Good news. This paves the way to the holy grail. 3G is the key to expansion of SSPI business. bp
Thursday March 25 7:15 AM ET
Ericsson, Qualcomm Settle Phone Standard Dispute
By Paul de Bendern
STOCKHOLM (Reuters) - Telecom equipment makers Ericsson of Sweden and Qualcomm of the U.S. announced the settlement of a patent dispute Thursday, paving the way for a global wireless standard and boosting Ericsson's position in the U.S. mobile phone market.
Ericsson and Qualcomm struck a deal allowing the Swedish manufacturer to buy Qualcomm's terrestial CDMA wireless infrastructure business including two of its research and development facilities.
''Under the agreements, Ericsson and Qualcomm agree to jointly support a single world CDMA standard,'' Ericsson said. CDMA (Code Division Multiple Access) is a telephone standard developed by Qualcomm and mainly used in the United States.
Ericsson shares soared 10 percent or 17.5 crowns to 193 by 1100 GMT, helping push up the Stockholm bourse indices.
Ericsson's growth potential has improved as the group can now address the whole global market for mobile infrastructure and produce CDMA-standard mobile phones, a technology accounting for half the U.S. market, Ericsson said in a statement.
Ericsson, the world's third biggest maker of mobile phones, said earlier this week trading conditions had deteriorated in the first quarter, confirming a profit warning last December.
The agreement helps settle an international trade conflict looming over the future of wireless communications by solving the debate over which standard will be used for the next generation of mobile phones, known as 3G.
Third generation equipment is intended to carry digital traffic such as Internet messages at high speeds.
''Ericsson, through its agreement with Qualcomm -- a pioneer in developing CDMA technologies -- now has complete 3G competence,'' Ericsson Chief Executive Sven-Christer Nilsson said.
''We are ideally positioned to support any operator anywhere in the world to migrate to 3G regardless of technology heritage or technological choice.''
The deal will allow Ericsson, which does not produce mobile phones with the CDMA standard, to boost its U.S. market position by producing CDMA phones as well as CDMA infrastructure. San Diego-based Qualcomm will get access to some of Ericsson's patents to CDMA's rival technology GSM, or Global System for Mobile Communications, the worlds largest mobile standard, and the one favored by European companies.
Ericsson's Finnish rival Nokia, the world's biggest maker of mobile phones and a major backer of GSM, does not make CDMA network equipment but does make CDMA handsets for the U.S. market.
''This gives us great opportunities to grab a larger part of the U.S. market, and within a couple of years we expect CDMA related technology to make up 15 percent of the total world market,'' Ericsson spokesman Erik Osterberg said.
Companies that would benefit from the expansion of CDMA include U.S. equipment suppliers Motorola, Lucent Technologies and Qualcomm, which stands to earn hefty royalties on the technology.
Canada's Nortel and South Korea's Samsung are also CDMA equipment providers. China has signaled it may open its market to CDMA technology.
Ericsson and Qualcomm will support approval of a single CDMA 3G standard by the International Telecommunications Union (ITU), the global telcoms body, the U.S. telecom industry body TIA and the European Telecommunications Standards Institute (ETSI).
''Qualcomm and Ericsson believe that rapid adoption of the single CDMA standard is in the best interests of the industry and allows each operator to select which mode of operation to deploy based on marketplace needs,'' Ericsson said.
The agreement settles the litigation and provides cross licensing of intellectual property rights for all CDMA technologies, including cdmaOne, WCDMA and CDMA2000.
(Additional reporting by Salomon Bekele)
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