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To: Ruffian who wrote (22302)	2/1/1999 4:12:00 PM
From: Greg B.	Respond to of 152472

cdma2000 backers try to get technology included in Super 301 By Jeffrey Silva WASHINGTON—President Clinton's renewal last week of a potent trade weapon—known as Super 301—could become a vehicle for prying open markets closed to U.S. wireless technologies. Super 301, a multistep process that calls for bilateral negotiations on trade disputes but can lead to retaliatory action, was used previously by the United States to leverage Japan into relaxing barriers to its telecommunications, satellite and supercomputer sectors. ‘‘Super 301 and Title VII have been critical to the successful conclusion of trade agreements and the elimination of foreign trade barriers,'' said U.S. Trade Representative Charlene Barshefsky. ‘‘Given the state of the world economy, it is now more important than ever that we maintain these tools.'' There will be a push to include in the process that Code Division Multiple Access technology has been excluded from Europe, according to a person closely involved in 3G lobbying here. The Clinton administration and various members of Congress are concerned with the potential lockout of U.S.-developed 3G CDMA (cdma2000) technology in Western Europe, which today uses Global System for Mobile communications technology. Intertwined in that debate is a controversy over 3G standardization. A new European Union law directs its 15 member states to deploy a version of 3G CDMA, called wideband CDMA. Qualcomm Inc., which is aggressively lobbying to converge cdma2000 and W-CDMA, said W-CDMA was engineered to keep the 3G equipment market closed to technology from the United States and elsewhere. Backers of W-CDMA technology reply that 3G CDMA harmonization will result in a degraded technology. Some believe the market access and standardization issues are separate, and should be kept that way. But others say the two are inherently, if not politically, linked. U.S. officials are pushing for multiple, market-driven 3G wireless standards, but realize the standardization process can be manipulated into market barriers. It will become clearer in coming months whether the United States will use Super 301 to further U.S. wireless interests abroad. · USTR on March 31 will submit a report to Congress comprehensively cataloging trade barriers facing U.S. products and services in the global market. · On April 30, USTR will distill from the report for Congress priority trade problems. For the next three months, the U.S. government will attempt to reach agreements on trade policies it deems unfair and discriminatory. For those unresolved trade disputes, USTR will initiate Super 301 investigations ranging from six months to 18 months. After the investigations, if there is still no agreement among parties, the United States then would consider taking retaliatory action. That could include slapping heavy tariffs on imports of countries with which the United States has unresolved trade differences. If the United States decides to challenge the EU over the absence of CDMA technology, it will be obliged to consider other wireless technology trade barriers. For example, only CDMA technology is permitted in Korea. ‘‘What we want is parity in terms of market access,'' said Mickey Gardner, counsel for the Universal Wireless Communications Consortium. UWCC members include BellSouth Corp., AT&T Corp. and SBC Communications Inc., users of TDMA and other technologies. rcrnews.com

To: Ruffian who wrote (22302)	2/1/1999 4:15:00 PM
From: Greg B.	Read Replies (2) \| Respond to of 152472

