To: GR (24888 )
From: Perry LaForge Thursday, Mar 25 1999 12:55AM ET
Reply # of 24891
To all: this just hit the wire from WSJ (sorry for the layout)
Telefon AB L.M. Ericsson of Sweden is expected to announce a deal
Thursday with Qualcomm Inc. of San Diego that will resolve a
long-running dispute over the future of wireless communications.
People familiar with the deal said Ericsson will purchase a
significant portion of Qualcomm's business, including rights to develop future kinds of digital wireless communications called CDMA. CDMA, which stands for code division multiple access, is the backbone of so-called third-generation wireless communications, which will allow for high-speed data and video in addition to standard wireless voice communication.
Such an agreement could allow the two companies to enter into each
other's core businesses, with potential rewards for both. Once a vocal
opponent of CDMA, Ericsson has come to embrace a version of CDMA for
future wireless communications. Earlier this year, Irwin M. Jacobs,
chairman and chief executive of Qualcomm, had a series of discussions
with Sven-Christer Nilsson, president of Ericsson, about ways the two
parties could use each other's core technologies.
Officials at both companies declined to comment. But the people
familiar with the situation said Ericsson, the world's third-largest
maker of wireless phones, plans to announce it will develop a version of CDMA that can accommodate the world's three major wireless technologies.
Besides the current form of CDMA, these are GSM, or global system for
mobile communications and TDMA, which stands for time division multiple access.
Qualcomm is the best-known backer of CDMA. However, Ericsson filed
suit in 1996, alleging that Qualcomm's CDMA technology violated Ericsson patents. The case was expected to come to trial in April in federal court in Marshall, Texas.
The deal would bring peace between the two chief combatants in a
fight over the approved technical specifications of the
third-generation, or 3G, phones.
But some proposed 3G specifications could make obsolete several
billion dollars of existing CDMA systems, while others would jeopardize the installed base of GSM equipment.
Officials from both the European community and the Clinton
administration, prompted by their respective European and U.S.
companies, recently have clashed over the specifications. In January,
several U.S. officials, including Secretary of State Madeleine Albright and Federal Communications Commission Chairman William Kennard, sent a
letter to European Commissioner for Industrial Affairs Martin Bangemann expressing concern that Europe would adopt a single, exclusive standard for 3G.
Instead of a single standard that favors one company over another,
Ericsson and Qualcomm executives say, regulators are likely to recommend multiple standards that allow existing GSM or CDMA networks to migrate to 3G, with all using a common radio interface similar to CDMA.
"There will be a family of standards. That's how it will come down,"said Keith Shank, director of strategic marketing for Ericsson, earlier this year.
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