Tero,
<< Don't you dare diss Terry... he's a genuine hero >>
He may be yours. After all, given Nokia's pioneering efforts in DCS-1800/GSM-1800, Nokia probably stands to benefit more than any other telecom manufacturer in the world if Brazil selects 1800 MHz spectrum for 2G wireless over 1900 MHz spectrum.
He is not mine, and in this case I am dissing the article, not Terry. If he is a hero, it is as a result of his career as a "war correspondent" (I have no visibility on that) not as a wireless journalist, or at least not on the basis of the referenced article.
<< In standing up to standard fragmentation, he's making a stand for the people of Latin America >>
Bull! Another humanitarian (?).
<< We've seen the results of the standard fragmentation in Australia, USA and Russia - three markets separated by oceans and united by dismal subscriber growth rates >>
Let us not forget that the US remains the single largest cellular market in the world ... and the best wireline market.
Alternatively Brazil could just mandate CDMA like Korea. That would work just as well would it not?
Tero, I am pretty technology agnostic, and I can argue the case for GSM pretty well (although I have a bit of a challenge defending the exclusionary tactics practiced by the EU which Terry is either ignorant of or more likely simply in denial about). I am not about to deny that the North Americans and their own telecom manufacturers have practiced some tough tactics along the way.
We in the Americas have opted not to mandate standards. Its our bed and we will lie in it. Choosing 1800 MHz spectrum for 2G wireless in Brazil fragments the Americas more than allowing 900 MHz contiguous to 800 MHz did (Venezuela, Chile, et al). If the Americas as a whole decide to open up 1800 MHz spectrum and tack it on to the IMT-2000 spectrum, that is another story.
Its the year 2000, not 1990. A decade has passed since the EU prepared to clean up their alphabet soup mess with the launch of GSM. New technologies have been commercialized. We are moving towards harmonization (however slowly) and interoperability between competing standards. Me. I'm for harmonization and interoperability.
The adoption by Brazil of 1900 MHz spectrum makes more sense to me than an 1800 MHz mandate. GSM-1900 is as interoperable with 800 MHz AMPS (Brazil's legacy, as CDMA or TDMA. Let Nokia compete for the business in Brazil. Tis the "American Way." Heck Nokia has just released a hot new GSM 900MHz/1900MHz "WorldPhone" (Nokia 8890) for those Brazilians who want to roam at home and roam abroad.
Now if Terry is your hero, today (at least), Robert Poe is mine
Robert Poe's article below discusses the subject of single v. multiple standards, in what I consider to be a more balanced way than Terry treats the argument. The article is about Qualcomm (apologies to the thread) and it has frequent references to Ericcson (only one to Nokia). I have "snipped" out much of the pure Qualcomm stuff and spared you the Dr. J interview at the end. What I have left unsnipped, is, I think, related to the topic at hand:
>> QUALCOMM REBORN AS WIRELESS PLAYER
May 09, 2000
by Robert Poe
"Upside Today"
< snip>
Additionally, resolving a potentially disastrous patent and standards dispute with arch rival Ericsson (ERICY) and its European and Japanese allies positioned Qualcomm to collect royalties on virtually every "third-generation" (3G) cellular phone to be sold worldwide in coming years, as well as on the wireless network equipment that makes the phones work.
Qualcomm isn't doing badly in the current second-generation cellular market either; by the end of last year, more than 50 million CDMA subscribers were using Qualcomm technology.
But just as the company finally appears headed for the long-awaited giant payoff, new challenges are looming.
<snip>
Nontechnical Advantages
Technical superiority is only one of several factors contributing to the success of a cellular system.
When deployment of first-generation analog cellular technology began in the 1980s, for example, the Federal Communications Commission mandated AMPS (advanced mobile phone system) as the U.S. standard. With no concerns about compatibility, a horde of manufacturers and operators rushed into the market.
Meanwhile, in Europe, a hodgepodge of at least five incompatible standards developed, hindering growth by making roaming (using the same phone in different cities and countries) impossible and eliminating advantages such as economies of scale that would have reduced prices of equipment.
The tables were turned with second-generation (2G) digital cellular, as European manufacturers, operators and governments in 1981 began work on a system called GSM, which originally stood for Groupe Sp‚cial Mobile but was later changed to Global System for Mobile communications.
Struggle To Catch Up
"The whole thing was kind of a can of worms, because there wasn't one particular standard."
In 1989, the European Telecommunications Standards Institute (ETSI) mandated GSM as a continentwide standard. Thanks to its international roaming capabilities and high manufacturing volumes, GSM soon spread throughout most of the world.
