Hardware-wise relatively few parts are actually required. The critical ones in the Bill of Materials (BOM) include:

• receive path IC
• transmit path IC
• RF baseband
• DSP (for signal processing)
• Crystal Oscillator (to provide a very accurate frequency timing reference)
• GPS receiver (for location to ensure permitted use and emergency location information)
• ADSL modem (although some functions can be offloaded to the DSP)

Whilst the end-user price of the equipment may be as low as $50 (or even free – Sprint have been giving these away during their initial commercial launch), this is due to subsidy by the operator.

Typical volume pricing is thought to be in the region of $200-250 at the moment, with a target of sub-$100 in the next 2 years for high volume. Achieving this goal of low equipment price depends on several factors:

• Volume. The incremental cost of individual chip production is very low compared to the one-off design and setup costs.
• Common requirements. Operators need to agree on common features so that vendors have to compete more on price. Examples of divergence seen already including max transmit power (and thus range) and max data rate (uplink and downlink).
• Solving the timing problem, so that expensive crystal oscillators are not needed

Indicative pricing for million piece quantities: $12-15 for RF/IF chipset (RF, IF and PA) $40-50 for baseband.

There are considerable efforts to reduce the need for highest quality crystals by using long term correction/clock sync from the network. Standards are emerging, such as IEEE 1522 which operate across packet networks and allow lower cost crystals to be corrected over a longer period of time.

Reduction of Opex costs is based on initiatives such as zero-touch installation and management of the devices, using standards such as TR-069.

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