DoCoMo downgraded because of 3G delay By Lynnette Luna The third-generation technology debate is beginning to have a negative impact on the valuation of the world's largest wireless carrier, Japan's NTT Mobile Communications, which plans to become the first carrier in the world to deploy wideband Code Division Multiple Access technology. Dresdner Kleinwort Benson downgraded NTT DoCoMo from a ‘‘buy'' to ‘‘hold'' status Jan. 18, saying the company's risk profile is increasing because of a delay in the rollout of W-CDMA technology, which DoCoMo plans to offer commercially by 2001. Shinji Moriyuki, analyst with Daiwa Institute of Research in Japan, put DoCoMo on ‘‘hold'' status in November. He agreed the company's risk profile is increasing because of the uncertainty surrounding 3G technology. The International Telecommunication Union is looking to set a worldwide 3G standard capable of delivering high data speeds, Internet-friendly handsets and full-motion video by March. Sixteen different radio transmission technologies—the majority incorporating some form of CDMA technology—were submitted to the ITU from regional standards bodies and other entities. But the ITU in December announced it would likely halt any work on CDMA-based proposals unless intellectual-property-right disputes surrounding the two main CDMA proposals were resolved by the end of 1998. Both Qualcomm Inc. and L.M. Ericsson claim to hold patents to both W-CDMA technology—based on GSM technology—and an evolved version of today's Interim Standard-95 technology called cdma2000. Qualcomm said it won't license its IPRs unless one converged CDMA standard is achieved. Ericsson won't grant its patents unless full reciprocity is granted and countries around the world are allowed to choose alternative technologies they want to deploy without being hindered by unequal IPR policies. The ITU will determine next week how it should proceed in light of the IPR obstacles. The ITU said it likely will try to give a free hand to technical experts to proceed without disturbing the IPR issue. Many operators and ITU members want to continue, the standards body claims, and it doesn't want to sidetrack the March deadline. However, many operators and manufacturers involved in the process believe a delay is inevitable given Qualcomm and Ericsson remain deeply divided over the issue of convergence. Even separating the standardization process from the IPR issues could still mean a drawn-out legal battle before any carrier could commercially deploy any CDMA-based 3G system. It is these delays that concern Thomas Rodes, analyst with Dresdner Kleinwort Benson in Japan. DoCoMo, which raised $18 billion in October in an initial public offering, plans to deploy 3G equipment in March or April of 2000, but any delay in the standards-setting process means DoCoMo will be unable to start spending on CDMA infrastructure by then and must continue cell splitting on its taxed Personal Digital Cellular network to maintain subscriber growth. PDC equipment, now considered obsolete technology, already has a low return on investment. Excessive spending on more PDC equipment will lower the company's free cash flow and raise future depreciation. ‘‘The cost of adding a subscriber will go way up,'' said Rodes. ‘‘I'm not sure a lot of people understand the business model. If they truly run out of capacity, the marginal cost of adding a subscriber is not going to go down. Total new capex spending is going to go way up.'' And DoCoMo, with more than 20 million customers, cannot push ahead with W-CDMA technology on its own. Japan's Ministry of Posts and Telecommunications will not allocate the 2 GHz spectrum needed unless carriers use technology in compliance with an ITU-chosen standard. DoCoMo plans to use that spectrum to overlay W-CDMA technology on its existing networks. And Rodes outlines other risk factors. DoCoMo had planned to relieve congestion constraints and offset enormous capital expenditures by offering a Personal Handyphone/PDC handset and pricing it aggressively in the marketplace. But the MPT will not allow the company to price as aggressively as it wants to, saying the largest wireless operator would obtain an unfair advantage in the market. ‘‘Outside the ITU process, manufacturers will struggle with commercialization,'' said Rodes. ‘‘W-CDMA will be wildly expensive. Whoever rolls out a new network will be the furthest up in terms of knowledge, but economies of scale and getting the system to work will be difficult.'' Rodes remains bullish on the company as it continues its stellar subscriber growth. The company's stock has increased about 20 percent since its IPO. Kate Lye, analyst with Warburg Dillon Read in Japan, maintains a ‘‘buy'' rating on the company, while Goldman Sachs, which could not be reached for comment, maintains a ‘‘strong buy.'' ‘‘I'm looking at growth between now and 2001,'' said Lye. ‘‘There's little risk in earnings. Subscribers are growing at a faster rate and stronger than our expectations ... For the longer term, I'm cautious about capex, and I've revised it upwards, but no one knows the price of W-CDMA.'' Lye said DoCoMo claims it only needs six to 12 months to complete a rollout of W-CDMA technology so it has some leeway if 3G decisions are delayed. She said DoCoMo expects a resolution on the patent issues this year. DoCoMo could not be reached for comment. But Lye believes that if key ITU meetings in the coming months don't go well, more analysts will start paying attention to potential risks. The financial consequences of the ITU delay could force DoCoMo to take a stance on the chip-rate issue—the main factor preventing the convergence of W-CDMA technology and cdma2000. rcrnews.com