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CDG OFFERS COMPROMISE ON 3G, BUT NOT ON CHIP RATE

A group of cdmaOne operators are making another push to harmonize third-generation technology
and avoid a potential deadlock within the International Telecommunication Union over intellectual property
rights.

The CDMA Development Group last week released a proposal based on technical work done within U.S.
standards group Telecommunications Industry Association and Japan’s Association of Radio Industries and Businesses.
The proposal keeps the 3.68 Megachips-per-second rate today’s cdmaOne (Interim Standard 95 Code Division Multiple
Access) backers need to achieve backward compatibility with second-generation systems, but allows for flexibility for
other technical aspects that have become issues between wideband CDMA backers and cdma2000 advocates.

Perry
LaForge, executive director with the CDG, declined to name which operators are backing the new proposal because not
all members had seen it, but major cdmaOne carriers and vendors approve of the new deal, he said.

The CDMA
Development Group has pushed for convergence of cdma2000 technology-based on today’s cdmaOne networks-with
W-CDMA technology, a proposal incompatible with cdma2000 by virtue of a higher chip rate. Today’s Global System
for Mobile communications operators plan to evolve their systems to W-CDMA technology and have resisted efforts to
converge the two proposals.

Mainly, the chip rate is at issue, with W-CDMA proponents unwilling to move the chip
rate below 3.84 Mcps because of stated capacity reasons and cdma2000 backers saying investment in today’s cdmaOne
systems will be lost if the chip rate exceeds 3.68 Mcps. Political and technical issues continually stand in the way, say
industry experts.

The ITU, the international standards-setting body, wants to decide on a 3G standard by March, but
may be forced to stop work on any CDMA-based proposals because of unresolved IPR issues, though the standards
body has said it will look for a way to work around the matter. The ITU in December warned it could drop CDMA-
based proposals and only consider proposals based on Time Division Multiple Access technology if IPR issues were
not resolved by Dec. 31. That date passed without resolution.

Qualcomm Inc. and Sweden-based L.M. Ericsson are
holding up the process. Qualcomm said it will not grant patents it claims to hold to W-CDMA technology unless one
CDMA standard is achieved that accommodates both ANSI-41 networks used in North America and GSM MAP
networks. Ericsson has stated it holds patents essential to both W-CDMA and cdma2000 technologies and is not
prepared to offer licenses if another company refuses full reciprocity globally. It wants each country to be allowed to
choose which technology to deploy.

The CDG said it is willing to provide flexibility with technical issues such as
allowing multiple frame lengths, accommodating both asynchronous and synchronous base stations and allowing for
both direct sequence and multicarrier approaches. CDG operators are traveling to Asia to discuss the proposal with
carriers there. The CDG also plans to set up a 3G Summit to pull together operators and vendors to resolve the chip-rate
stalemate.

Vendors say operators in Europe and Asia-especially Japan’s NTT DoCoMo, which plans to launch the
first commercial W-CDMA system in 2001-are urging them to resolve the issue. But industry experts believe the chip-
rate issue will remain unresolved unless carriers make stronger demands with their vendors.

“The issue has
not been resolved because no one has become wounded yet,” said Jeffrey Schlesinger, analyst with Warburg
Dillon Read in New York. “No one has threatened to stop buying equipment unless convergence is
achieved.”

Ericsson offered its compromise in December, moving the chip rate from 4.096 Mcps to 3.84
Mcps. Ericsson told RCR in December it was unwilling to move the chip rate any lower than 3.84
Mcps.

“This is the last step. They can either accept it or reject it,” John Giere, vice president for public
affairs with Ericsson Inc. in New York, said in December.

Meanwhile, the European Telecommunications
Standards Institute in published reports indicated it would continue to push ahead with its W-CDMA proposal,
regardless of the ITU’s actions. LaForge said the CDG is concerned that U.S. standards organization committee T1, a
member of ETSI’s 3G Partnership Project, is involved in a process that wants to sidestep the ITU.

ETSI sent a letter
to the ITU in November, claiming it would look at harmonizing all CDMA-related 3G proposals, including cdma2000.
ETSI called for contributions from companies and regional standards bodies on the subject.

Vendors say ETSI has
resisted any attempts at converging the standards. The U.S. government is pushing Europe to allow multiple standards.

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