Investor Conference Call: Update on CDMA2000 1xEV...

Airvana Proprietary & Confidential1

LEHMAN BROTHERS

Investor Conference Call:

Update on CDMA2000 1xEV-DOFeaturing Airvana

Hosted by Lehman BrothersJuly 10, 2003


LEHMAN BROTHERS

Introduction: Investigating CDMA 1XEV-DO

• Today’s call examines the development of the CDMA2000 1XEV-DO high speed mobile data market– Continues our investigation of mobile wireless data markets – Follows our recent call on the development of the WLAN market

• CDMA 1XEV-DO appears poised to become an important new technology for the CDMA community– Carriers include Verizon Wireless and SK Telecom – CDMA vendor includes QUALCOMM, Lucent, Nortel, Motorola and Ericsson

• CDMA 1XEV-DO is developing traction in Korea, Japan, the U.S. and Latin America and is enabling a broad range of exciting new multimedia applications and services

• Featured speaker Randy Battat is President & CEO of Airvana, a high-profile start-up driving the development of this market


LEHMAN BROTHERS

Topics

• Airvana Overview• 1xEV-DO Market & Applications• Airvana Products• Future Direction


LEHMAN BROTHERS

Airvana Overview

• Product– Differentiated All-IP Radio Access Network– 1xEV-DO: Broadband, mobile, CDMA wireless standard

• Funding– $80M raised in three rounds– largest investment in 1xEV-DO

• Major Investors– Matrix Partners– Desh Deshpande– Qualcomm

• Key Partners– Qualcomm, Nortel, Ericsson


LEHMAN BROTHERS

Current Status

• Financial– Revenue: $5M in 2002; $20M-$30M in 2003– Expect to turn profitable by year-end

• Trials/Deployments To Date– 2 North America

• Verizon Wireless Commercial Launch Q3 ‘03

– 2 Latin America• Vesper Commercial Launch Q2 ‘03

– 4 Asia/Pacific• Asia Pacific Broadband Wireless Launch Q3 ‘03

– 1 EMEA


LEHMAN BROTHERS

1xEV-DO Market Overview


LEHMAN BROTHERS

How operators will migrate to 3G

CDMA

2G

GSM

2G

200 KHz

GSM GPRS

2G 2.5G

• Same spectrum• Same Cell Sites• Packet Data• Low Speed

Data Rate (kbps)

10 14

10 14

1

10

100

1000

10000

GS

MC

DM

A

TypicalPeak

1

45

171

GP

RS


LEHMAN BROTHERS


CDMA

2G

GSM

2G

200 KHz

GSM GPRS W-CDMA“UMTS”

2G 2.5G 3G


• New Spectrum• New Cell Sites• Higher Capacity Voice• Higher Speed Data

5 MHz

Data Rate (kbps)

10 14

10 14

1

10

100

1000

10000

GS

MC

DM

A

TypicalPeak

1

45

400171

2,000

GP

RS

WC

DM

A


LEHMAN BROTHERS


CDMA CDMA2000(1xRTT)

2G 3G

• Same spectrum• Same Cell Sites• 2x Voice Capacity • Higher Speed Data

1.25 MHz

GSM

2G

200 KHz

GSM GPRS W-CDMA“UMTS”

2G 2.5G 3G



5 MHz

Data Rate (kbps)

10 14

10 14

1

10

100

1000

10000

GS

MC

DM

A

TypicalPeak

153

307

CD

MA

2000

1

45

400171

2,000

GP

RS

WC

DM

A


LEHMAN BROTHERS


CDMA CDMA2000(1xRTT)

1xEV-DOData Rate (kbps)

10 14

10 14

1

10

100

1000

10000

GS

MC

DM

A

2G 3G

• Same spectrum• Same Cell Sites• 2x Voice Capacity • Higher Speed Data

• Same spectrum• Same Cell Sites• Broadband Data• Multimedia services

1.25 MHz

3G

GSM

2G

200 KHzTypicalPeak

153

750307

2,400

CD

MA

2000

1xE

V-D

O

1GSM GPRS W-CDMA“UMTS”

2G 2.5G 3G



5 MHz

45

400171

2,000

GP

RS

WC

DM

A


LEHMAN BROTHERS

Residential / SOHOBroadband

MobileProfessional

Mobile Consumer

• Cell Phone or Home Modem is used to connect to PC via USB

• Application: Broadband Internet Access for Residential and Small Business Users

• Service deployed without a “truck-roll” just like a Cell Phone Service

• Cell Phone or PC Card is Used as a Modem for Laptops and PDA

• Application: Email, Internet Access, Corporate Intranet Access, VPN

• No change required to the Application

• Multimedia Content to Cell Phone

• Application:Pictures, News, Information, Entertainment

Applications: 3 Market Segments


LEHMAN BROTHERS

1xEV-DO Devices Currently Available

Source: QUALCOMM Annual Meeting of Stockholders, 2/11/2003


LEHMAN BROTHERS

Asia/Pacific

• Korea: SKT and KTF posting impressive subscriber and ARPU numbers


LEHMAN BROTHERS


LEHMAN BROTHERS

Asia/Pacific

• Korea: SKT and KTF posting impressive subscriber and ARPU numbers

• KDDI will launch 1xEV-DO in Q4 ’03– Covering 60% of Japanese population at launch, 90%

within a year

• Asia Pacific Broadband Wireless (Taiwan) will launch commercial service in Q3 ‘03

