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Technology Stocks : Interdigital Communication(IDCC) -- Ignore unavailable to you. Want to Upgrade?

To: HoodBuilder who wrote (4166)	4/21/2000 5:12:00 PM
From: Gus	Read Replies (2) \| Respond to of 5195

Here's an inside look at the politics behind the lopsided fight between WCDMA and CDMA2000, the niche 2G standard. It also happens to provide a glimpse into yet another ongoing case study on the folly of trying to repeal the law of supply and demand. IF manufacturers need unit volume to keep their fabs operating at peak efficiency at maximum profitability AND the high cost of fabs is rapidly turning the chip business into an inverted pyramid structure with only the strongest at the top of the inverted pyramid, where do you think are the key manufacturers going to allocate their substantial but still scarce resources. CDMA2000, the upgrade path to over 5% of the market outside of South Korea, or WCDMA, the upgrade path for 80-85% of the global market? A rhetorical question, obviously. The QCOM news from Japan is very significant in my opinion. I just finished catching up on club board posts from over the weekend (stayed away from the board for two glorious days) and was shocked to see the news that QCOM was going to push for a license to operate its own CDMA2000 network in Japan. What a joke! This is a clear move of desperation. QCOM is in no way positioned to operate a 3G service in Japan or anywhere else. This move is obviously a last ditch effort to stake out CDMA2000 turf in Japan. They know that if they don?t get a foothold there the war will be lost to WCDMA. Now why do they care to risk their business future on such a move if they really do hold significant IPR for WCDMA? Didn't they claim just recently that they would win either way, whether WCDMA or CDMA2000 was adopted by service providers? In my opinion actions speak louder than words. And where do they get off using the US Government like this? Isn't IDC a US company, too? Somebody needs to let the government know that WCDMA does not represent the Evil Empire. Let?s face it, QCOM has been fighting against the tide for years. Thanks to Data_Rox for his informative posts over the weekend (hard at work again for our mutual benefit). From his post at ragingbull.com we get a sense of what was going on back in 1998. The ITU has a policy which prevents them from creating any standards around technology where IPR issues are being disputed. Hence they warned that all CDMA radio proposals for its IMT-2000 initiative could be thrown out unless the stalemate is resolved by month's end. Few observers see the ITU's threat as realistic, believing that the protagonists are engaging in brinkmanship and will eventually resolve their differences. ERICY and QCOM were in a heated battle over QCOM's IPR for 3G. ERICY contended then that they did not need QCOM IPR for 3G, and they were working with ETSI to put together a WCDMA standard that would overlay GSM. QCOM wanted the world to adopt CDMA2000 as the single air interface standard. Here is what the ITU said about all this: "To conform with ITU patent policy," said Robert Jones, director of the ITU Radiocommunications Bureau, "the holder of any known patent or any patent-pending application related to any proposal made to the ITU in the process of international standards-setting must submit a written statement either waiving his rights [to the IP] or committing to negotiate licenses on a non-discriminatory basis and on reasonable terms and conditions. Failure to provide this statement ultimately excludes the proposal from the international standards-setting process." In its statement, the ITU said that while Qualcomm was prepared to grant licenses on its essential IP contained within CDMA2000, on most other CDMA proposals the company had proved unwilling thus far to negotiate reasonable terms and conditions with other parties on a non-discriminatory basis. The statement went on to list the conditions that Qualcomm had specified for the ITU in a letter it had sent to the body in August. In other words, QCOM would gladly license its CDMA2000 IPR if that air interface standard was adopted. But they would use their IPR to block WCDMA. Simple as that. From Corp's post at ragingbull.com ?ETSI has acknowledged that Qualcomm holds CDMA IPRs, and requested clarification from Qualcomm. On August 6, Qualcomm notified ETSI that it "is not prepared to grant licenses for the proposed W-CDMA standard in accordance with the terms of Clause 6.1 of the ETSI interim IPR policy". ETSI then stated that the development of the third generation standards within ETSI will thus progress according to this decision and its Rules of Procedure. QCOM would only license if CDMA2000 were adopted as the sole air interface standard. They were prepared to block WCDMA using their IPR if necessary. And they went to Congress to try to convince them the Europeans were playing unfairly. So what did ERICY and NOK do? They got together and formed a two-pronged approach. First, they had to get QCOM off their backs, because they were using politics to thwart WCDMA. So ERICY suddenly and mysteriously caved in and entered into a cross-licensing agreement with QCOM. They also agreed to changes in the WCDMA chip rate to appease QCOM. Secondly, ERICY and NOK, along with IDC, GBT and others, began designing around QCOM IPR in the 3GPP specification process. The ITU forced QCOM and ERICY to provide details about their applicable IPR back at the end of 98. So everybody knew what cards QCOM held. Since then NOK has stated that they don't need QCOM IPR for WCDMA. See Corp's post at ragingbull.com It is obvious that Q believes they have necessary technology. i do not believe that anyone can accurately predict to what level they will participate with Nokia in a WCDMA only based handset model. i do not believe that current Nokia agreements allow for the production of WCDMA technology and payment to Qualcomm. those agreements with Qualcomm, if necessary, will need to be reworked to include such. as point has stated, the agreements bw Qualcomm and IDC do not include technology produced after 1995. obviously, much of IDC's work in CDMA, and even TDMA improvements, have occurred after that timeframe. Does QCOM have IPR for WCDMA. The short answer is yes, but they know they will not make nearly as much in licensing revenue if WCDMA wins out over CDMA2000. They are so desperate that they are now willing to pull the government in again and try to strong arm the Japanese into letting them operate their own CDMA2000 network. Who are they kidding? The Japanese will not let this happen. From Jimlur's post (Tero's comments) at ragingbull.com This makes no sense. Several notable US analysts have declared that it doesn't matter for Qualcomm which 3G standard wins - Q wins in any case. So why spend 10 billion dollars to build a cdma2000 network in Japan, just to get that standard implemented somewhere outside of North America? If "CDMA is Qualcomm" as Paine Webber hysterically declared - why would Qualcomm panic at the thought of Japan having three W-CDMA networks? Why this extreme reaction?? Another possible answer is that the global sweep of W-CDMA really would hurt Qualcomm. Maybe because they might not succeed in the chipset market - maybe because the IPR situation is so hairy. Let's face it. QCOM knows how the 3GPP specs are going to turn out. The handwriting is already on the wall. We are just days from the formal adoption of IMT-2000. Manufacturers are already designing and testing the equipment. The race has begun. There is no turning back now. Whatever blocking patents QCOM may have thought they had have been overcome. IDC and GBT have brought technologies to the table that QCOM perhaps did not foresee. They have been left in the dust. So do they still have IPR that will be used in WCDMA? Yes. Is it essential? Perhaps not. Will it be used? Probably. Will QCOM get paid? Yes, but not nearly as much as they would get for CDMA2000. That is why they are so desperate. Will IDC be a winner? Absolutely. Their IPR is deeply entrenched in TDMA/GSM, WCDMA and even CDMA2000. Yeah, QCOM can go on producing CDMA2000 chips without a new agreement with IDC, but who cares? Even QCOM is tacitly admitting that is not where the real money is. WCDMA overlaid on GSM is the brass ring. And with the drive toward mobile Internet and an all-IP network in Release 2000 of the 3GPP specs, IDC's TDD puts them in the driver's seat. They hold the cards for the future. QCOM holds the cards for a small part of the past (IS95/CDMA2000). Their arrogance will cost them dearly ragingbull.com