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On Thu Oct 10 19:03:05 1996, Gregg Powers , from Private Capital Management, Inc. , wrote:
With all due respect to the various consultants, journalists and journalist/consultants (you do work with Ericsson, don't you Bill?), I have some simple questions. Here goes.... Well over twenty spectrum operators, including 360 Communications, AirTouch, ALLTEL, Ameritech, BCTEL Mobility, Bell Atlantic NYNEX Mobile, GTE Mobilnet, Korea Telecom, PrimeCo, Sprint, US Cellular, US West and so on, have comm itted to CDMA technology despite the fact that GSM technology is commercially available and, apparently from a prima facia standpoint, the "safer" choice. Various pundits have hypothesized that these companies, their Boards, management, shareholders and creditors have committed to a path of self-destruction solely because Irwin Jacobs and Andy Viterbi have articulated a compelling fantasy. Huh? Bill, when you state aphoristically that a CDMA overlay at 800MHZ won't work, you are basically saying that Sam Ginn (chairman of AirTouch) is either deranged, incompetent, or holed-up in a cavern somewhere far removed from California's southern corrider (between San Diego and Los Angeles) where his company is rapidly deploying CDMA infrastructure. Are you suggesting that Sam is willing to financially devastate his company or to go to jail by misrepresenting the outcomes achieved so far in LA? Do you think that Sam expects the financial community, his banks or his Board to forget his bullish comments (not to mention the checks he has written) if the system simply doesn't work? Do you really believe that Sprint and PrimeCo considered CDMA an "unproven" or "unworkable" technology when they bet their respective companies on it? Are your suggesting that every management team, at every company that is currently deploying CDMA, has be seduced, in cult-like fashion, to Jacobs' promotional powers? Innuendo and techno-babble really do get old after awhile. Is Korea a myth or are there really 200,000+ subscribers on the KMT system? Hong Kong, Vancouver, Las Vegas, and on the 22th San Juan, are all available to provide empirial evidence. Naivete is a dangerous thing in the investment business (my field). While my formal training is in electrical engineering and biochemistry, I would consider myself first a student of people. Within that context, my firm has coinvested with Jacobs/Viterbi/White et al for almost four years--during this period we've enjoyed the "ups" and shared the "downs" without ever selling a single share of stock. Why? Because these gentleman have always demonstrated the highest degree of intellectual honesty, candor and concern for all stakeholders. It quite frankly burns my butt to hear Irwin characterized as a "promoter" -- nothing could be farther from the truth. He is certainly passionate, obviously brilliant, and clearly a visionary--but a promoter, no way. The good news is that over the next six months, we will all get a chance to find out who is right and who is full of baloney. I have an $75 million bet on what the outcome will be, so at least in my case, I've put my money where my mouth is.....
Response:
On Fri Oct 11 09:23:36 1996, Bill Frezza , from Network Computing , wrote:
To Mr. Gregg Powers - thank you for your impassioned post. Has Airtouch played the fool? Yes. As you said the results will be in soon and it will be so obvious that even the blind will understand. CDMA at 800 MHz can only be described as an unmitigated dis aster. Airtouch's "strategy" to migrate their highest volume users to CDMA on an invitation-only basis is a blatant coverup of this failure, aided and abetted by "analysts" that are committed to supporting the story. At some point, the line will be crossed between failure and fraud. Some say it has already been crossed. That will ultimately be up to a judge to decide. ------- Will CDMA "work" at 1900 MHz? Someday, yes. As you so aptly point out, there is too much money and too many careers invested to let it fail completely. Will it confer competitive advantage to the carriers that use it? No. Will these carriers lose money? Yes. Will their vendors lose money? Some of them will and some of them won't depending on how their deals are structured ----- Why don't we stop arguing about the "potential" of CDMA and its long list of celebrity endorses and start talking about reality? It has been over 6 months since CDMA was "launched" in the US. How many 800 MHz CDMA subscribers are there? Maybe 1,000? In six months of commercial operation the first US GSM system (APC) garnered 100,000 subscribers. This is in one city! ------ In six months, we will ask the same question about CDMA PCS subscribers. Primeco and Sprint have made some bold promises about 1996 launches. I can't wait to measure the results. Not the number of press releasese and media events where single phone calls are placed by prominent politicians, but actual results, meaning subscriber counts. ----- As for offering Korea as proof of the success of CDMA, I confess that I don't understand the Korean market as well as the US market. I do know that they are not the same and it is dangerous to draw conclusions without knowlegde of all the facts. Korea Inc. has bet the ranch on CDMA, which means there are many forces and factors propelling it forward. These forces will not exists here in the US. CDMA will have to make it in the face of bloody price wars and excess capacity. CDMA was invented to sol ve the opposite problem - insufficient capacity in an environment that could sustain high duopoly pricing. So, CDMA supporters, please, keep posting. We can archive all of this stuff and then roll it out again in six months. |
