Exclusive Focus Stock Report

Revised April 1, 2003

Global communications markets are now experiencing the greatest transformation since the invention of the telephone itself. Indeed, some experts say that we are in the initial stages of a revolution as significant as the Industrial Revolution. Around the world, the movement from government controlled monopolies to deregulation is ensuring that entrenched telephone monopolies are facing a fiercely competitive environment. The rapid growth of commerce on the Internet and the subsequent rise of data traffic means that new broadband networks capable of multimedia are being built to replace "voice-only" networks. Fiber-optic cables are being laid across the world’s oceans - as well land masses - while simultaneously low-Earth-orbit satellites are radically changing communications from on high.

Economist and technologist George Gilder, in Forbes ASAP, notes that the world is entering into an era of unlimited processing power and bandwidth (which is the ability of a network to carry information). Because of the growth of the Internet and consequent demand for greater and greater bandwidth there is now a frantic race to develop new technologies. Indeed, a technology to handle voice, data, audio and video is the "Holy Grail" of telecommunications. Already, it seems, the world is far more connected by means of the Internet than through voice.

The developing nations of the world bring a huge demand for telephone service because there is a strong correlation between such service and a nation’s gross national product. There are areas of the world that still have almost no telephone service. Most of the world badly needs but currently lacks data networks or the capability of broadband.

Is it any surprise that "bandwidth" is a buzzword in technology. Perhaps you have heard the expression "It’s bandwidth, stupid!" Experts predict that in 2003, there are as many wireless subscribers as those with a fixed wireline service. By 2004, the number of persons with wireline telephone service, mobile service and Internet users are each predicted to reach one billion. Already immense, the telecommunications and data communications market is still in its infancy. Communications play a key role in shaping our futures, where the ability to communicate anywhere and at any time will be taken for granted.

Thanks to the use of new technologies and advanced capabilities, wireless communication is becoming an essential element in telecommunications in both fixed location and mobile environments. Wireless has become cost efficient and reliable option. In wireline based communication, cable must cover the entire distance between all subscribers. In wireless, for all or a portion of that distance, the transmission of radio frequency signals may cost effectively replace expensive copper wire.

They spoke of the original telephones the same way. "It's easy enough to write a letter. What would we say, anyway?"

2G cell phones were greeted with great skepticism in the 1990s. "We've got good cell phones already. Why do we need those more expensive digital things?" It took awhile to realize that communication was much improved thanks to digital. And without digital, the 1G analog systems would have become hopelessly overcrowded years ago. City after city would have become frequency gridlocked.

Widespread 3G service will spread from Asia to Europe in 2004 and beyond. Business Week recently reported that in Spain, Telefonica Moviles as has already installed 750 Ericsson 3G base stations in 24 urban areas in preparation for an initiation of service in 2003. Test networks, Business Week says, are running in 24 European nations, with commercial 3G service likely to be launched by year end 2002 in Britain, Finland and Italy.

The U.S. and other countries of the world lag behind Asia and Europe because there have been competing 2G standards and slow-moving government and regulatory agencies. But the United States will see widespread 3G service beginning by 2005. In fact QUALCOMM's CDMA technology, which is theoretically 3G, even if some consider it to be 2.5G, may emerge strongly in 2004.