Full IBD "story" referenced ear;ier:
Better Not Invite AT&T,
Qualcomm To Same Party
By Peter Benesh
Investor's Business Daily
It’s a tale of spin and outrage. Of accusation and denunciation. The election? Florida? No, this is a tale of two giants of the wireless world in a scrap that makes dimpled chads seem logical.
The feud pits AT&T Wireless against Qualcomm Corp. The truth is clouded by acronyms that swarm like insects. Analysts say the spat is not all that unusual, but that investors should be aware.
The row started with a Dec. 1 Qualcomm press release. It claimed that AT&T had "embraced" Qualcomm’s Code Division Multiple Access, a standard for transmitting data wirelessly. Qualcomm invented CDMA.
In its release, San Diego-based Qualcomm said it "applauded AT&T Wireless’ decision to embrace CDMA technology and deploy third-generation (3G) W (for Wideband) CDMA networks beginning in 2002, with rapid expansion thereafter."
The release then quoted Dr. Paul E. Jacobs, executive vice president of Qualcomm: "AT&T’s plans represent a long-awaited decision in favor of CDMA technology by another leading U.S. operator."
Qualcomm issued its praise for AT&T the day after AT&T made two big announcements that analysts took as bad news for Qualcomm.
First, Japan’s NTT DoCoMo bought 16% of AT&T Wireless. That deal gives AT&T access to Japan’s dominant wireless Internet technology, called i-mode. Some analysts say i-mode can become the global standard. Some 14 million Japanese surf the Web on cell phones that have i-mode technology.
Second, AT&T said it will upgrade its U.S. wireless network with GSM technology. GSM stands for Global System for Mobile communications. GSM is almost universal in Europe and Asia and far outpaces Qualcomm’s CDMA worldwide.
Hold the phone. With AT&T upping its GSM ante and joining forces with a non-CDMA partner, how could Qualcomm say that AT&T had embraced CDMA?"
In Seattle, AT&T Wireless brass got riled. AT&T spokesman Ken Woo denounced Qualcomm’s release as "spin." That was one of his polite words. He used other phrases that he later asked to rescind.
"The statements issued regarding AT&T Wireless’ technology choices are not correctly represented by the Qualcomm press release," Woo said, after cooling down.
Qualcomm, he says, doesn’t own WCDMA, and WCDMA isn’t the same as CDMA. The similar names are an "unfortunate choice of terms developed by the Asians and Europeans," he explained.
Woo says WCDMA is also known as UMTS, for Universal Mobile Telecommunications System. Though it’s confusing, WCDMA is seen as the world standard for the next generation of GSM. He says that as of September, "GSM has 311.2 million customers worldwide and TDMA has 65 million. (TDMA is another wireless standard for sending data and also is used by AT&T.) CDMA has only 57 million customers worldwide. I would say that is not a figure that dominates world technology."
To be clear, Woo added, "We are deploying Wideband CDMA, which is not related to CDMA."
Told of Woo’s reaction, did Qualcomm temper its claim of AT&T’s "embrace"? No.
"If they’re saying that, then they don’t understand what it is they’re deploying," said Steve Altman, an executive vice president at Qualcomm.
"WCDMA is CDMA," he said. "Our patents cover WCDMA absolutely, and we have more than 30 companies that signed WCDMA agreements with us and agreed to pay us royalties so long as they use any of our patents."
How does that translate into AT&T’s "embrace" of CDMA? Altman says it flows through AT&T purchases of WCDMA hardware from Qualcomm customers. He said, "The licenses that we’ve granted to these companies allow them to sell WCDMA equipment to AT&T and to other carriers around the world."
Does Qualcomm have a straight-line deal with AT&T? "We don’t have a contract with AT&T," Altman said. "We’re not saying AT&T’s going to pay us royalties."
He defended the press release. "It doesn’t say we have a contract," he said. "It says we’re thrilled that AT&T is going to go with CDMA, and that it benefits us because we’ve licensed 30 different companies to manufacture WCDMA."
Who’s right? Yeah, and who’s president-elect of the U.S.? Asked to play judge, Bill Plummer, Washington-based vice president of cell-phone maker Nokia Corp., backed AT&T.
"Wideband CDMA is not about Qualcomm," Plummer said. "It’s not a proprietary standard. Wideband CDMA is the product of an open process of standardization with a large number of contributors. It is an entirely different system."
But Qualcomm does have a claim, Plummer said, "to the extent that Qualcomm contributed to the development of that technology."
In the PR biz, timing is everything. Was Qualcomm trying to offset AT&T’s two big announcements? Could be, especially in light of comments by European Union Commissioner Erkki Liikanen. He called the AT&T deal with NTT DoCoMo "one of the most important decisions taken in years. We all know that as long as there is not one global (wireless) standard, there is not really global growth."
"Any time Qualcomm puts out a press release, you’re going to see a good amount of spin," said Larry Swayse, senior vice president of Allied Business Intelligence, a market research firm in Oyster Bay, N.Y. "Investors need to do a lot more homework, especially now, when there’s a lot of heat on most wireless companies to present themselves in the best possible light."
Then Swayse, who says his firm has worked for both companies, said more. He called Qualcomm "pretty much a company of patent lawyers. They may be confusing people who aren’t involved in the wireless industry intimately," he said.
He added, "Qualcomm is going to make some money off WCDMA, but they aren’t going to be as enhanced by AT&T Wireless as they would like people to think. They wanted to show the financial world they were still the king. And it may not be the case when you really dig down."
Swayse wasn’t alone in aiming tough words toward Qualcomm.
The San Diego company is known as "Spinco," said Bryan Prohm, an analyst with market researcher Gartner Dataquest in Raleigh-Durham, N.C. "To me, it was kind of a snow job press release," Prohm said.
He dismisses Qualcomm’s claim of WCDMA authorship. NTT DoCoMo "was really the progenitor of Wideband CDMA," he said. "Qualcomm is exploiting the fact that there’s CDMA in the acronym of a technology that AT&T will deploy."
And now, back to Florida.
---------------- |