By the end of March 2000 there were some 280 million customers worldwide, accounting for 55 percent of the global wireless market and 65 percent of the digital wireless market, according to the GSM Association industry group.
Back in the United States, the FCC decided against selecting a second-generation standard. Several U.S. operators and manufacturers jointly developed a digital system now generally referred to as TDMA, or time division multiple access. (Confusingly, GSM is also based on TDMA technology, but it's incompatible with the U.S. type, which is also called IS-54 or IS-136, depending on the version.)
"The Europeans mandated a standard, but in the U.S., they said, 'Let the market decide,'" explains Jane Zweig, executive vice president at market researcher Herschel Shosteck Associates. "You had TDMA accepted as a standard in the U.S., then Qualcomm said in '89, 'We have a really good standard, too.' So the whole thing was kind of a can of worms, because there wasn't one particular standard."
As a result, the U.S. cellular market is plagued by incompatible networks the way Europe used to be. But the worms the agency had set loose generated rich soil for future growth.
Under Qualcomm's aggressive tending -- and, some say, healthy doses of fertilizer -- CDMA began to take root, both domestically and in Asia. Having bet its future on CDMA, Qualcomm quickly went from underdog to serious contender in the cellular races.
The Struggle To Catch Up
Qualcomm immediately faced serious handicaps in its struggle to promote CDMA. While AMPS, GSM, and the U.S. TDMA were all products of group efforts, government mandates, or both, Qualcomm embarked on its crusade alone and late. The major U.S. carriers that moved first into digital cellular had little choice but to go with TDMA, which was standardized by 1991.
Once committed, they found it hard to switch. Even today, TDMA operators such as AT&T Wireless (AWE), BellSouth Cellular (BLS) and Southwestern Bell Wireless (DSW) continue to attract customers through their marketing clout, with innovative service options such as single-rate nationwide calling without roaming charges.
But Qualcomm had some advantages of its own. As CDMA's sole supporter, it could develop the technology largely in private, retaining ownership of the patents and overall control of the technology. By functioning almost like an R&D house for the industry, specializing in creating and selling technology, Qualcomm became a vendor of intellectual property rights (IPR) rather than a major manufacturer. That might be a key reason for CDMA's continuing technical strength.
"Any time you get a group of companies putting a standard together, everybody's fighting very hard, not necessarily for the best technical approach, but perhaps to get their own intellectual property in," Jacobs says.
Confirms Zweig of Herschel Shosteck, "Where it becomes dangerous is under the so-called guise of an open standard. When you have people fighting for their own claims for intellectual property, it undermines efforts toward open standards."
Soon after Qualcomm demonstrated the technical merits of CDMA in 1989, Lucent (LU) and Motorola (MOT) joined the development process. Others soon followed.
"We brought in many other companies to do a very extensive testing program, with them suggesting tests, and doing it in a public fashion, letting people produce their own data if they wished to," Jacobs says.
"By the time we came to the standards process, there wasn't any commercial equipment, but there was a very well-tested technology, and a document to form the framework for the standards was already done," he explains. "It allowed the standards to get done in a reasonable fashion, though it still took a year and a quarter."
Builders Wanted
The Telecommunications Industry Association formally adopted the IS-95 standard based on Qualcomm's CDMA cellular technology in 1993. But someone still had to make the equipment.
"Back then, we were just a technology company, and we weren't happy or pleased that things weren't moving very fast," says Sulpizio. "We started to manufacture our own base stations in partnership with Nortel (NT). If it wasn't for that partnership, Sprint (FON) would not have launched, because Nortel was one of the first providers of base stations, along with Lucent and Motorola."
But infrastructure gear was only part of the problem.
"At the handset level, Qualcomm Personal Electronics (QPE), which we founded with Sony (SNE), was the first company to produce CDMA phones for Hong Kong, Korea, and North America," says Sulpizio. "If it weren't for that, CDMA would not have been launched in those countries."
Cdma Takes Off
After Qualcomm jump-started the market, Hong Kong's Hutchison Telecommunications, which was already operating both AMPS and GSM systems, launched the world's first commercial CDMA network in 1995. U.S. rollout began in 1996. In addition to Sprint PCS (PCS), U.S. CDMA operators included AirTouch Communications, Ameritech Cellular Services, Bell Atlantic Mobile (BEL), Cricket Communications, GTE Wireless (GTE) and PrimeCo Personal Communications.
The pivotal market was Korea, where promoting domestic manufacturers was a longstanding national priority. Companies such as Samsung and Hyundai saw CDMA as an opportunity to get in early on a hot new growing market, rather than go head-to-head with giant, entrenched GSM manufacturers such as Ericsson and Nokia (NOK). The Korean government mandated CDMA as a national standard, and commercial trials began in January 1995, with full commercial operation beginning a year later.
