About Time>
US cell phone makers blast EU's hangup in excluding their
standards
Journal of Commerce
While a slew of European directives aimed at
high technology have been in the news (not to
mention Europe's anti-trust slap at [ Microsoft ]
), a significant battle over cellular phone
standards has been playing out between the
United States and the European Union.
The European Union has barred all but its GSM
standard governing cellular phone technology,
which gives preference to Swedish manufacturer
[ Ericsson Inc. ] and Nokia of Finland.
American manufacturers Qualcomm, [ Motorola ] , [ Lucent Technologies ]
and [ AT&T ] claim they are being hurt because their products use
alternative technology standards -- CDMA and TDMA. Qualcomm
basically invented CDMA, and AT&T is credited with TDMA.
Information technology experts in the United States say this battle is as
significant, in terms of market share, as the issue of Internet access and
Microsoft.
In fact, they argue that the competitiveness of the U.S. companies hangs in
the balance as debate over a cellular phone standard moves from European
standards bodies to the International Telecommunication Union.
At June hearings in Washington before the technology subcommittee of the
House Science Committee, U.S. manufacturers testified the future of the
digital cellular market in Asia, Latin America and Africa -- and eventually the
question of global market dominance -- is very much at stake. These are the
regions where the growth of wireless communication has outpaced
conventional phone systems.More recently, at a November meeting of the
European Telecommunications Standards Institute in Dresden, Germany, the
European Union seemed amenable to a world standard that would combine
European and U.S. technologies, said William Bold, vice president of
government affairs, Qualcomm.
The European Union, which dominates international standards bodies, also
has been willing to throw the matter before the International
Telecommunication Union in Geneva, where an international standard is
under development.
A few days before the Dresden meetings, Joachim Kubosch said he didn't
see any reason for a dispute between the United States and Europe over the
cellular phone standard. He is a spokesman for Commissioner Martin
Bangemann, head of Directorate-General III, Industry, the competition
section of the European Commission.Mr. Kubosch said the European Union
was "open to (cell phone) systems being compatible. We need a common
interface. If this can be provided, there's no problem."
Although Mr. Bold of Qualcomm witnessed this more conciliatory attitude at
the recent ETSI talks, neither he nor anyone else on the U.S. side expects
the European Union to cede control of the cellular market. That means there
could be some interesting maneuvering between now and the end of 1999
when he says an international standard would be voted.
HOW THE EU PLAYS THE STANDARDS GAME
According to Mr. Bold, the history behind cellular phone standards very
much illustrates how the Europeans have learned to exclude products from
their market.
As will be evident, the game of protectionism -- whether through direct
quotas or non-tariff barriers such as standards -- can end up biting the
protectionist more than those excluded from markets.
According to Mr. Bold, the Europeans originally sought a single cellular
phone standard "so EU consumers can roam across national boundaries.
They were also looking for an export engine for European companies. They
selected GMS, and, through directives and other agreements between
member states, said this was the only digital technology to be used in
Europe."
Although U.S. technologies TDMA and CDMA reportedly offer large-
scale capacity advantages over the European's GSM technology, Mr. Bold
says CDMA "has never gotten into the European marketplace." He says
that's despite the fact that CDMA can handle far more calls on a given
frequency and offers better voice quality.Now, according to Mr. Bold, "the
technology that was supposed to give Europe a head start (in the cellular
phone market), is becoming capacity constrained relative to CDMA." This is
especially true in the digital age, where phone lines can serve a multitude of
purposes.
"European companies are finding CDMA preferable, but it doesn't exist in
Europe," he said. "A couple of manufacturers then took the core (CDMA)
technology and introduced changes to the standard that ensured that Sprint,
[ Bell ] Atlantic (and other carriers using CDMA) won't be interoperable
with their proposed system."
That, says Mr. Bold, has granted them some CDMA business in Europe,
but doesn't allow them to be compatible with foreign carriers like Sprint and
Bell Atlantic.
Working through ETSI to garner some sort of compromise that would allow
them into the European market, Qualcomm tried to float a compromise
standard in ETSI, Mr. Bold said.
"We put forward our own proposal for a third-generation standard - -
CDMA 2000 -- but were voted down," he said. "So we refused to license
our patents for (any standard that doesn't offer compatibility with American
technology). Our customers deserve better than an incompatible standard."
SOME MOVEMENT TOWARD COMPROMISENot all Europeans buy
this, hence the push for an international standard that offers compromise
between all technologies -- what manufacturers like Qualcomm call
convergence.
Many ETSI members consider convergence a good idea. Although nothing
earth- shattering happened in Dresden, Mr. Bold said this is "the first time
they've allocated time and said "let's make a serious consideration on how to
converge the standards together,' meaning two versions of CDMA (U.S.
and European). And they're willing to back off GSM and put new systems in
place."
What changed the EU's mind, he said, was a concern for consumer interest.
"They still want a system that allows roaming in and outside of Europe. They
want to keep costs and complexity low. And, if we pull off convergence,
that will allow them to move along. Which isn't to say they've entirely
backed off (the EU version of CDMA)."
As for being willing to produce an international standard through ITU, Mr.
Bold points out that the Europeans are generally oriented in the global
direction.
Qualcomm has its perspective. There are other U.S. members high- tech
industry who say Europe's intentions haven't been quite so nefarious as
manufacturers like Qualcomm indicate.
WHATEVER THE LANGUAGE, KEEP CUSTOMERS HAPPY
They say GSM's main aim has been unifing the European cellular phone
market to provide unified service, and that this has worked extraordinarily
well for European consumers up until now.
However, it is clear that whether through U.S. government intervention and
high-level pressure or real market need, the European Union is in some sort
of compromise mode.
Initial proposals for an international cellular phone standard went to the ITU
in July. These proposals will be evaluated by a working group with March of
1999 set as a target date for developing a draft standard.
Under ITU procedures, the draft standard circulates and then must come up
for a full membership vote. Mr. Bold doesn't see a vote taking place until the
end of 1999.
Global Product Standards is a weekly column that analyzes standards
already established or in the process of being established that are applied to
traded goods. If you have questions about standards issues, we'll answer
them in an upcoming column. The information in the column should not be
construed as legal advice or opinion. Please address any questions to Amy
Zuckerman, Global Product Standards, Trade Desk, The Journal of
Commerce, Two World Trade Center, Suite 2750, New York, N.Y.
10048. Ms. Zuckerman is the author of "International Standards Desk
Reference: Your Passport to World Markets" (Amacom Books).
(Copyright 1998)
_____via IntellX_____
Publication Date: December 02, 1998
Powered by NewsReal's IndustryWatch
...back to top
|
