Qualcomm uncut
Telecom.com Spotlight
15-NOV-2002
Qualcomm came to GSM-land this week, riding high on the back of $190 million of Q4 profits and delivering more steers to market than Texas: A "top five" GSM operator trialling GSM1x next year; operators in "Hong Kong and Taiwan" poised to switch to CDMA2000; Vodafone "testing" Qualcomm's CDMA-GSM handsets; a Samsung dual-mode GSM-WCDMA handset for Vodafone Spain. And all this chatter neatly complementing the official release of Qualcomm's latest WCDMA/GSM/GPRS chipset solution, the MSM6250, and Sanyo's selection of its predecessor, the MSM6200.
Leading the charm offensive were President Don Schrock, Group President Paul Jacobs, and CFO Bill Keitel. The message was conciliatory. They were not, they said, coming to Europe with a CDMA/GSM1x agenda-downplaying the ex-Dolphin 450Mhz properties in the UK and France as "niche" was part of the spin. They were here to help with the CDMA family's problem child, UMTS.
Schrock may have been over-egging it a bit when he said that "Qualcomm is CDMA agnostic"-tricky when one version makes all your money-but dual-mode GSM-WCDMA handsets are to be welcomed (unless you're a vendor that wants to flog both GSM and WCDMA devices) while bridging the GSM-CDMA standards gap offers exciting possibilities, especially if, like Vodafone and Telefonica, you have affiliates in both camps. Of course, it could also encourage operators worldwide to plump for CDMA networks safe in the knowledge that their customers won't be shut out of GSM markets.
When they opened the floor to the assembled industry hacks the first question was: if Qualcomm is so WCDMA-friendly, why not join the IPR party announced last week by Nokia, DoCoMo et al? "We are glad the party is taking place," said Keitel. "The initiative will hopefully reduce the ambiguity. But we've already been to that party." "The question was always what others were going to charge on top of our agreements," continued Jacobs, who was quick to dismiss Ericsson's claim that it has more 'essential' WCDMA patents as "irrelevant".
How much Qualcomm charges they wouldn't say, beyond, after a brief inter-departmental debate, "low single digits" (the same levels as for CDMA), but the message was that they have already staked their place at this particular IPR trough, and won't be budging. Particularly because, as Jacobs enthused, "the UMTS handsets will be more expensive (than CDMA handsets) so our royalty as a percentage of the wholesale price of a more expensive handset means we actually make more money." Even so, Qualcomm believes their WCDMA royalties will be negligible before 2004. "WCDMA is not totally done yet," argued Jacobs.
And if it doesn't get done in time Qualcomm will always be ready to offer alternatives or, to put it another way, keep up the pressure on the GSM community. Would a European GSM operator conceivably switch? "There are European operators today that have internal working groups looking at what has gone on in Japan and trying to understand the benefits of going one way or another," claimed Jacobs. "But getting CDMA rolled out in an existing GSM operator in Europe is a very difficult task unless we see WCDMA slip farther out." Not the most unlikely scenario in the world, you will agree, and remember that Dolphin spectrum.
So what of GSM1x, that other alternative that appeared to have slipped off the radar screen since being unveiled in February? "Smoke and mirrors," grumbled one attendant hack, although Jacobs made it pretty clear that if there is a top five GSM operator trialling it, they are probably in China. "CDMA phones being built for the Chinese market have a SIM card slot in them so they can read a GSM SIM card and interface directly with a GSM network." He went on: "The only way we will see GSM1x roll-out in Europe is if WCDMA continues to have technical issues and the technology roll-out takes longer." Again, hardly a scenario you can definitively rule out.
Also in China, Jacobs admitted that Qualcomm had been surprised by the Chinese government's decision to back the home-grown technology, which Qualcomm clearly regards none too highly. "TD-SCDMA will be niche compared to WCDMA and CDMA2000," said Keitel. "It has problems with wide area. And the political side of the decision will be based on export opportunities, which TD-SCDMA does not offer." It does if it can replace the TDD element of UMTS, someone pointed out, which Keitel conceded.
Predictably, they didn't have much good to say about EDGE either. "We are fairly sceptical that data rates are going to come out the way people are claiming," argued Jacobs. "There will be some improvement but not a huge improvement and then operators are going to find their vendors are coming to them and saying: 'You know, to get the higher data rate you really need to buy some more base station equipment.'"
And what of the major supplier of that equipment and traditional foe Nokia? Jacobs couldn't resist: "If you look at Samsung's and our horizontal model of development as opposed to Nokia's vertical model, I think our model will win out. It is hard to be a device manufacturer these days."
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