• China Unicom launching several trials• Additional planning underway driven by Korea

success and threat of WCDMA by Hutchison


LEHMAN BROTHERS

North America

• Verizon Wireless to launch commercial service in San Diego and Washington, DC in Q3– Expect broader deployment in 2004

• Most large CDMA operators are either have trials in place or are planning them

• Alaska Communications Systems successful fixed-wireless trial

• Target applications– Mobile business professional laptop PC access– Residential broadband– Broadband content delivered to handsets: sports, news,

stocks, weather, entertainment, games, …


LEHMAN BROTHERS

Latin America

• Vesper launched service in March– Fixed business/residential broadband service

• rate-limited to 300 kbps

– Very positive reaction from users• >70% conversion success rate converting free

subscribers to paid subscribers

• Brazil Telecom launched 1xEV-Trial and roaming agreement with Vesper

• BellSouth International launches several 1xEV-DO technology & market trials across the region


LEHMAN BROTHERS

Products


LEHMAN BROTHERS

Airvana’s 1xEV-DO System

IPNetwork

IPNetwork

Element Management System

AAA ServerAirvana RN-8000

R-P Interface

Airvana Channel Card

PDSN

Radio NetworkController

Benefits of an ALL-IP Radio Network:• Enhanced Revenue with Differentiated Services• Better Reliability & System Availability• Lower Deployment and Operating Costs• Leaves Legacy Voice Network Alone


LEHMAN BROTHERS

Nortel Channel Card


LEHMAN BROTHERS

Ericsson Channel Card


LEHMAN BROTHERS

Benefits of All-IP Architecture

• Increased revenues– Quality of Service prioritizes traffic to most profitable users– Multiple service offerings from a single network: fixed or mobile,

broadband PC or phone, Internet access, push-to-talk

• Lower operating costs– IP backhaul gives operators choice– Fewer central offices– Web-based provisioning

• Increased system reliability & maintainability– Routed network structure– Web-based management system– Redundant/load-balanced system elements with hot-swap– On-site flash for multiple SW copies, statistics collection…


LEHMAN BROTHERS

Future Direction


LEHMAN BROTHERS

User-Level Quality of Service

• Users assigned to classes of service (e.g. gold, silver, …) with network performance tuned for each service class

• Business impact:– Prioritizing more profitable customers (e.g. corporate enterprise– Tuning network traffic by market segment (e.g. PC Internet access

versus handset applications)– Pricing by market segment


LEHMAN BROTHERS

IP Broadcast

• Single transmission →Multiple receivers– Network utilization

scales with content, not subscribers

• Selectable data rates: 38.4 – 614.4 kbps

• New services– News, music, video/TV

distribution, sports, advertising,….

– Supports TV-like logical channels


LEHMAN BROTHERS

1xEV-DO Release A• Reverse Link

– Very High Peak Data Rates: 153.6 → 1.2 Mbps– Significantly Higher Sector Throughput

• 350 → 550 kbps (Hybrid ARQ + Enhanced MAC)

• 550 → 900 kbps (4-way diversity)

• Forward Link– Higher Peak Rate: 2.5 Mbps → 3 Mbps– 30% Higher Sector Throughput

• Support for short packets• Lower latency• Faster sleep-time interval• Tighter 1x/1xEV-DO interoperability


LEHMAN BROTHERS

Outlook: CDMA Applications & Services

Telephony Telephony

WebContent

NotebookPC Access

CameraPhone

Telephony

WebContent

NotebookPC Access

CameraPhone

Push-To-Talk

Push-To-Talk

FixedBroadband

VideoOn Demand

Telephony

WebContent

NotebookPC Access

CameraPhone

Push-To-Talk

FixedBroadband

VideoOn Demand

MultimediaMessaging

BroadcastVideo

On-LineGamingIS-95

1xRTT

1xEV-DO

Legend

Telephony

WebContent

NotebookPC Access

CameraPhone

Push-To-Talk

FixedBroadband

VideoOn Demand

MultimediaMessaging

BroadcastVideo

On-LineGaming


LEHMAN BROTHERS

Wireless Equipment Industry Restructures

IntegratedWireless

EquipmentCompany

Late ’80s

Chips

Late ’90s

Handsets

Infrastructure

Chips

Early ’00s

Handsets

Infrastructure

Applications

Power Amps

Deploy Svcs

Servers

Chips

Late ’00s

Handsets

Infrastructure

Applications

Power Amps

Deploy Svcs

Servers

NetworkSoftware


LEHMAN BROTHERS

Summary

• 1xEV-DO: a standard to spark wireless data growth– Clear value proposition: Broadband Internet Access– Low barriers to deployment, complements voice network– Market traction with commercial launches under way– Continuous improvement with new services and features being

standardized

• All-IP technology:– New services to grow revenue, lower operational cost– Significant carrier-class data networking experience

• Airvana– Close partnerships with large equipment suppliers

• Nortel, Ericsson– Products in commercial deployment today– The leader in an emerging segment of the wireless industry

Investor Conference Call: Update on CDMA2000 1xEV...

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