Technology Forum April Mark Kelley CTO, Leap. March 2001 p 2

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2 Technology Forum April Mark Kelley CTO, Leap March 2001 p 2

3 Safe Harbor Statement Before we proceed, we would like to point out that the following presentations will contain forwardlooking statements from industry analysts, consultants, Leap and others that inherently involve risks and uncertainties. Factors that could cause actual results to differ include, but are not limited to: Changes in economic conditions which could adversely affect the market for wireless services The ability of Leap Wireless or its operating companies to access capital markets Leap s ability to roll-out networks according to its plans Failure of the systems to perform according to expectations The acceptance of the product offering by the Company s targeted customers and the ability to retain these customers Competitive pressures which could affect subscriber growth rates, revenues and the ability of the Company to maintain its cost, market penetration and pricing structures Uncertainties relating to negotiating and executing definitive agreements and the closing of transactions described herein as well as other factors detailed in the Company's Transition Report on Form 10K for the transition period from September 30, 1999 to December 31, 1999 and other SEC filings. Forward looking statements which are based on certain assumptions and describe future plans, strategies and expectations of the Company, are generally identifiable by use of the words believe, expect, intend, plan, anticipate, estimate, project, aim or similar expressions. The forward looking statement are based on current information which Leap has assessed but which by its nature is dynamic and subject to rapid and even abrupt changes. We encourage you to consult these filings for a more complete understanding of these risks and uncertainties. March 2001 p 3

4 Technology Agenda Leap Wireless Backgrounder Importance of Technology to Carrier Business Brief History of CDMA in CMRS Key Technology Developments March 2001 p 4

5 Leap Changing Wireless for consumers

6 Leap s Strategy Identify under served markets - segment focused Focus heavily on costs - be a value leader Concern for customers is key to success - always listen to them and service their needs March 2001 p 6

7 Wireless Local Network Cricket Typical Wireless Where you live, work and play March 2001 p 7

8 dot com speak: 1999 we work in the new paradigm space 2000 we need to monetize our service

9 Carrier Focus The key 3 elements: Customers Employees Shareholders Growth and profit ARPU Cost Churn March 2001 p 9

10 CDMA It took courage

11 Multiple Access Methods FDMA TDMA CDMA March 2001 p 11

12 Nobody got fired for buying IBM But these carriers showed courage Korean Operators/Vendors Canadian Carriers BCTel/Bell Mobility DDI/IDO (KDDI) US Carriers PacTel Cellular/Nynex/BellAtlantic/Ameritech/USWest/Sprint/PriimeCo Australia/New Zealand Telstra Latin America Now we have two dominant worldwide standards Engineers focusing on technology must understand big picture And have courage to keep advocating technology to management March 2001 p 12

13 Wireless around the World

14 Voice Capacity Comparison Maximum subs using 5 MHz Amps GSM TDMA CDMA (95) CDMA (00) CDMA 1X Technology Comparison - 5 MHz used with 3 Sector cells Channel Calls per Frequency Erlangs/sector Subs/cell site Technology Bandwidth(MHz) Channel Reuse per 5 MHz (50 me/sub) AMPS TDMA GSM CDMA 95A CDMA 95A/EVRC CDMA 1X (3G) March 2001 p 14

15 Mobility is the KILLER APP

16 Going Mobile Wireless revenue estimated to increase from $19B in 1995 to nearly $60B in 2010 Billions $US Wireless Revenues 10 Source IEC Telecom Outlook Report March 2001 p 16

17 The Wireless Internet Or Using your device for something other than a phone call

18 Wireless Data Success: Japan i-mode NTT DoCoMo s wireless data service went from 0-3 million subs in 1 year, close to 20 Million today 500+ different content providers, different web sites $3/month to sign up, very cheap services: Charged by the bit transferred $0.03 for a recipe, $0.09/day to download cartoon characters, $0.30/month for photo ID Good Business $13/month incremental revenue (16% of ARPU) Technology 9.6 kbps over PDC-P network Moving to 28 kbps Packet data adapted to PDC TDMA network HTML light, not WAP March 2001 p 18

19 i-mode niche time March 2001 p 19

20 Images from 21 st Century devices March 2001 p 20

21 Keep it simple for the customer

22 New Technology Will Customize Experience Requests Behavior Preferences Automated Voice response system jfjfjjf Enhanced Mobile formats and platforms: WML/HTML/other March 2001 p 22

23 When Does More Spectrum Not Equal More CAPACITY?

24 Spectrum Needs Conventional Wisdom US Spectrum Drought Absence of spectrum will prevent 3G services First-mover advantage in 3G will go to Asia and Europe 3G will need at least 160 MHz of dedicated spectrum (as much as 230 MHz was also contemplated) - WRC Without more spectrum, the US will lose its technological edge to countries such as the U.K, France, Germany and even Argentina (CTIA) Is the conventional wisdom correct? March 2001 p 24

