Wireless operators around the globe are launching or preparing to launch packet data services over mobile networks.

Deploying packet data is a cost-effective way for mobile carriers to balance the network resources required to sufficiently meet the needs of the growing market for voice services and the potentially large mobile data market. The path to high-speed packet data differs greatly, however, between GSM and cdmaOne networks. GSM operators require a new data backbone, base station upgrades and new handsets to offer packet data services. Packet data in cdmaOne networks is standard and was built into the IS-95 standard from its inception. All cdmaOne handsets and base stations are packet data capable today, and the networks utilize standard Internet protocol (IP) based equipment. GSM is circuit- based, requiring a new packet data backbone and new handsets, the commercial launch of which has been delayed until early 2001. In order to take advantage of higher speed packet data, the GSM and cdmaOne upgrade paths include higher speed handsets, which will be commercially available within the next 12 to 18 months. The next major upgrade for GSM is GPRS, which is 2.5G, while the next major upgrade for cdmaOne is 1X, which is 3G. We will examine some of the critical factors affecting an operator's ability to migrate to higher speed services and to implement a packet backbone. One of the most critical factors is the forward and backward compatibility of the handsets--the capability of an older handset to operate on an upgraded network and the capability of a newer handset to operate on an older network. The commercial availability of the packet capable handsets is the second crucial factor. The Second factor is the cost and ease of integration of the packet data network and the ability for third parties to implement services on these data backbones to offer high-speed Internet services.

Defining the market Currently, mobile data rates are low on both GSM at 9.6 kbps with Circuit Switched Data and cdmaOne 95A networks at 14.4 kbps in either circuit or packet switched modes. These speeds are far lower than those available to a typical user of a PSTN wire-line network. However, we are now entering a period that will see new and faster non-voice mobile services. For example, anticipating an increased demand for data services, Korean and Japanese operators SK Telecom, Hansol, DDI and IDO have already implemented commercial cdmaOne 95B packet data at speeds of 64 kbps.

Packet data Equipment requirements

GSM CSD (Circuit Switched Data)

GPRS (General PacketRadio Service) New handsets GPRS-- enabled handsets will work on GPRS enabled networks and 9.6Kbps on GSM networks using CSDDual Mode phones New packet overlay/ backbone needed for

EDGE (Enhanced Data rates for GSM Evolution) New handsets EDGE-- handsets will work at up to 384Kbps on EDGE enabled networks on GPRS enabled networks and 9.6Kbps on GSM networks using CSD-Tri-Mode phones Further backbone modifications required

IMT-2000 CDMADirect Spread (CDMA DS) New handsets CDMA DS handsets will work at up to 2Mbps and only on 3G networks-Quad-Mode phones New infrastructure roll out with existing

Handset

No packet data capability -SingleMode phones

Infrastructure

No packet data capability

circuit switched network Technology Platform Current GSM TDMATechnology GSM TDMA platform with additional packet overlay Modulation changes required to GSM TDMA platform

