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    HomeInsightsWhat century is it?

    What century is it?

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    “Tonight we’re going to party like it’s 1999…”

    GSM equipment makers’ charges against Qualcomm, and the American company’s defence of them transported this correspondent back to the “Holy Wars” of the late 1990s, when the IMT-2000 standard was being formed. The issue then was whether the worldwide harmonised standard for third generation mobile telephony systems was going to be built upon technology based mainly on the “European” GSM standard or the Qualcomm dominated CDMA technology. Of course the result was a kind of mishmash, or parallel development that has continued to this day. But, crucially, the decision to develop 2G GSM into 3G W-CDMA left the GSM vendors reliant on Qualcomm’s licensing structure for certain CDMA technology.
    At the time there was little love lost between the GSM community and Qualcomm. The GSM vendors tended to portray Qualcomm as grasping and trying to impose a proprietary technology on the world, undermining GSM’s utilitarian ideal of open standards and fair practice licensing. Qualcomm would portray the GSM vendors as a closed shop of self-interested protectionists depriving consumers of superior technology.
    Now, the times may have moved on but the debate seems stuck in an old groove. First, the news dropped that the GSM vendors (Broadcom, Ericsson, NEC, Nokia, Panasonic Mobile Communications and Texas Instruments) had filed complaints to the filed Complaints to the European Commission requesting that it “investigate and stop Qualcomm’s anti-competitive conduct in the licensing of essential patents for 3G mobile technology”.
    The companies said that Qualcomm was failing to meet earlier commitments that it would license in a “fair and reasonable” manner.
    The vendors said Qualcomm was excluding competing chipset manufacturers from the market. It said Qualcomm had “committed a number of abuses, ranging from the refusal to licence essential patents to potential chipset competitors on fair, reasonable and non-discriminatory terms to offering lower royalty rates to handset customers who buy chipsets exclusively from Qualcomm.”
    It also said that Qualcomm was charging the same for royalties in W-CDMA as it does for CDMA-2000, despite the “fact” that “Qualcomm has contributed far less technology to the WCDMA 3G standard than it has to the CDMA2000 standard.”

    Hitting back, Qualcomm pointed out there were 130 licensees of its technology, which it said demonstrated that its terms must be fair.
    Qualcomm also said it has contributed just as much to W-CDMA as CDMA-2000. It also pointed out that evidence that it is integral to W-CDMA lay in the fact that attempts to design W-CDMA systems without its technology had been unsuccessful. It also said that it was “especially ironic that the complaints are being lodged by suppliers who voluntarily entered into license agreements with Qualcomm, acknowledging its leading WCDMA patent portfolio. This action appears to be nothing more than an attempt by these licensees to renegotiate their license agreements by seeking governmental intervention.”
    Paul Jacobs, ceo of Qualcomm, said that the complaints came from “entrenched” 2G suppliers worried about competition from new competitors (many of them Qualcomm licencees) taking advantage of the brave new world of Qualcomm’s chipsets and licensing process.
    Unable to resist a few “1999” style swipes, Qualcomm pointed out that W-CDMA handset prices were reducing, and user uptake increasing, at a faster rate than when GSM was launched. It also claimed there were a “small number of entrenched suppliers in GSM”, compared to the “many handset vendors” operating in W-CDMA.The GSM Association, the industry lobby association for GSM and 3GSM operators, bravely struggling to present an independent voice, and said that it was in the best interests of all concerned to get a speedy resolution to the allegations.
    “It is to no one’s benefit—including Qualcomm’s—to have this uncertainty,” said Rob Conway, CEO and board member of the GSM Association (GSMA).
    “While we in no way pass judgment on the merits of these allegations, nevertheless these are troubling claims coming from leading suppliers in our industry,” said Conway. “Indeed, as key buyers and distributors of W-CDMA network equipment, mobile phones and related products, the operator members of the GSMA are understandably concerned by these allegations.”