NY Times. 'Holy War' Over the Future of Wireless
nytimes.com
February 15, 1999
By SETH SCHIESEL
erhaps 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.
Copyright 1999 The New York Times Company
|