interconnect New CDMA infrastructure

The GSM data evolution path will always require new network infrastructure and new phones. Every one of the future GSM data services from GPRS to EDGE to WCDMA (and High Speed Circuit Switched Data and Wireless Application Protocol) requires the purchase of a new mobile phone to take full advantage of the enhanced functionality, but all handsets will still be able to operate on the GSM network, allowing voice and CSD at 9.6Kbps. The GSM roadmap for handsets is not forward and backward compatible. This means that GPRS handsets will not work on EDGE or 3G CDMA DS base stations. A GSM carrier must make new investments in base stations for GPRS, EDGE and 3G CDMA DS, while the packet backbone may only need minor modifications after deploying GPRS. GSM also requires the implementation of IP based network elements to allow a packet overlay onto a circuit switched network. The links between the existing GSM network infrastructure entities and the IP backbone are comprised of proprietary hardware such as the Gateway GPRS Service Nodes (GGSNs) that link the Internet to the IP backbone. These are MODIFIED IP routers. Using standard IP routers would have given network operators and corporate customers vendor choice, interoperability, economies of scale with existing purchasing patterns and the like. The biggest issue with GGSNs is that new pieces of equipment raise security concerns with IT departments. This can hinder the deployment of a mobile data application due to the need for integration and testing. Since network operators are interested in the data traffic, this barrier to the sale presents a challenge for the corporate work force. Discussions with suppliers of both standard IP routers and GGSNs have indicated that a GGSN will typically cost three to four times more than the equivalent IP router, presenting another sales barrier. Network operators are likely to subsidize the GGSN element- perhaps even giving it away free of charge with a minimum number of GPRS phone sales. The use of the proprietary GGSNs in the GPRS solution also has other cost implications for network operators and third party developers. GGSNs will not realize the same economies of scale of the Internet network elements that the cdmaOne solution does. Corporations all over the world are implementing standard routers in their corporate landline Intranets and for standard Internet access. IT departments are building knowledge and skills with standard IP network equipment. The addition of a new version of a router -GGSNs-- will require IT employees to learn new non-standard router configurations specific to each GGSN vendor. We believe that this will hinder the implementation of GPRS in corporate environments. The cdmaOne packet data implementation, on the other hand, utilizes standard routers, which are the same ones used in the landline Internet. The same IT professionals working on a corporate landline Intranet could transfer the same skills to a mobile Intranet based on cdmaOne. This will result in greater revenues for operators and lower costs for corporations. Operators will not need to be integral in developing every application that is used on its network, and corporations will require fewer resources to develop applications.

GPRS will also eventually require Mobile IP in order to offer full mobility within the Internet. Without Mobile IP, the GPRS network will not be able to identify a node such as a portable computer that has a standard IP address. For example, GPRS subscribers with portable computers will not be able to log into a corporate network using GPRS alone. The GPRS network will require Mobile IP to allow the corporate network to authenticate the IP address of the portable computer. Since Mobile IP requires more network resources, this may lead to a reduction in the volume of data available on each packet as the transport layer information increases. The implication is that GPRS networks will be less efficient than cdmaOne networks. cdmaOne uses Mobile IP as its transport layer.

Packet Data Equipment requirements

95A

95B

IMT-2000 CDMAMulticarrier 1X(MC 1X) 1X standard in chipsets in 2001 1X handsets will work on 95A networks at 14.4Kbps, 95B Networks at speeds up to 114 Kbps and 1X and 3X networks at speeds up to 307Kbps-Single-Mode phone

IMT-2000 CDMAMulti-carrier 3X(MC 3X) New handsets 3X handsets will work on 95A networks at 14.4Kbps, 95B networks at speeds up to 114Kbps and 1X networks at speeds up to 307 Kbps and 3X networks at 2Mbps-Single-Mode phone

Handset

Standard inchipsets Standard 1999 95A handsets will 95B handsets will work work on all future on 95A networks at networks: 95B, 1X 14.4Kbps and 95B, 1X and 3Xat 14.4Kbps- and 3X systems at Single-Mode phone speeds up to 114 * Kbps-Single-Mode phone Standard CDMA New software in BSC (Base Station Controller) CDMA

Infrastructure Technology Platform

1X requires new software in Backbone modificationsNew backbone and new channel channel cards at base stations cards at base station CDMA CDMA

cdmaOne is based on IP standards, giving it an inherent advantage over GPRS. Current cdmaOne phones have the standard IP protocols built into the handset, and cdmaOne networks use IP addressing within the network without the need for an additional IP layer being added to the packet transport layer. This allows for a high degree of backward and forward hardware compatibility for network operators looking to implement new higher speed data services and evolve to 3G, which is an IP-based standard. Today's cdmaOne networks already incorporate an IP gateway referred to as the Inter-Working Function (IWF). This is essentially a standard IP router built into the network, routing IP packets without the need for them to be handled by an analog modem. The IWF receives information from the mobile phone in Point to Point Protocol (PPP) format and assigns a temporary IP address for that session. Experts estimate the cost for rolling out a full network upgrade for 45 million POPS from GSM to GPRS is about US $125 million. Adding packet data to a CDMA network is far less expensive: less than $5 million dollars. cdmaOne phones and base stations already have IP protocols built in. Having the IP gateway as a standard feature NOW therefore represents a significant advantage to cdmaOne network operators. The cdmaOne configuration is based on existing corporate infrastructure standards. Certain network infrastructure manufacturers have stated that their new cdmaOne infrastructure allows the incorporation of ANY standard router from any manufacturer into the IWF. A standard RADIUS server undertakes billing information and authentication in the network, and messaging is handled using SMTP.