Fighting For The Future
As rapid as the growth of second-generation CDMA users and manufacturers has been, it could have been faster if not for the conflict over 3G standards and technologies.
CDMA has since spread throughout the rest of the Asia-Pacific region, operating or being deployed in Australia, Bangladesh, China, India, Indonesia, Japan, Mongolia, New Zealand, the Philippines, Singapore, Taiwan, and Thailand, according to the CDMA Development Group (CDG).
And growth is accelerating. The 50 million-plus global CDMA subscribers as of December 1999 represented an increase of 27 million over the previous year, CDG figures show. Thanks to Korea, the largest numbers were in the Asia-Pacific region, with 28 million subscribers, compared to 16.5 million in the United States and a mere half-million in Europe, the Middle East, and Africa combined.
In the fourth quarter of 1999, though, U.S. subscribers increased faster than in the Asia-Pacific region, both in number (3.6 million vs. 3.2 million) and percentage (28 percent vs. 13 percent). Caribbean and Latin American subscribers increased by 2.1 million, or 68 percent.
In February, Qualcomm signed an agreement with China's Unicom to supply technology for a nationwide CDMA network to be built by Chinese manufacturers. A glitch developed when the Chinese government froze the project later in the month, but subsequent announcements seemed to put it back on track.
Fighting For The Future
As rapid as the growth of second-generation CDMA users and manufacturers has been, it could have been faster if not for the conflict over 3G standards and technologies. That epic battle came to involve not only rival technologies, companies and governments, but also conflicting ways of establishing standards. The outcome served to transform Qualcomm yet again.
The dispute really extends back to the 2G cellular era, when Sweden's Ericsson said it owned patents on technology used in the commercial IS-95 CDMA Qualcomm was selling.
"Ericsson has been a defense communications company, developing radio systems for defense," says Ake Persson, president of Ericsson CDMA Systems. "We have a lot of experience in CDMA technology and we have a very strong patent portfolio. We approached Qualcomm a few years ago saying we thought it was appropriate for them to pay us to license some of the patents they were using, and they were not willing to do it. We couldn't come to an agreement, so we sued them."
Meanwhile, maneuvering for position in the third-generation cellular race was already well under way. As envisioned by the International Telecommunication Union (ITU), 3G systems would have high worldwide compatibility, high rates of data transmission, support for multiple simultaneous connections, call quality comparable to wireline, efficient use of spectrum and integration of various services, such as satellite communications and paging.
New Standards
Because Japan was rapidly exhausting available spectrum for its wireless services, Japanese carrier NTT (NTT) (through its mobile communications arm NTT DoCoMo) was a major force driving the rapid development of the new 3G standards.
By the mid-1990s, CDMA seemed to be the most efficient digital cellular technology around. But rather than casting its lot with Qualcomm, Japan pushed ahead with the development of wideband CDMA, or W-CDMA, which differed significantly from CDMA2000, the 3G CDMA technology Qualcomm and its partners were developing based on IS-95.
European manufacturers, carriers and authorities collaborated with the Japanese to develop and promote W-CDMA. Attempting to replicate their GSM success, they pushed W-CDMA through as ETSI's third-generation cellular standard to be used throughout Europe.
In theory, Qualcomm was free to argue the case for CDMA2000 with ETSI. But with manufacturers' votes weighted according to their European sales the previous year, the process gave new meaning to the concept of an unfavorably stacked deck.
Having selected W-CDMA for Europe, ETSI lobbied the ITU to also adopt it as the global third-generation cellular standard. The Japanese, whose regulatory body was headed by a former NTT DoCoMo executive, supported them energetically.
Political Issues
The Europeans and Japanese argued that the reasons for their actions were purely technical: W-CDMA theoretically had somewhat higher capacity than CDMA2000. But behind the maneuvers lay serious commercial and political issues. Most importantly, W-CDMA had less in common with second-generation IS-95 CDMA than did CDMA2000. That was intentional, according to Qualcomm.
"People know that Qualcomm's IPR is necessary for CDMA," says Sulpizio. "They wanted to change what they were doing so they could possibly add some of their own IPR in their version of the third generation, thinking that if they had some IPR in it, they would have a different royalty rate structure going forward."
W-CDMA offered Japanese companies a potentially bigger piece of the 3G IPR pie than would CDMA2000.
But for the European manufacturers who dominated the GSM market there was an additional factor: Because of the technical differences, second-generation IS-95 CDMA networks could be upgraded to CDMA2000, but not to W-CDMA. Establishing W-CDMA as the eventual world 3G standard would give operators less reason to choose CDMA over GSM when they built current-generation digital networks.
