WLL Analysis: The war moves
to 3G
ntil Qualcomm came along with a
commercial application of CDMA in
1995, this country was proceeding
along the TDMA/GSM route.
Qualcomm's chairman and cofounder, Irwin
Jacobs, initially promised that CDMA could
fit 20 to 40 times as many calls into a
channel as analog could. The European
GSM operators were doing fine with the
GSM standard, which, by default, made
European equipment manufacturers such as
Ericsson and Nokia the leaders in digital
wireless infrastructure, and put the U.S.'
Motorola and Lucent (then AT&T Network
Systems) behind in the race.
Philip Redman, wireless mobile
communications analyst for Boston's
Yankee Group, says, "[Qualcomm] rolled out
not only a technology argument, saying that
their technology was going to be 30 times
better than the competition's, but they also
said 'ours is American technology,' "
ratcheting up the debate into a virtual trade
war. Qualcomm took that
"made-in-America" argument to Washington
and lobbied heavily for a chance to establish
a CDMA beachhead in this country.
William Bold, vice president for
governmental affairs at Qualcomm, says,
"From the company's inception we have
spent a lot of time explaining the virtues of
CDMA technology, most principally to the
FCC in this country." But he voices the firm's
frustration with its efforts, especially in
Europe. "We think that part of the motivation
on the other side is to stop [our] growth."
What upsets the standard bearers for TDMA
and GSM is the way Qualcomm portrays its
cause: "We're being excluded by the
Europeans, you know, and therefore the
U.S. should retaliate," mimics Nicolas
Kauser, executive vice president and chief
technology officer for AT&T Wireless.
The FCC seems entranced by Qualcomm's
CDMA, as does Reed Hundt, its former
chairman. Just this June, Hundt, now a
consultant, addressed the CDMA World
Congress in Singapore, gushing about
CDMA and this country's competitive
climate, and condemning European
governments for holding off competition.
Qualcomm took that "made-in-America"
argument to Washington and lobbied
heavily for a chance to establish a
CDMA beachhead in this country.
Kauser recalls meeting Hundt this May: "I
was given an award by the Carnegie Mellon
Institute and he [Hundt] was the guest
speaker, and he spoke about all the
wonderful things the FCC had done, and
then he said, 'thanks to us there is
Qualcomm.' At the end of it I said, 'you know
Reed, you could have said anything but that.
Is it FCC's rule to form companies?'"
Forbes Digital Media interviewed the FCC's
current chairman, William Kennard, who
flatly stated that GSM is "basically a useless
standard," adding that Europe is "not
backing GSM for 3G, but backing
Wideband CDMA." Forbes is surprised
Kennard doesn't seem to realize that, as
Julian Herbert, an analyst with EMC World
Cellular Database in London, says, "It could
be argued that this [decision to move to
wideband CDMA] ensures the survival of
GSM platforms, requiring only the radio
element to be replaced or upgraded." This
kind of talk from the FCC belies the
Commission's stated desire "to give every
manufacturer an opportunity to get their
wares to marketplace," since it has written
off GSM as useless.
The competition also charges that
Qualcomm plays fast and loose with the
facts. Qualcomm's capacity claims for its
current generation of wireless haven't come
to pass, say the company's critics.
Qualcomm's William Bold maintains, "In its
current product offering the advantage is 9
or 10 to [analog]." GSM can get 6 or 8 times
analog and TDMA can be nudged to get 5
to 7 times analog. If you break down a
network into cost of an individual voice
channel, TDMA and GSM are roughly the
same--$6,000 to $6,500. CDMA is double
that.
Carriers were lured in by thinking that with
more capacity they could cut back on
infrastructure costs--hardware, software, site
acquisition and legal fees--which for a single
cell site can be as much as $500,000. A
company basing its business plan on the
kind of capacity Qualcomm was promising
would find itself severely underfunded.
Now, things get more confusing. GSM rules
the world. The Europeans love it. The
Asians who use it love it. Now GSM is going
to be made over. That means the carriers
are considering upgrading to yet another
standard. This one is called wideband
CDMA. Does this mean good news for
Qualcomm? Nope. Qualcomm owns the
patents on narrowband CDMA. Qualcomm
is not nearly as major a player in the
wideband arena. Wideband versus
narrowband comes down to an issue of
increased capacity and a different
emphasis on what is transmitted. Wideband
is focused on providing data and
messaging services like two-way paging,
where narrowband is based on providing
voice services.*
The crux of the next generation of digital
cellular comes down to the air interface--the
way the phone connects to the base station.
The standard that Europe and Japan are
leaning toward is wideband CDMA (related
to TDMA, not Qualcomm's CDMA, which is
narrowband.) Thus, should Europe firmly
pick wideband, Qualcomm will be virtually
left out of a market, whereas with the first
generation of CDMA, it rules because of its
patents. Anyone dealing with first-generation
CDMA pays some sort of fee to Qualcomm.
Not so, with wideband CDMA.
According to analysts, some form of CDMA
will most likely be the eventual worldwide
standard, because when the technology is
mature it will provide greater capacity. Even
Warkentin, the head of the GSM Alliance,
agrees that wideband CDMA is the future.
Qualcomm feels the same, just as long as
the world's next CDMA solution is called
cdma2000.
Qualcomm has irritated both the European
Telecommunications Standards Institute and
the Electronics and Telecommunications
Research Institute, Korea's equivalent to
Bell Labs. The Europeans are angry
because Qualcomm refuses to grant
irrevocable licenses for its wideband CDMA
patents. Patents aside, the next generation
of cellular services begs the question: Why
would Europe pick a technology that would
mean they'd have to rip up everything and
completely start over?
Remember that there is virtually no
difference in digital cell phones, as far as
sound is concerned. The biggest problem is
that you can't simply take an American
TDMA or a CDMA phone and use it in
Europe. And vice-versa. You'll have to take
along a subscriber identity module (SIM)
card (about $40), which will give you the
identity of your homeland's telephone.
Don Warkentin of the GSM Alliance
probably states the opposition's position
most succinctly: "What Qualcomm is trying
to tell everyone is that the world would be
better off if we agreed on the same air
interface--and by the way you have to have
Qualcomm's [system] in the middle of it so
they can have an ongoing royalty stream.
What the GSM community is saying is 'we
don't need you, because to conform with
what you want would degrade what we have
invented.'"
While the battle rages, cell phone owners
who try to keep in touch when they cross an
ocean are basically screwed unless they fit
their phones with the modules required to
make them compatible with the host
country's standard, or they carry a European
and an American phone. Perhaps the
answer for the most exasperated is a
satellite phone. Then again, there's always
E-mail on your laptop. Or, just use a phone
booth.
*On Aug. 2, when this was originally
published, this sentence incorrectly read:
"Wideband is focused on providing voice
services, where narrowband is based on
providing data and messaging services like
two-way paging." |
