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Ericsson plots Qualcomm's demise

Passion, poison and petrefaction in the wonderful world of W-CDMA...

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The US CDMA digital phone standard is in danger of being shut out of consideration in the international discussion for third generation (3G) cellular systems; or so it would appear from a series of coded press releases issued over the week. In the wonderful world of mobile phone company strategic direction, press releases frequently don't mean what they purport to say. Henry Kissinger or Machiavelli might grasp the intent instantly, but mere mortals and honest journalists haven't much hope of spotting the daggers and poison chalices carefully inserted between the lines. Bizarrely, these press releases aren't meant to be published. The companies are sending one another threats and signals while maintaining unctuous smiles on their corporate faces. We can tell you don't believe us - but in the past couple of days the plot designed to hang CDMA and Qualcomm out to dry cranked into action. Two days ago Ericsson published a statement offering a proposal "to harmonise third generation mobile communications." The meat of the proposal was that the chip-rate of WCDMA, which is the basis of the European UMTS 3G standard and a candidate for incorporation in the ITU's IMT-2000 global one, be reduced from 4.096 Mcps to 3.84 Mcps. This is the arcane point at which everybody except a handful of backstabbers world-wide is supposed to stop reading. "We are very optimistic that our proposal meets with all requirements for harmonised 3G standards for users of GSM, TDMA IS-136, cdmaOne and PDC equally well," smiled Ericsson VP Ake Persson. Yesterday Nokia followed this up by saying it "looks forward to closely reviewing recent proposals for the adoption of the common chip rate of 3.84 Mcps for both WCDMA and CDMA 2000." so what we've got so far is an Ericsson proposal, and a Nokia reaction of studied neutrality. Nokia is reserving its rights to jump in whichever direction it decides suits it, apparently. So, onwards to today. The CDMA Development Group (CDG) claims the Ericsson proposal is hypocritical. Says voluble CDG executive director Perry LaForge: "We find it frustrating that Ericsson says it's trying to compromise, but again chooses a chip rate that is made purposely incompatible with the cdma2000 proposal... Clearly there is no difference in performance between 3.68 [the rate proposed for cdma2000] and 3.84 Mcps... So how then is 3.84 Mcps a compromise?" If you've stuck with us this far you're probably puzzling over what it is they're arguing about. But the trick is to grasp that what they say they're arguing about isn't really what they're arguing about at all - it's a sort of proxy war. Ericsson has clearly deliberately made a proposal that it knows will be unacceptable to the CDMA lobby, while Nokia is holding itself in reserve. Between the two of them they can call the shots in Europe's ETSI, and they have a mutual interest in stitching up Qualcomm. Which brings us on to the real argument. On Monday the ITU issued a warning "that CDMA-based RTT proposals for IMT-2000 could be excluded from further consideration if [the] IPR stalemate is not resolved by the year end." This uncharacteristically uncoded edict basically means that if the CDMA camp doesn't start to negotiate reasonably on intellectual property it's not going to be allowed to play in the construction of a global phone standard by being allowed to submit candidate Radio Transmission Technologies (RTTs) for consideration. Robert Jones, Director of the ITU Radiocommunications Bureau, says: "To conform with the ITU patent policy the holder of any known patent or any pending patent application related to any proposal made to the ITU in the process of international standards-setting must submit a written statement, either waiving his rights or committing to negotiate licenses on a non-discriminatory basis and on reasonable terms and conditions. Failure to provide this statement ultimately excludes the proposal from the international standards-setting process." So the ITU isn't saying contributing technology should be royalty-free, but that it should be freely and reasonably licensed. Which might seem reasonable. The ITU has set a deadline of the end of this year for patent statements on IMT-2000 RTTs, and has received two "upholding IPRs on CDMA-based technology proposals: one by Ericsson on 28 September 1998 and one made by QUALCOMM on 13 October 1998." Ericsson seems to sort of accept the ITU conditions, but says, according to the ITU, that "it is not prepared to offer licenses, provided that some other company does not apply such reciprocity in its licensing commitments and by such non-reciprocal action, hinder free choice on equal terms between available standards." Again according to the ITU, Qualcomm is willing to conform on cdma2000, but on a stack of others, including UMTS, W-CDMA and Korean CDMA, it "is not willing to waive the IPR rights it says it holds nor is it willing to agree to negotiate licenses with other parties on a on-discriminatory basis on reasonable terms and conditions." Qualcomm is claimed only to be willing to licence its IPR if first, a single converged world-wide CDMA standard is selected for 3G; second, that this standard accommodates equally the two dominant standards of today, and third, that "Disputes on specific technological points should be resolved by selecting the proposal that either is demonstrably superior in terms of performance, features, or cost, or, in the case of alternatives with no demonstrable material difference, the choice that is most compatible with existing technology." Requirement three looks like a handy last trench to inhabit if the other two are agreed, but you get the picture. Qualcomm has been betting the IPR ranch on leveraging itself into a pivotal position in IMT-2000, and on being able to derive extremely comfortable revenues from the rest of the industry. Coming to acceptable agreements on IPR assignment is absolutely vital to the production of converged standards, so Nokia and Ericsson, who aren't about to roll over without a fight, are working hard to isolate Qualcomm. (Lots of other companies want to isolate Qualcomm too, but that's another story). The ITU announcement makes it abundantly clear that the isolation process proceeds apace. The CDMA people, RSN, may have to truck out FCC spokespeople bashing on about letting the market decide again. And that chip rate stuff? Well, Ericsson has made an offer that is difficult for the CDG to accept, and deliberately so. Maybe Nokia is playing good cop, by welcoming the possibility of discussion. And by rejecting the offer out of hand, the CDG looks intransigent again. ®

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