Gregg, BATTLE LOOMS IPR-Q;
Battle looms over Qualcomm technology patent
The San Diego Union-Tribune
As the world's largest wireless companies
convene at a trade show this week in Orlando,
Fla., one of the most popular exhibits will be the
next generation of wireless phones.
These "Third Generation" phones can hook
mobile callers into the 21st Century -- allowing them not only to use the
same handset in San Diego as they do in Santiago, but also enabling them to
surf the Web, do videoconferencing and send electronic mail at rates faster
than some home connections.
While the PCS '98 conference will showcase the capabilities of these glitzy
new devices, a much less sexy debate about the technical specifications of
"3G" will be raging below the surface.
The battle over the technological standard for 3G has pitted one of San
Diego's largest companies against some of its biggest competitors in the
wireless industry and the European standards-setting bodies, which make
recommendations on technology to the European Union.
Qualcomm, which is leading the charge to adopt specific standards that
favor its technology, sees this as a fight for survival. If it loses the battle,
Qualcomm's equipment could be rendered obsolete in Europe and several
other growing markets, including parts of Asia.
At issue is the core technology that will be used to operate 3G phones.
Qualcomm, which has pioneered a system called Code Division Multiple
Access, wants to build onto that technology and is advocating a standard
called CDMA 2000.
Such a standard would allow current CDMA licensees, such as Sprint PCS,
GTE Wireless and PrimeCo, to build onto their existing systems for 3G
technology. The cost would be minimal and the result would be phones that
provide portable data services and could be used across the globe. But
European manufacturers, such as [ L.M. Ericsson ] and Nokia, favor a
standard known as Wideband-CDMA, which builds upon Global Systems
for Mobile communications technology. GSM is the standard technology in
Europe and the main rival to CDMA. While some in the industry consider
CDMA to be a better technology, GSM still has a much larger customer
base -- more than 100 million subscribers, compared with about 12 million
CDMA subscribers. The W-CDMA standard that is being considered is
incompatible with networks that use Qualcomm's CDMA system. That is
because W-CDMA is not "backward compatible," meaning it cannot be
fused with any system that does not use GSM. Adoption of W-CDMA in
Europe essentially could end Qualcomm's chances to gain market share for
3G in that area because manufacturers and wireless carriers would be
unable to use Qualcomm's technology in that region. That is something the
company cannot afford to see happen. Qualcomm largely has been shut out
of Europe and Asia with its current generation of phones and the company
had been hoping to finally crack those markets with its 3G product.
"This is the future of how every wireless consumer communicates over the
next 10 to 15 years," said William Bold, Qualcomm's vice president of
government affairs. "It's a big deal to us and it's an enormous market." In
January, the European Telecommunications Standards Institute
recommended W-CDMA as the standard technology for Europe, causing
panic at Qualcomm and other companies that sell or develop CDMA
products. Qualcomm Chairman and CEO Irwin Jacobs in the past has said
he believes Europe will choose W-CDMA, because that technology favors
home-grown companies, such as Sweden-based Ericsson and
Finland-based Nokia. Attempt at unity
Qualcomm wants to avoid being shut out of Europe at all costs and believes
the way to do that is by converging CDMA 2000 and W-CDMA into a
single, compatible technology. The European manufacturers have balked at
this request, saying the shift essentially would "dumb down" their GSM
technology and make the phones less powerful.
The GSM Alliance, which represents GSM operators, says Qualcomm
wants to converge the technologies so it can force all 3G manufacturers to
pay licensing fees for Qualcomm's technology.
"Attempts by others to force the combination of third generation
technologies has nothing to do with benefiting the American consumer," the
GSM Alliance said in a statement to Congress last June. "It's all about
protecting the second generation intellectual property rights of some
manufacturers."
The reluctance to converge has angered Qualcomm officials, who have
turned to U.S. officials for help. The company has sent dozens of employees
to Washington to educate Congress and other federal officials about the
growing controversy. They also have been playing up the fact this could
become a world trade dispute if the European government closes the door
on American technology.
A legal approach
The battle recently took a nastier turn. While W-CDMA is incompatible
with pure CDMA systems, it does use some CDMA technology, much of
which is patented by Qualcomm. And this summer, Qualcomm threatened
European manufacturers with patent infringement lawsuits if they try to use
Qualcomm's CDMA patents for a W-CDMA product. On Aug. 5,
Qualcomm told the European Telecommunications Standards Institute that
European manufacturers could forget about getting access to its patents
unless it endorsed a standard compatible with Qualcomm's technology.
That threat -- which upset the European community and some manufacturers
-- could turn the debate from a technical tug of war into a legal one.
Analysts say the issue is headed straight for the courts, though many
question the wisdom of Qualcomm's decision to make this a legal fight and
hinge its success on intellectual property rights.
"Qualcomm is playing hardball," said Andrew Cole, head of the wireless unit
at [ Renaissance Worldwide ] , a telecommunications research firm. "They
are taking a risk. If they can focus and show that their patents are being
infringed upon, they may come out on top. But in any case, we'll end up
having a long, drawn-out legal battle."
Cole said it may not be smart for Qualcomm to upset the European
community while officials there still are considering which technology to
choose. But Qualcomm's Bold said his company has every right to threaten
restricted access to its technology.
"We have essential (intellectual property rights) for these standards and we
will defend those rights," Bold said. "Qualcomm pioneered CDMA. We
developed and have been assigned essential patents. These other companies
cannot manufacture equipment to that standard without infringing on our
(intellectual property rights)."
Battle for livelihood
Brian Modoff, an analyst with BT. Alex Brown, said Qualcomm needs to
fight if it wants to ensure its place at the European table.
"The big debate at this point is over intellectual property rights," Modoff
said. "That is the nexus of everything. There are three key patents that
Qualcomm has that W-CDMA needs to work effectively. Ericsson says it
has patents in this area for the technology. It's going to boil down to a legal
decision in a patent court."
Whether Qualcomm will be successful is not an easy call. The company is
fighting tooth-and-nail to get its technology accepted, but the courts could
decide that W-CDMA does not use Qualcomm's proprietary technology.
Ericsson officials say they do not believe their technology uses any of
Qualcomm's patents and are willing to go to court. However, John Giere,
Ericsson vice president of public affairs, said he hopes the issue can be
resolved without a messy intellectual property rights fight. One of the
reasons Giere and others in the industry do not want a long legal battle is
because it could delay the deployment of any 3G products. All the wireless
players hope to have the issue wrapped up by the end of 1999. The
Geneva-based International Telecommunications Union has asked for
recommendations by Dec. 31, and then will do its own research on the
suggested standards. However, if the dispute goes to court, the arrival of 3G
could be set back beyond the anticipated year 2000 deployment date.
(Copyright 1998)
_____via IntellX_____
Publication Date: September 24, 1998
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