Integrating high speed cdmaOne data in a corporate network will be much easier than with GPRS, as the infrastructure of cdmaOne is based on what is considered to be standard corporate infrastructure components. Since there is backward and forward compatibility in the cdmaOne handsets, any handset can operate on any cdmaOne network, (assuming the same frequency or the use of multi-band phones) of that cdmaOne network (95A, 95B or 1X) at the highest available speed possible by both the handset and network. For example, 1X handset will be capable of 14.4 Kbps on a 95A network and 64 Kbps on a 95B network. A 95A handset will operate on a 95A, 95B or a 1X network, but only at 14.4Kbps.

* Across the raw air link; assumes 8 concatenated channels. With GPRS, the figures also assume no error correction on data transferred. ^ Indicates initial/ current support (4 slots for GPRS) " The typical data rate available to an individual user We can see from this analysis that the maximum theoretical speeds available over GPRS are in fact higher than 95B but less than 1x-but in initial commercial implementations we expect 95B to outperform GPRS. KT Freetel, and Hansol in Korea, commercially launched 95B in 1999 while DDI and IDO of Japan launched commercial service in 2000. Several, but not all, of the GPRS network infrastructure vendors are planning to support the maximum eight channels in their technical implementations. GPRS has a disadvantage in that the initial GPRS capable mobile terminals are expected to support only a maximum of four simultaneous channels. GPRS and voice both use the same traffic channels, meaning that that both voice and data are competing for the same resource. Network operators, wherever they are in the world, are reluctant to dedicate channels or assign priority to data over voice. Because of real world limitations the typical bandwidth available to a GPRS user is expected to be less than 30 kbps, similar to the wire-line data transfer rates in 1999 and below today's 95B. EDGE has a maximum theoretical data rate of 384 kbps, but EDGE works in a similar way to GPRS in that this would require all 8 timeslots-which is unlikely-- to be available to a single user who would also need to be given priority over voice. As such, the theoretical maximum is once again an irrelevant figure to an end user. We expect uses to get 114 kbps data rates. We estimate that CDMA 1X will allow approximately 90% throughput of the implemented bandwidth to the application layer and therefore offers a typical user rate of 130 kbps, five times the typical data rate available to a GPRS user. It should be noted that the144 kbps rate is symmetrical. Summary

From this analysis, we can see that the packet data design that is standardized in the network and handsets of the cdmaOne standards technology facilitates easier and therefore less expensive packet data implementation than GPRS from a network operator, handset, application developer and corporation's point of view. All cdmaOne handsets are packet data capable and work on all implementations of cdmaOne networks. Phones do however remain a significant barrier to the widespread uptake of higher speed data services on both GSM and CDMA networks. Any network operator who is facing the decision of which network to buy should consider the upgrade paths of each network. GSM networks were not designed for packet data-- a GPRS upgrade adds this capability but at a higher cost than cdmaOne. Also, the GPRS network is not based on standard IP network elements, which will result in a more complicated integration than the cdmaOne packet data solution that was designed with standard IP in the handsets and with standard IP elements in the network. These standard elements will follow the cost curves of the Internet network elements. Additionally, GPRS and EDGE dedicate network resources to data taking capacity away from the GSM voice network which could cause network congestion. CDMA is a voice and data solution where voice and data share the same resources. 1x also increases data speeds to 144 kbps and doubles the voice capacity of current cdmaOne systems By incorporating standard IP protocols and network IP routing, cdmaOne sensibly maximizes the leverage it gains from the considerable economies of scale conferred by the Internet. This will allow cdmaOne carriers to offer the equivalent Internet services as GPRS and EDGE operators with a lower overall investment in equipment and human resources and without decreasing voice capacity. Network operators will more readily find the skills to integrate equipment and develop services because the same IP elements are used on the landline Internet.