It appears that E.Digital is simply sticking to the original claim. Basically telling the examiner that they think he is incorrect in rejecting it do to prior art.

I think the next step will be for the examiner to either change his mind about the prior art, or if he sticks his ground there is an appeal process.

Bottom line.... This is going to take awhile.....

I only skimmed through it, so someone might take more time to analyze it.