$5.2 Million Mobile Phone Contract

US : Calypso Wireless who is making the real-time video cellular phones of the future, announced that it has signed a $5.2 million contract with C.G.E. Distributors Corp, a distributor of mobile phones, for the delivery of Calypso's cellular broadband real time video phones, WLAN Access Point and networks software products. On the agreement the customer has agreed to deliver an initial down payment of $2.4 million.

These phones will incorporate Calypso's proprietary ASNAPTM technology, which operates on either the wide area network (WAN) using existing GSM/GPRS or CDMA networks or the wireless local area networks (WLAN) such as Wi-Fi incorporating the 802.11 standard. The phones will have the ability to deliver two-way real time video conferencing when connected to a Wi-Fi access point. Calypso Wireless Inc. is currently pursuing additional contracts with major global carriers as it completes its first phase of testing of its switching system. Mark Sujo, vice president of sales of Calypso Wireless Inc., stated: "We are aggressively pursuing new contracts in order to be able to launch our proprietary technology in several markets at once."

Calypso manufactures the world's only mobile real-time video cellular phone capable of seamlessly switching back and forth between the cellular networks and the new Wi-Fi networks. It is also the first and only mobile phone capable of using Wi-Fi to connect users to the Internet at blazing broadband speeds of 11,000 KBPS (11Mbps), enabling movie-quality, real-time video conferencing. Calypso startled the telecommunications world in February when it announced that it had signed a $500 million contract to deliver mobile phones and network systems to China Telecom (NYSE:CHA). China Telecom customers will actually be able to utilize a new set of high value-added services such as two-way real time videoconferencing at the speed of 30 frames per second or wireless Internet access up to 50 times faster than cable broadband users have been accustomed to in the U.S.

Calypso is currently working with different cellular operators and is planning to begin field trials in several markets for its real-time video cellular phones and second generation Wi-Fi Access Points.

Many segments of the mobile telecommunications industry are already benefiting from the rapid adoption of the Wi-Fi wireless local area networks (WLANs). The number of frequent Wi-Fi users in North America is expected to grow from 4.2 million in 2003 to over 31 million in 2007. The astounding demand for Wi-Fi has helped fuel over $1 billion (U.S.) in new wireless hardware sales for 2002. That number is expected to double in 2003 and grow to more than $3 billion by the end of 2004.

It is estimated that the total number of users subscribing to a wireless service in the U.S. will increase to 205 million in 2003. The number of cellular phones, PDAs and laptops equipped for Wi-Fi is increasing rapidly as well. The number of wireless network hardware units in the U.S. has grown from less than 1 million units in 2001 to approximately 8 million units in 2002 and is expected to reach over 60 million units in 2005.

The number of Wi-Fi hot spots (points where users can connect to the Internet without wires) is exploding. Many companies are creating them to attract tech savvy consumers to their facilities. For example, Starbucks (Nasdaq:SBUX) already has 2,000 hot spots and McDonalds (NYSE:MCD) should have 300 by the end of the year. The number of commercial hot spots will jump from an estimated 9,700 this year to nearly 50,000 by 2006. The number of users actually paying to access this growing number of hot spots is expected to grow to 5.5 million by 2006.

The sales of cellular phones in the U.S. continues to grow as well. In 2002, it was estimated that approximately 90 million cellular phones were purchased in North America. That number is expected to grow to 164 million in 2007, with up to 70% of those sales being newer phones to replace older ones. Broadband use in the U.S. surged 59% in 2002, with adults over 50 posting the highest percentage gains (CNET News.com). The number of households in the U.S. that are now capable of subscribing to a service provider for broadband access is nearing the 40% mark.