direct the signal in the direction of the base station, even as the phone is moved around. It may seem far-fetched to imagine smart array antennas built into cell phones. However, the notion of an adaptive matched filter, the CDMA rake filter described in Sec. 8.4, seemed like science fiction rather than reality a few years ago. However, need drove the tech- nology. Today, rake filters are standard in all CDMA telephones, and they manage de- lay spread instant by instant. What we have seen consistently in cellular engineering and other portable electronics is that demand drives engineering innovation, and therefore, it is a mistake to say that technology not available today will be impossible in 5 years. 3.1.3 Economics What, then, are the driving forces in the technology for mobile telephones? And what lies ahead? One driving factor from the past will continue to operate indefinitely: cost reduction. When we look at a mobile telephone system with its base-station towers, its elaborate switching systems, and its complex transport network, it is hard to realize that the mo- bile telephone is a major component of the cost of the cellular network. In fact, the mo- bile telephones may be the most expensive part of a wireless telephone system. It de- pends on usage patterns, of course, but a large system may have 10 switches, 1000 cells, and 1 million mobile telephones. If a switch costs $200,000, a base station costs $80,000, and each mobile telephone costs $175, then the mobile telephones would make up two-thirds of the equipment cost of the system. As a result, reducing production cost for cellular telephones is very valuable to cellular providers, who often give away the telephone or discount it heavily to get new subscribers. The production cost of electronics is often more dependent on the scale of production and the selection of appropriate and available parts than on the complexity of the de- sign. Huge production quantities typically are required to make the use of application- specific integrated circuits (A