3G Standard Scales Shifting
By Malcolm Spicer, mspicer@phillips.com
February 12, 2001
Vol. 5 Iss. 26
Those mobile operators expecting to use Qualcomm's [QCOM] cdma2000 third-generation standard took a heavy hit in November when AT&T Wireless [AWE] aligned itself with the wideband-CDMA (W-CDMA) camp, and again last month when word got out that Verizon Wireless is leaning that way as well.
However, the scales could tip back toward Qualcomm a bit if Nextel Communications [NXTL] opts for cdma2000, as is expected.
W-CDMA is the infrastructure technology most GSM and TDMA carriers are expected to use to migrate their services to 3G capabilities. Most CDMA carriers are expected to move to 3G capabilities with cdma2000.
Qualcomm's CDMA patents are linked to both W-CDMA and cdma2000, and it will receive royalties for the use of both technologies. However, its interests are more closely tied to cdma2000.
Nextel likely will move customers on its existing iDEN (integrated digital enhanced network) system to infrastructure operating in 900 MHz spectrum, and then deploy the cdma2000 network in the 800 MHz spectrum it owns, Tole Hart, wireless infrastructure market analyst for Gartner Group's [IT] Dataquest subsidiary, told Wireless Today.
"With [cdma2000], Nextel can deploy it in their existing spectrum," Hart said. "That was really the only option they had. That's good news for Qualcomm."
It won't be good news for Qualcomm, though, if Verizon Wireless opts for the W-CDMA 3G path, said Robert Saunders, senior analyst for emerging telecom technologies at the high- tech consulting firm Eastern Management Group.
Verizon Communications [VZ] and Vodafone [VOD] created the world's largest CDMA network last April when they merged their U.S. wireless systems to form Verizon Wireless.
However, Verizon's announcement this month that it plans to increase its global presence would make migrating Verizon Wireless to W-CDMA a likely move, Saunders said. That's because GSM is the most widely used wireless standard worldwide, although it trails both CDMA and TDMA in the United States. With Vodafone and other European GSM operators migrating to 3G capabilities with W-CDMA, Verizon Wireless could link with more international carriers if it opts for W-CDMA.
"I think Verizon is going to start moving down a path with a little more international focus," Saunders said. "They want to continue making themselves more attractive to a larger market."
AT&T Wireless also made its move toward W-CDMA for international reasons - to attract Japanese carrier NTT DoCoMo, which paid $9.8 billion for a 16 percent stake in the telco. AT&T Wireless will offer the i-mode mobile Web service developed by NTT DoCoMo after it migrates its existing TDMA network to a GSM voice service and general packet radio service data network next year. It eventually will deploy W-CDMA infrastructure.
The Bottom Line
Qualcomm's 3G deployment play has not worked out as simply as the company and much of the rest of the industry expected when the International Telecommunication Union in 1999 decided all 3G standards would be developed from a CDMA foundation. Nonetheless, the CDMA pioneer will remain in the catbird seat as carriers make their 3G decisions.
In addition, Qualcomm isn't relying on the network infrastructure market for revenues. It continues to receive royalties for 3G handset sales (though it no longer makes the devices) and last month announced a new wireless Internet and software development technology that lets developers create applications for any wireless phone.
Qualcomm's latest idea, called BREW (binary runtime environment for wireless), could secure it a position in the market for mobile phone application software, just as its CDMA patents have done in the infrastructure and handset space.
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