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To: Jeff Vayda who wrote (26115)	4/5/1999 2:10:00 PM
From: Ruffian	Read Replies (1) \| Respond to of 152472

Cdma Uphill Battle In Euro> April 5, 1999 cdma2000 faces uphill battle in Europe By Jeffrey Silva WASHINGTON—Despite the much-ballyhooed settlement of the patent dispute between Qualcomm Inc. and L.M. Ericsson and the global embrace of multiple third-generation mobile phone standards, it remains unclear whether American wireless technology can break into a European market that has shunned it to date. Some industry sources last week said the transAtlantic intellectual property rights deal merely enables Ericsson to rid itself of the nuisance that Qualcomm had become for the Swedish mobile phone manufacturer and predicted the IPR agreement will not translate into a breakthrough for cdma2000—an American 3G technology—in Europe. As such, there is a view Ericsson simply will sell W-CDMA in Europe and market cdma2000 in the United States. Qualcomm, which pioneered the commercial development of Code Division Multiple Access technology in the United States, has for months been fighting for a fully harmonized CDMA standard that could be accepted worldwide. That an umbrella, tri-mode standard (which includes cdma2000 and European-backed wideband CDMA technologies) has emerged from the International Telecommunication Union makes it no more likely that U.S. CDMA technology will make inroads into Europe, according to sources. Ericsson last week did little to dispel that theory. ‘‘In reality, very little has changed,'' said John Giere, vice president of corporate marketing and public affairs for Ericsson here. ‘‘The market,'' he added, ‘‘is going to follow the paradigm it did before.'' That paradigm is based on a single European-developed Global System for Mobile communications technology, which EU states have embraced and grown accustomed to because of its seamless roaming feature. Europe is not about to abandon W-CDMA technology after all the work that has been put into making it the 3G successor to GSM, according to Giere. European adoption of the W-CDMA in a big way could tip the scales insofar as Asia's decision on 3G wireless technology. The Clinton administration, for its part, last week signaled a shift to a less-hostile stance toward the EU on 3G. The administration, pointing to progress on multiple 3G standards development in the ITU and Finland's ‘neutral' technology position on 3G licensing, last week declined to target the European Union for 3G trade retaliation after months of sabre-rattling on the issue at the urging of lobbyists and lawmakers. Instead, the White House is taking a wait-and-see approach with the EU on 3G, and focusing telecom market-opening efforts on Mexico, Japan and Germany for now. ‘‘We now need to ensure that EU member states actually license and assign radio spectrum on the basis of standards that emerge from the ongoing negotiations at the International Telecommunication Union,'' said Charlene Barshefsky, the U.S. trade representative. But others are less optimistic about cdma2000's chances in Europe and far less diplomatic about saying so. Some industry observers insist the deck remains stacked against U.S. CDMA entry into Europe. First, a European Union directive requiring a pan-European 3G standard have European Telecommunications Standards Institute approval remains firmly in place. Wideband CDMA, crafted by Europe and Japan and championed by mobile phone giants Ericsson and Finland's Nokia Corp., is the only pan-European 3G standard sanctioned by ETSI. That guarantees there will be at least one W-CDMA system in each of the 15 EU member states, ensuring seamless roaming throughout the continent. Capital likely will flow to the 3G technology with the biggest footprint in Europe. Thus, carriers intending to bid hundreds of millions of dollars for 3G licenses in Europe may be inclined to minimize the risk of paying for an ‘island' system by steering business plans and financial resources toward W-CDMA over either cdma2000 or Time Division Multiple Access technologies. If that occurs, the United States will not be in a position to accuse the EU of industrial policy. W-CDMA dominance in Europe will have happened—seemingly so—on its own, without government prodding. ‘‘With respect to Europe, the Ericsson-Qualcomm agreement included a commitment by both companies to support the single CDMA standard at every regional standards body—including ETSI—in the world and at the ITU,'' said Jonas Neihardt, director of government affairs for Qualcomm. Other factors conspire against cdma2000 in Europe as well, despite the ITU's support of multiple 3G standards. W-CDMA technology was developed with the idea it would operate in a huge chunk of virgin spectrum, like that which will be auctioned or given away free for 3G systems across the EU. In contrast, U.S.-based cdma2000 is viewed in some circles as more of an overlay technology—one better suited for integration into existing mobile phone spectrum. That scenario fits the U.S., but not Europe. In Finland, the four firms (of the 15 that applied) that won 3G mobile phone licenses plan to deploy W-CDMA. One of the unlucky applicants was Saunalahden Serveri Oy, a Finnish Internet service provider. It submitted two bids: one proposing cdma2000 technology and another featuring W-CDMA. Not to be overlooked or minimized is the strong parochial support within the EU for home-grown technology and the growing resentment against the United States as a result of several high-profile trade disputes between the two Western powers. For sure, with the IPR agreement intact and Qualcomm's army of lobbyists reined in, the administration will not be under as much pressure to take trade action against the EU as it has been for the past 12 months. A couple of wild cards in the equation are the carriers, particular the big two that make up the proposed $62 billion merger between AirTouch Communications Inc. and Britain's Vodafone Group plc. Carriers could pressure companies to compromise on the differing chip rates on W-CDMA and cdma2000 technologies in order bring handset prices down and push sales volume up.