Qualcomm looks at the future in 3G
By MSNBC's David Bowermaster
Over the next three to five years, wireless phone companies plan to rollout new technology that will combine the convenience of mobile calling with the muscle of high-speed computing -- but a fierce technical battle is already underway that could decide winners and losers in the new wireless world, MSNBC's David Bowermaster reports. Among the combatants with the most at stake: San Diego-based Qualcomm Inc. and its European rivals, S.M. Ericsson and Nokia Corp.
In the acronym-obsessed wireless industry, the promising technologies now on the drawing board are known collectively as "3G," or third generation wireless. Basic cellular services that have been around since the early 1980s are considered first generation, while recently introduced personal communications services, or PCS, which offer clearer calls and short bursts of data, are considered second generation.
3G will usher in a "whole range of new multimedia devices," says Dr. Peter Barry, director of strategic technology for AirTouch Communications, one of the many wireless carriers working toward 3G. In addition to souped-up phones, Barry says, consumers will have the opportunity to buy mobile computing devices, such as 3Com's PalmPilot, that will be able to carry voice calls and transmit data at speeds up to 384 kilobits per second, or more than four times faster than PCs using today's fastest dial-up modems.
In a sign of things to come, Qualcomm announced last week that it is teaming with Microsoft Corp. in a new joint venture, to be called Wireless Knowledge, that will help wireless carriers deliver low-cost data services to a wide range of mobile devices.
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The 3G fight now in progress is over technical standards that will define how wireless networks will deliver the hotly anticipated new services. Though the details are mind-numbingly complex, the struggle is not unlike the old duel over whether VCRs should use Beta or VHS technology: The companies that back the right standard stand to make a whole lot of money.
A crucial early skirmish in the 3G standoff is now taking place in Europe. A piece of legislation pending in the European parliament would require all wireless carriers on the continent to use a 3G technology developed by Ericsson and Nokia and endorsed by the European Telecommunications Standards Institute. The bill could be voted on by the end of this month, according to William Bold, vice president of government relations for Qualcomm. If it passes, Qualcomm and other American companies fear they could be shut out of the European market even before 3G gets off the ground.
Anxious to avoid that outcome, and in recognition of the high stakes involved, the State Department, the office of the U.S. Trade Representative, the Federal Communications Commission, and powerful members of Congress have weighed in against the European bill.
In a letter sent to Secretary of State Madeleine Albright earlier this week, California Sens. Barbara Boxer and Dianne Feinstein - the representatives for the California-based company and most of its more than 9,000 employees - wrote: "The European proposal appears to be both exclusionary and discriminatory."
Those concerns are shared by the FCC. "If this goes forward, it appears it will be impossible for any other standard...to be used in Europe, and that hinders competition," says a senior FCC official. Noting that the European-backed standard was developed by European-based companies, the FCC official added: "That is, we believe, unfortunate industrial policy that we don't support."
The wrangling over 3G is, to some extent, a repeat of earlier tussles over how PCS would evolve. In the late 1980s, the European Union mandated GSM (short for "global system for mobile communications") as the technology of choice for European cellular carriers moving to digital. Simultaneously, a technology called TDMA (short for "time division multiple access") was being embraced in the U.S. and other parts of the world by large companies like McCaw Cellular, now AT&T Wireless.
Qualcomm then established itself as an iconoclast of the wireless world by pushing yet another technology called CDMA (short for "code division multiple access"), which had been developed by the company's chief executive officer, Dr. Irwin Jacobs. Qualcomm insisted CDMA was technically superior because it could handle more calls and deliver more data than its competitors, but it struggled mightily because CDMA came relatively late to the game.
Nonetheless, CDMA won important converts in the U.S., such as Sprint PCS, which is building a nationwide network based on CDMA, Bell Atlantic Mobile and PrimeCo PCS.
Still, in part because of its early lead, GSM dominates the worldwide digital market; according to some estimates, there are now nearly 140 million GSM subscribers, compared to around 20 million for TDMA and approaching another 20 million for CDMA.
The CDMA camp believes 3G gives it a chance to swing those numbers in its favor if it can make its flavor of 3G a worldwide favorite. That is why the standards debate now underway is so important, and also why Qualcomm, whose fate is closely tied to the rise and fall of CDMA, is exerting enormous energy to influence it.
The arbiter of the 3G standoff is the International Telecommunications Union, which is a branch of the United Nations. The ITU has so far accepted proposals for about 15 different versions of 3G. Later this year it will start reviewing the proposals, and by next March it is expected to rule on how 3G technologies should develop throughout the world.
The common thinking is that the ITU will endorse a handful of different standards, each of which will work to some extent with existing, second generation digital networks.
But here's the sticking point: The European standard for 3G developed by Ericsson, Nokia and others is called "wideband CDMA," or w-CDMA. Though, as the name suggests, it incorporates aspects of Qualcomm's second generation CDMA, w-CDMA technology is incompatible with existing CDMA networks.
Qualcomm, on the other hand, is pushing a technology called CDMA2000 for third generation wireless; current CDMA operators, such as Sprint PCS, would only have to make incremental improvements to their existing networks to upgrade to CDMA2000, according to Qualcomm.
Qualcomm is asking the ITU to "harmonize" w-CDMA and CDMA2000 standards into a signal technology, that would be based largely on Qualcomm's technology.
"Where would the Internet be today if there were two incompatible [Internet] standards, each being used by half the world?" says Jeff Belk, vice president of marketing at Qualcomm. "Our viewpoint has always been that there needs to be a single, converged, worldwide standard."
The Europeans, conversely, want the ITU to allow multiple CDMA-based standards to proceed, and then let the marketplace choose the superior product.
In an aggressive attempt to turn the tide in its favor, Qualcomm last month declared that it will not license its intellectual property rights for any competing versions of 3G technology that incorporate elements of CDMA. That move could potentially kill w-CDMA; the ITU has declared that it will not endorse any standard that has intellectual property rights in dispute.
Keith Shank, director of strategic marketing and business development for Ericsson, said that the intellectual property dispute is unprecedented.
"Most companies that are international and have done business for quite some time understand that you should deal with each other in a fair and open matter," Shank says. "IPRs are routinely traded (between companies). They are are not held for blackmail type purposes."
Shank says that if Qualcomm continues to press its intellectual property stance, "both w-CDMA and CDMA2000 would suffer substantial delays at implementation" because all parties would be tied up in lawsuits. But he doubts that Ericsson's core business would be adversely affected, because the company builds equipment to jibe with many different technology standards.
But before anyone worries about what happens at the ITU, all eyes will be on the European Parliament to see if it passes the legislation that would mandate w-CDMA for the entire continent, at Qualcomm's expense.
"We would find it disappointing if they were to go forward prior to the completion of the ITU process," said the senior official at the FCC. "That would suggest to us that they set out to basically ignore the ITU process." |
