WSJ: Ericsson Expected To Announce Deal With Qualcomm
Qualcomm Inc.
Dow Jones Newswires -- March 25, 1999
From Thursday's Wall Street Journal By Quentin Hardy
NEW YORK (Dow Jones)--Telefon AB L.M. Ericsson of Sweden is expected to announce a deal
Thursday with Qualcomm Inc. of San Diego that will resolve a long-running dispute over the future of
wireless communications.
People familiar with the deal said Ericsson will purchase a significant portion of Qualcomm's business,
including rights to develop future kinds of digital wireless communications called CDMA. CDMA,
which stands for code division multiple access, is the backbone of so-called third-generation wireless
communications, which will allow for high-speed data and video in addition to standard wireless voice
communication.
Such an agreement could allow the two companies to enter into each other's core businesses, with
potential rewards for both. Once a vocal opponent of CDMA, Ericsson has come to embrace a
version of CDMA for future wireless communications. Earlier this year, Irwin M. Jacobs, chairman
and chief executive of Qualcomm, had a series of discussions with Sven-Christer Nilsson, president
of Ericsson, about ways the two parties could use each other's core technologies.
Officials at both companies declined to comment. But the people familiar with the situation said
Ericsson, the world's third-largest maker of wireless phones, plans to announce it will develop a
version of CDMA that can accommodate the world's three major wireless technologies. Besides the
current form of CDMA, these are GSM, or global system for mobile communications and TDMA,
which stands for time division multiple access.
Qualcomm is the best-known backer of CDMA. However, Ericsson filed suit in 1996, alleging that
Qualcomm's CDMA technology violated Ericsson patents. The case was expected to come to trial in
April in federal court in Marshall, Texas.
The deal Thursday would bring peace between the two chief combatants in a fight over the approved
technical specifications of the third-generation, or 3G, phones.
But some proposed 3G specifications could make obsolete several billion dollars of existing CDMA
systems, while others would jeopardize the installed base of GSM equipment.
Officials from both the European community and the Clinton administration, prompted by their
respective European and U.S. companies, recently have clashed over the specifications. In January,
several U.S. officials, including Secretary of State Madeleine Albright and Federal Communications
Commission Chairman William Kennard, sent a letter to European Commissioner for Industrial
Affairs Martin Bangemann expressing concern that Europe would adopt a single, exclusive standard
for 3G.
Instead of a single standard that favors one company over another, Ericsson and Qualcomm
executives say, regulators are likely to recommend multiple standards that allow existing GSM or
CDMA networks to migrate to 3G, with all using a common radio interface similar to CDMA.
"There will be a family of standards. That's how it will come down," said Keith Shank, director of
strategic marketing for Ericsson, earlier this year.
Copyright © 1999 Dow Jones & Company, Inc. All Rights Reserved.
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