25 Data Capacity Growing Data capacity growth CDMA technology path on data speed increases similar to voice Mbits/hour/FA/Sector A 1XRTT 1XEV Video Customers/sector/FA A 1XRTT 1XEV Future video customers downloading two 3 min video clips during the busy hour per day March 2001 p 25

26 Data Application Needs Thin Apps SMS/text pull 1 phone call is like 1500 SMS messages Mbits per each use Thin data applications Phone browser SMS Voice "data" use Voice apps 0.5 Mbits/call mbits per each use Voice Viper Heavy apps Net Radio and MP3 downloads are 20 kbps Video steaming will likely be 30 kbps Mbits per each use High bandwidth Applications Video Streaming Net Radio/MP3 March 2001 p 26

27 But, the fact is There is PLENTY of capacity But only with efficient technology and deployments! Before cell-splitting, CDMA carriers have sufficient capacity with as little as 10 MHz to have 20% market penetration using 1999 Technology When technology improvements are included, this nearly doubles, and will exceed 50% with 1XRTT in 2001 CDMA Carriers' Voice Capacity % % March 2001 p 27 Penetration % % 50.00% 0.00% baseline 6 sector 1XRTT Technology 10 MHz 15 MHz 30 MHz

28 Population Density Higher population density requires more spectrum Cell size hard to control Cell splitting much more difficult Population density (People/square mile) Japan UK Germany US Countries with higher average population density will necessarily require more spectrum to offer equivalent service March 2001 p 28

29 Vocoder Evolution 93 QCELP 8K 95 QCELP 13K 98 EVRC (8K) 02 SMV Vocoder technology has provided enhanced performance Originally the goal was AMPS quality (10X capacity) Later, Higher fidelity (13K) was traded for capacity Followed by EVRC - best of both worlds 10X and high MOS Finally, SMV allows both highest fidelity, or, highest capacity March 2001 p 29

30 Smart Antennas Advanced Antenna technology permits even higher capacity, and will rollout in two stages Stage 1: after market products After market product shapes 3 sectors to best match load in cell site footprint Already demonstrated in TDMA and CDMA Provides 25% - 50% increase in capacity Stage 2: Beam Forming Arrays Potential of %+ localized capacity increases via beamforming Stage 3: Other spatial techniques March 2001 p 30

31 cdmaone Technology Roadmap K QCELP, 9 E/S 1H 2000 EVRC, 17 W pa,17 E/S 2H % FER, 18.2 E/S 2001 cdma2000, 29 E/S 2002 SM Vocoder, 43 E/S 2003 Smart antenna, 85 E/S (normalized to 3 sector) March 2001 p 31 Erlangs Airlink Capacity Growth Technology improvements permit high use voice and mobile data applications

32 Is There A Spectrum Shortage? Conventional Wisdom requires re-examination There is no lack of spectrum, only a lack of spectral efficiency (Martin Cooper CEO, ArrayComm) Efficient spectrum use allows more services for more people US - Lower population density Need for more spectrum not severe as in Europe and Asia Only New York City and selected parts of other cities compare with situation overseas Technology differences in capacity Dramatic difference of over 20X from first generation New technology continuing to increase capacity, speed March 2001 p 32

33 What Does The Future Hold?

34 Bluetooth and Ericsson, IBM, Intel, Nokia, and Toshiba originally created this wireless short range technology in mw transmit power, 1 MB/s data rate, 2.4 GHz carrier frequency (ISM band) While just about to become available, recent setbacks: Microsoft will not support next year Recent trade show debacle = WiFi 11 Mbps, higher power direct spread technology Explosive growth via IT areas in business, university campuses Bottom Line: Cheap, Fast and easy to install March 2001 p 34

35 Campus of the Future Off-Campus HDR for Data PCS for Voice Dorms Air Fiber OC-12 Internet Backbone WLAN Educational Facilities Library Faculty March 2001 p 35

36 Voice Services Voice based services will to grow into a sizeable market Allows eye-free access to information enabling mobility to continue VAD, Voic , Voice Portals, Today handset and network based Tomorrow hybrid end-to-end detection Providers: BeVocal, TellMe, Webley, General Magic, Wildfire Technology from: Nuance, Speechworks, others March 2001 p 36

37 Location Technology E911 requirements in US time line By 12/31/2001, 25% of handsets enabled By 6/1/2002, 50% of handsets By 12/31/2002, 100 % Phase 2 requirements Network based systems must be within 100 meters 67% of the time, 300 m 95% of the time Results show meters Handset based systems must be within 50 meters 67% of the time, and 150 meters 95% of the time Results show meters PROBLEM most handset vendors will have no handset based solution until 1Q 2002! March 2001 p 37

38 Conclusions cdmaone migration to cdma2000 is worlds smoothest path to 3G Technology advances will add more value through capacity Key to success technical evolution knowledge matched with business courage March 2001 p 38

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