"The question is, how do the carriers migrate their investments, based on having GSM today or having IS-95? How do you get to 3G based on your existing investment?" says Robert Egan, an analyst with the Gartner Group.
In one sense, the dispute was simply about who would make the most money from future 3G systems as well as from 2G systems in the meantime.
The bigger question was whether political decisions, rather than the simple merits of the technology, should determine which company or technology prevailed.
Both sides had what they considered legitimate points. GSM's politics-driven birth had made it wildly successful, and it had clearly expanded the cellular industry in general. But CDMA had succeeded simply because of its technical strengths.
High-Stakes Showdown
"The winner in the fight between Ericsson and Qualcomm was the wireless industry."
The inevitable showdown came in 1998, when Qualcomm announced that if W-CDMA became the exclusive European 3G standard, it would refuse to license its technology to any manufacturer who wanted to build such equipment.
Considering the strength of Qualcomm's patents, it wasn't a threat to be taken lightly.
"Any commercial CDMA mobile network, certainly along any of the lines that have been proposed, basically needs to use our fundamental patents," says Jacobs.
"We were working with CDMA when everybody else didn't think it could be done commercially. We have built up a large body of patents and we continue to add to those patents, and they're not bandwidth-specific." (Bandwidth is one of the areas where W-CDMA differs from CDMA2000.)
Ericsson officials won't publicly concede that point. "Qualcomm refused to license their patents," says Ericsson's Persson. "They claimed they had some patents even in wideband CDMA; we don't know whether that is correct or not. If that is the case, they wouldn't let the rest of the industry take advantage of it."
It'S All Settled
The eventual settlement involved not only the manufacturers but also the relevant standards organizations and operators, and resolved both the court case and the 3G standards dispute.
Ericsson's purchase of Qualcomm's infrastructure division ended the companies' manufacturing competition. A cross-licensing agreement allows each to use the other's patented technology. (Both sides refuse to disclose royalty payments.)
The agreement also established a worldwide ITU 3G standard called International Mobile Telephony 2000 (IMT-2000). The standard left it up to individual cellular operators to decide whether to use W-CDMA or CDMA2000 technology, or even a third type containing some elements of TDMA.
Negotiations also narrowed the technical differences between the two CDMA versions, bringing them closer to compatibility. The settlement achieved a compromise by conjuring up a seeming impossibility: a global standard that still lets the market choose the technology it prefers.
Naming Winners
As a result of the agreement, Qualcomm says it will make money on any piece of 3G equipment, whether handset or base station, that is built in the future. Its royalty structure calls for charging the same fees, whether it is W-CDMA or CDMA2000 equipment. It also allowed Qualcomm to exit a manufacturing business it had only reluctantly entered in the first place.
Ericsson, which is less concerned with royalties than profits from manufacturing, is now free to build any type of CDMA equipment, including IS-95. Ericsson officials believe Qualcomm's version of CDMA -- IS-95 and CDMA2000 -- will account for 25 percent to 30 percent of the market over the next few years.
To analysts, it seemed like a good deal all-around. "The winner in the fight between Ericsson and Qualcomm was the wireless industry, and if this hadn't been solved, the winners would have been the lawyers," says Zweig of Herschel Shosteck.
On the other hand, because the two main CDMA systems -- as well as other variations permitted under the compromise -- will still be competing, it remains to be seen how effective the agreement will be in creating global uniformity.
It also remains a matter of dispute.
Two Standards
"In essence, I think W-CDMA and CDMA2000 pretty much are two different standards now," Persson says. "We put a label on it and called it IMT-2000, a harmonized standard, but in essence, they are pretty much different. Whether we have put that common label on it or not, it would offer dual-band dual-mode capabilities anyway."
Dual-mode or dual-band handsets and network equipment are more complicated, bulky and expensive because they generally require two sets of chips and other circuitry to allow them to work under different frequencies and modulation schemes. On the other hand, the two versions "are both CDMA technologies, after all," notes Qualcomm's Kripalani.
The compromise means, for example, that the difference between the two standards of one parameter, called the chipping rate, has been narrowed to only 5 percent. "I can use the same oscillator," Kripalani explains. "So if I bring it within 5 percent, I can do it without having two pieces. Dual mode, therefore, doesn't quite mean dual mode like TDMA and analog, or CDMA and TDMA."
Adds Zweig: "As you get into software-defined products and multimode chips, it become more of a moot point. The world is really big enough that you can have these two standards. There are going to be lots of advancements in chips and other software-defined things that will make some of this not as important."
