'Holy War' Over the Future of Wireless
By SETH SCHIESEL
Perhaps the most far-reaching battle in
telecommunications these days is not being waged in board
rooms or stock markets. It is being fought in places
like the Mines Beach Resort and Spa outside
Kuala Lumpur, Malaysia.
There, in a conference room not far from the ocean,
representatives of 34 of the world's largest
communications companies joined official delegates from 14
nations on Feb. 6 to try to forge a
consensus on the next generation of wireless phones.
That they failed was hardly surprising. For the last 18
months, the biggest
players in the wireless business, both carriers and
equipment makers, have been
embroiled in what an AT&T spokesman describes as a
financial, regulatory and
political holy war for control of the wireless future.
In six weeks, the International Telecommunication Union, a
United Nations
agency that set up the meeting in Malaysia, is scheduled
to start approving
international standards for wireless technologies for the
next decade. But that
process is being threatened by a general reluctance to
compromise on arcane
technical standards and in particular by intransigence on
the part of Ericsson of
Sweden and Qualcomm Inc., of San Diego, two big
communications
manufacturers that have feuded for years.
The stakes are immense for both consumers and the
companies. Over the next
few years, most of the world's wireless carriers intend to
introduce services that
could prove technically momentous. With an emphasis on
bringing high-speed
data services to customers wherever they are, proponents
of so-called
third-generation wireless technology predict that the next
wave of mobile
phones will incorporate World Wide Web browsing and video
conferences.
Billions of dollars in revenue could await the companies
that manufacture and
sell the equipment that will make this happen.
At the same time, a wave of consolidations is creating
bigger and broader
wireless carriers. Last month, for instance, the Vodafone
Group, Britain's
biggest wireless company, agreed to acquire Airtouch
Communications of San
Francisco, another huge wireless provider, for $60
billion.
And as carriers extend their coverage, there is rising
potential for callers to be
able to use one phone, with one number, almost anywhere
and at rates that are
widely affordable. But to make that happen, the carriers,
manufacturers and, to
some extent, governments would have to agree on a single
standard. Many
industry insiders now think that will not happen.
"The idea of one standard or a universal standard sounds
good," said Jim
Brewington, who runs the wireless business for Lucent
Technologies, North
America's largest communications equipment maker and a
relatively neutral party in the dispute. "We
would like to see it happen. I frankly don't think it's
going to happen."
Fabio Leite, a wireless counselor for the
telecommunications union in Geneva, said, "We have a lot of
reasons to be pessimistic." And even the adversaries
concede that the fight, though couched in highly
technical language, is really a political struggle.
"If you're asking me is it a political issue or a
technical issue, I'll say it's a political issue," said Keith
Paglusch, a senior vice president of Sprint PCS, a big
U.S. wireless carrier that essentially belongs to
the Qualcomm camp. "It really is a business/political
issue."
The roots of the row over
third-generation wireless technology were put
down in the early 90s, when it became
clear that the first generation of
wireless phones, analog cellular, was
going to be replaced by a second
digital generation known as PCS --
personal communications services.
At that time, Qualcomm was basically
alone in advocating a wireless
approach known as CDMA, for code
division multiple access. This works
somewhat like the Internet in that it
breaks messages into small bits, which
are then scattered throughout the
wireless telephone spectrum and
reassembled at their destination. The
idea that CDMA, which was originally
developed for military purposes,
could be adapted to civilian use was
heresy to many wireless engineers and
their companies.
Perhaps the most vociferous in its
criticism was Ericsson, which had built a
big second-generation wireless
business on a competing technology called
time division multiple access. That
technology uses relatively narrow
batches of wireless frequencies,
which it then breaks up many times a
second to convey many messages.
It is in a lot of ways similar to a
third technology in the wireless alphabet
soup: GSM, or global system for
mobile communication, which is the
dominant second-generation standard
in Europe and many other areas. It is
largely associated with Ericsson but
is also supported by Nokia of Finland,
Siemens of Germany and others.
Despite the engineers' early doubts,
CDMA, which was chosen by Sprint
PCS and a few other carriers, turned
out to work just fine -- and perhaps
better than fine. So Qualcomm was
upset when in October 1996, just as
CDMA was emerging, Ericsson sued
Qualcomm, charging that Ericsson held
patents covering parts of Qualcomm's
systems. The trial is scheduled to
begin in April in a Federal court in
Texas.
Not much later, development began on
the wireless third generation, and
both Qualcomm and Ericsson chose to
use CDMA technology for
transmitting digital data at high
speed.
But in developing third-generation systems, Qualcomm and
Ericsson seemed to have different agendas.
Qualcomm wanted the new systems to be compatible with
existing CDMA systems, so that carriers
would not have to scrap their investments and Qualcomm
could continue to sell second-generation
CDMA with the promise that it could be upgraded.
Ericsson, with no installed base of CDMA systems, did not
appear as concerned with the
compatibility issue. So with European partners, it
developed a technology that is not compatible with
existing CDMA services. It said it simply wanted the most
robust, advanced system possible. But
some U.S. executives and officials smelled a plot after
the European Union adopted a directive in
December that appeared to force European carriers to use
Ericsson's third-generation technology.
Secretary of State Madeleine Albright; Secretary of
Commerce William Daley; U.S. trade
representative Charlene Barshefsky, and William E.
Kennard, chairman of the Federal
Communications Commission, sent a letter to the Europeans
expressing concern over the policy.
Last month, the European commissioner for
telecommunications, Martin Bangemann, appeared to
mollify American policy makers somewhat by saying that
competing standards would not be barred
from Europe. But suspicion remains.
An American official, speaking on the condition of
anonymity, said, "It appears to some of us that our
friends in Europe want to duplicate the conditions that
allowed GSM to become the predominant
global second-generation technology: Get it to market
first, mandate it as a pan-European standard and
make sure it's not backwards-compatible with existing
wireless networks in North America."
Ericsson and Qualcomm have now each claimed patent rights
over each other's third-generation
proposals, and the International Telecommunication Union
says it cannot certify a standard until the
property rights are settled. Qualcomm wants Ericsson to
converge its standard with Qualcomm's in a
way that grants existing CDMA operators thorough
compatibility. Ericsson has so far refused, saying
such convergence would yield a technically inferior
standard.
The end game may be a proliferation of multiple standards.
For consumers, that could mean
abandoning hope for a seamless global wireless network. Or
it could mean higher prices if carriers
and equipment makers have to offer many technologies to
insure seamless global wireless systems.
From New York Times. Feb 15th. |
