Analysis of Refurbished and BrandNEW FWT Product Table

Analysis of Refurbished and Brand-NEW FWT Product Table of Contents 1. Comparison and Analysis of FWT 2. LCC Analysis 3. Attachment - Replacement Cycle of FWT - Reliability Prediction Standard 4. Example of Design 5. Conclusion LG 전자 LG전자 Vo. Ex

The comparison of Refurbished Chipset versus New FWT Life Cycle Refurbished FWT Brand-new FWT • Short life cycle ØAverage life cycle of Refurbished FWT is normally presumed to be 6 to 12 months. But, as the electronics have already been used over 25 months, • Long life cycle ▷Average optimum life cycle of new FWT is presumed to be 18 months (Standardizing field fault rate) ▷Telcodia Standard : MTBF over 60 K hours (The above standard doesn’t include fault rate of soldering, PCB and cable sealing) Ø terminal is already 7 months more than optimum life. Maintenance Design Cost • Hard to repair and guarantee Ø Impossible to repair in case of soldering inferiority Ø Hard to repair or owing to using glue to connect parts Ø Hard to find the exact repairing point owing to many types of PCB, Hard to stock repair parts ØOld Chipset, NON Qualcomm Chipset, Refurbished Chipset ØAnd after 1 year, its’ M&A cost is three-fold compared to the new FWT • Easy to repair with full guarantee ØEasy to stock repair parts • rely on existing repair parts owing to using second-handed PCB. No new repair parts are available for repairing • Poor RSSI owing to using SMA type Antenna • Will not pass Drop testing • Ideally designed for ‘Derating’ and ‘Redundancy’ not to lower function and performance by environmental element considering safety and performance • Low $30 s-$40 s • Middle or High $65 -$85 ØTrouble shooting guide provided ØScalable to Data upgrades ØQualcomm MSM 5105 or MSM 6025 ØQualcomm MSM 6500 • Full RSSI by using TNC type Antenna or external patch Antenna. ü Derating : Designing materials to use under the rated stress level ü Redundancy : Keeping the high reliability by duplicating mid-material or sub-system as a parallel system ü LCC : LCC which stands for ‘Life Cycle Cost’ analyze cost considering maintenance and administration cost as well as purchasing cost ü FWT : Fixed Wireless terminals (WLL : Wireless Local Loop) LG전자 Vo. Ex

LCC Analysis Cost M & A Cost of Republished FWT Total cost of Refurbished FWT Cost Total cost of new FWT Total Cost M & A Cost of new FWT M & A Cost Initial Investment Cost The optimum economic life 18 months Year 25 months 32 months • The optimum life cycle of new FWT is presumed about • Refurbished FWT are the one which has been normally used over 25 months, which is 7 months more than the optimum economic life. Therefore, it needs more M&A cost than the new FWT. And after 1 year, its’ M&A cost is three-fold compared to the new FWT 18 months. The maintenance and administration cost gradually goes up after 18 months and dramatically increase after 36 months. ▷The optimum life cycle is drawn up according to field defect ▷The above M&A cost are calculated on the base of 25 rate. ▷Maintenance and Administration Costs are calculated by 12%-24% months after use. If A/S is impossible, the M & A cost grows in an arithmetical progression increase rate year ▷Depreciation of FWT is calculated by 12% - 36% decrease rate per year LG전자 Vo. Ex

Attachment 1 Possession rate The FWT replacement cycle of Korea • Source : Green Consumers Network • Source : Dec, 2003 through Dec, 2007 • Conclusion : Over 60% of customers use FWT more than 2 years • Main reason of replacement ▷Over 80% is loss and Break-down of FWT Month The FWT replacement cycle of each country • Source : Domestic LG economic research institute Overseas Data Quest • Date : March, 2006 • Conclusion : The FWT average replacement cycle of each country is over 25 months LG전자 Vo. Ex

Attachment 2 Trend of reliability evaluation technology Developing Speed of Electronic Industry Reliability Evaluation Technology in Private Section PRISM HRD 5 CNET 93 Reliability Evaluation Technology in Military Section 1990’s ü Established by AT&T Bell research institute ü Defined by the number of defect per 1 billion hours ü Special Management for initial defect rate • PRISM ü Made by the dept of Defense of US together with RAC(Reliability Analysis Center) on the basis of MIL standard ü Defined by the number of defect per one million hours ü Defined by the defect rate in the normal status PRISM MIL-HDBK 217 Steady-State Period hour 4 private section is Telcodia, PRISM, HRD 5, CNET 93 • Telcodia Bellcore, Telcodia 10 hours industry, that of Private Section has been used more commonly * Typical standard for Reliability Evaluation Technology in the hour Wear In Period section couldn’t keep up with developing speed of electronic after 1990’s up to now. MIL-HDBK-217 1980’s been used as a standard of Reliability Prediction since early 1980’s. However, since Evaluation technology of Military Bellcore appearance Defect rate * Reliability Evaluation Technology of Military section has 6 10 hours 9 • UK : HRD 5 enactment • France : CNET 93 enactment 10 hours LG전자 Vo. Ex

Refurbished FWT (Made in China or Korea) Inside of Refurbished FWT (Key PCB) (Main PCB) LG전자 Vo. Ex

Brand-new FWT Inside of Brand-new FWT (Top side) (Main & Key PCB) LG전자 Vo. Ex

Conclusion ● Weak point of using Refurbished FWT 1) Hard to repair or A/S owing to using glue to connect parts ( Refer to the pictures in Page 6) 2) Hard to believe the quality owing to using second-handed CDMA MODEM or old PCB from second handed handset. Failure rate average of 35%. 3) Poor RSSI owing to using SMA type Antenna. 4) Potential problem on drop test calls. 5) After a year of use, Brand image of operator might be ruined because of incessant complaints about inferiority of Refurbished FWTs and A/S from end-users (Example : Indonesia, South America, etc) ● Strong point of using Brand-new FWT 1) Easy to repair by using Connector to connect parts and components. (Refer to the pictures in Page 7) 2) Easy to guarantee the quality by using brand-new single type board. 3) Full RSSI by using TNC type Antenna or external patch Antenna. 4) Passed drop test. ● Therefore, it is strongly suggested that every single operator to use brand-new FWTs instead of refurbished FWTs in the long-term business regard. LG전자 Vo. Ex