< snip >
Say You Want An Evolution
Wireless data could be the catalyst for Qualcomm's next major transformation, made possible by the 3G deal the company pulled off.
"Qualcomm clearly was and is a leader in CDMA. They invented it for all intents and purposes, they are the leaders, and they understand it," says Zweig. "They are an excellent chip manufacturer; and they have a lot of advanced chip technology, so that will serve them very well."
Although Qualcomm has the most experience in building CDMA chips, Jacobs acknowledges that, "clearly, there are some other significant players out there, and they'll try very hard to capture part of what is a very large and growing market."
Another lucrative business is building equipment for GlobalStar (GSTRF), the low Earth-orbit satellite operator. "We own about 6.4 percent of GlobalStar, and we were the R&D house for the gateways and the phones and the technology," Sulpizio notes.
The most exciting future growth area might be even less predictable, and thus potentially more lucrative: Qualcomm's foray into the superheated wireless Internet arena, centered on its HDR technology. Wireless data could be the catalyst for Qualcomm's next major transformation, made possible by the 3G deal the company pulled off.
Keep Moving On
"If you look at Qualcomm's history, it's clear that there's going to be yet another evolution of their business," says Gartner Group's Egan.
First, Egan explains, the company plowed OmniTRACS profits into CDMA, which is now profitable.
Second, the company is now flush with cash from the sale of the manufacturing groups and from its sky-high valuation, both of which result from the 3G deal. "Just like before, I believe they'll take the new cash and invest it in expanding their business horizons," Egan says.
That could mean another excursion into manufacturing. Just as the company had to build cellular equipment to get that business going, "in the future, they might have to do it again" in wireless data, Egan notes. "If they choose not to, they have to develop a brand new marketing and sales model to entice carriers or customers of equipment suppliers to use some of these technologies they've developed."
In any event, pushing HDR will be difficult, given that virtually every cellular system has some form of higher-speed data technology in the works. Perhaps the most formidable is enhanced data rate for global evolution (EDGE), which is compatible with both GSM and TDMA systems and provides data speeds of 384 kilobits per second.
Although this is far slower than HDR or other potential 3G data technologies, it might be enough to delay the global introduction of 3G systems.
"If I'm a European operator or AT&T (T), rather than going to a third-generation CDMA system, I'll modify my 2G system, I'll add EDGE to it, and that'll keep me going longer," Sulpizio suggests. "The analogy I use is 'Do you want to buy your new car today or put new tires on your old car?' EDGE is doing nothing but putting new tires on an old car."
Demand Drives It
Sulpizio says increasing pressure for broadband Internet access will hasten the tendency to go directly to 3G data.
"The drive to the Internet and access to the Internet from a mobile environment is going to rule out EDGE because it's not going to give you the speed and capability you're going to need," he says. "We're stuck on the Internet at home, and we want access to it wherever we are. That in itself is going to force CDMA."
Sulpizio also contends that manufacturers are having a hard time developing EDGE-capable phones, but he acknowledges that may not make much difference.
"AT&T is a well-run, well-organized company, and they have a lot of money already invested in TDMA," he says. "They're going to do everything they can to keep their system going a little bit longer."
Qualcomm, incidentally, also has interim wireless data technologies based on IS-95, which it calls 1X and 3X CDMA, for those who want a smoother evolution to 3G.
"It's similar to the early days of CDMA, where we are in a sense evangelizing HDR and bringing knowledge to the market in terms of what it can do and how it can revolutionize communications," says Kim Kleber, director of product marketing for HDR.
"We still have several steps to go through," adds Jacobs, "but I'm sure wireless Internet access will be a major part of our business. And we think HDR is probably the best way to do that. It's similar to the CDMA approach, but we're trying to do it even more rapidly. I think the world is now getting used to that, because of the fact that various other types of standards are being done in a more accelerated fashion. The world keeps changing faster.
"If you take a long time with standards, you're going to be left behind because of Internet time."
That's what makes it interesting for observers. Recounting Qualcomm's two-step progression from OmniTRACS manufacturer to CDMA cellular vendor, Gartner Group's Egan is looking forward to the next step.
"We've seen Qualcomm Part 1 and Qualcomm Part 2, which has been very successful. Now the world is standing with bated breath waiting to see what Qualcomm Part 3 looks like," Egan says. "It's not a matter of will it happen; it's what's going to be and when is it going to be."
Qualcomm is a leader in developing and delivering innovative digital wireless communications products and services based on the company's CDMA technology.
<snip>
Robert Poe has written about high-tech industries for more than 15 years for such publications as High Technology, Datamation, CommunicationsWeek International and Electronic Business Asia. <<
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