrade?

To: Joe NYC who wrote (20676)	1/2/1999 10:59:00 PM
From: SKIP PAUL	Read Replies (1) \| Respond to of 152472

"The real distinction between CDMA and GSM is not therefore on the price per minute, but rather the total minutes that can be produced for a given spectrum or dollar amount. In our example, total users for CDMA are 880,000 and for GSM 390,000 at peak loading. The fixed costs of running the wireless system, namely umbrella marketing, G&A and customer support costs, are, therefore, amortized over a wider base for the CDMA system." Above is a clip from the article you mention which is the main point of the cost equation. Moreover AT&T's network is still largely analog which is very very expensive. Another question to ponder-Does AT&T want to spend more money on obsolete(TDMA)technology that has no upgrade path when 3G is around the corner?

To: Joe NYC who wrote (20676)	1/3/1999 2:43:00 AM
From: Clarksterh	Read Replies (2) \| Respond to of 152472

Jozef - Take the cdg article with a very large grain of salt since I think it was intended for comparison purposes, not for absolute values. (For example the real Sprint costs are more than an order of magnitude above the cost in the cdg article.) See exchange2000.com Clark

To: Joe NYC who wrote (20676)	1/3/1999 10:23:00 AM
From: Gregg Powers	Read Replies (2) \| Respond to of 152472

Joe: I don't know where the $0.002 and $0.006 cost per minute came from, but according to Airtouch their fully-loaded cost per minute is around $0.06, i.e. six cents per minute and management believe that T's is much higher. Many elements factor into the fully loaded cost per minute such as corporate overhead and marketing strategies, but the two most important long-term factors are the minute factory's productivity and handset pricing (from vendor to operator)...particularly if you believe that demand is elastic in face of pricing declines (as per the ATT Wireless example). Remember also that while CDMA infrastructure is more productive than TDMA, the latter has been around longer and cheap handsets are plentiful. Qualcomm's licensing strategy was designed to promote handset availability AND TO RAPIDLY REDUCE THE COST OF CDMA HANDSETS so as to achieve parity with competing technologies. As a result, I expect that this year single mode, i.e. apples-to-apples, CDMA handsets to catch GSM handsets on a price basis. So those that complain about declining handset ASPs simply do not understand Qualcomm's business model was designed specifically to accelerate such price reduction. Jozef...wireless service, over the long-term, will increasingly become a commodity in the consumer, particularly as the air-interface and base station technologies evolve and improve. Voice quality will get better and better, as will battery life...to the point where the service difference becomes less important than price to the consumer. This about wireline telephony...everyone picks up their phone and just expects it to work perfectly. As such, the choice between your traditional carrier and switching to a CLEC is based entirely on price. Under this framework, over the long-term, TDMA MUST expire and CDMA MUST prevail because the latter is simply more spectrally efficient. In the short-run, when operators can get $0.20 per minute, a TDMA operator can probably live with a less productive minute factory and issues like sunk costs, vendor financing and time-to-market can drive the business case. Over time, however, as the revenue per minute declines inexorably, the low cost producer will steadily gain an advantage as the high cost producer suffers from a comparably disadvantageous return on invested capital. Best regards, Gregg