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Technology Stocks : Qualcomm Incorporated (QCOM)
QCOM 168.09+1.8%Nov 28 9:30 AM EST

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To: MileHigh who wrote (28441)4/26/1999 11:52:00 PM
From: JGoren  Read Replies (4) of 152472
 
Generically, cdma means Code Division Multiple Access, which digitizes conversations and divides conversations on the same radio frequency by codes. As opposed to TDMA, which is also digital but divides them by time. CDMA generally is regarded to have greater capacity, which is important for data transmission. In the wireless world, Qualcomm owns the patents for cdma.

On this thread, cdma also refers to Qualcomm's 3G method, in particular called cdma2000, which is fully backwards compatible with Qualcomm's current standard in use, cdmaOne a/k/a IS-95.

WCDMA is "wide band" cdma, Ericsson's conconction of an overlay to GSM wireless systems that would handle 3G data transmissions. Ericsson basically created WCDMA as a way to compete against Qualcomm and delay commercial exploitation of cdma around the world. Some of the main standards for W-CDMA were, in Qualcomm afficionado's views, created so that Q-CDMA would not be backwards compatible with cdmaOne or IS-95. The reason is that a GSM operator would be forced to make a lot of exepensive upgrades no matter what the 3G standards and system would be. Ericy wanted for example a different chip rate in order to equally disadvantage cdmaOne carriers. However, W-CDMA had to have Qualcomm critical patents to operate. Thus, Ericy came to the table.

With the settlement of the patent ligitation between Qcom and Ericy, they each license one another on IPR. There will be one standard--cdma --code division multiple access--with three different modes, cdma2000, W-CDMA and one for TDMA. In other words, code division multiple access will be the 3G standard, and each carrier will decide which mode to use.

The carriers are now engaged in negotiations on certain parts of the standard, such as chip rate, to negotiate a standard that will serve their interests. Qcom and Ericy have agreed to support a single standard with three modes.

Qualcomm will receive a royalty no matter which mode is used in the handset. So all 3G handsets will pay Qcom a royalty for its IPR. Qualcomm will pay Ericy a royalty but because Qualcomm owns far more in number of critical patents than does Ericy, the royalty payment to Ericy will be very small, whereas Ericy's payment to Qualcomm will be approximately the same as that other licensees pay.

With respect to handset chipsets, Qualcomm will be able to use Ericy GSM patents and sale of the chips will include the royalty to Ericy. As a result, for many handset manufacturers there may be an incentive to purchase chips from Qcom rather than negotiate a direct royalty with Ericy for the manufacture of their own chipsets.

One of the techies may be able to give a better answer.
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