It was not a major surprise that six leading communications companies filed complaints with the European Commission (EC) against CDMA chipset giant Qualcomm Inc.
As reported on Friday (Oct. 28), Broadcom, Ericsson, NEC, Nokia, Panasonic Mobile Communications and Texas Instruments each asked the EC to investigate and stop alleged anticompetitive conduct by Qualcomm in the licensing of essential patents for 3G mobile technology (see Oct. 28 story).
One simply wonders what took the industry so long to act upon Qualcomm’s alleged ruthless business practices, which, at times, have been compared to Intel Corp.’s behavior on the microprocessor front. The difference is that Qualcomm is less visible and operates under the radar screen in sunny San Diego.
But on the other hand, one also questions the motives behind the EC’s complaint. Perhaps some, namely TI, are afraid that Qualcomm will become the eventual winner in 3G and maybe it’s time to grab the tiger by its tail before the market gets too hot.
Here’s another possibility: 3G is a bust and Qualcomm is the scapegoat. Perhaps it’s a combination of the two scenarios.
After all, the overall 3G handset market was viewed as a “disappointment” in the first quarter of 2005, but the ramp is projected to be much stronger in the second half of this year, according to a report from RBC Capital Markets Inc. In total, the 3G handset market is expected to grow from 24.2 million units in 2004 to a modest 50 million in 2005, according to RBC.
In any case, for years, Qualcomm claims to have competed fairly in the CDMA chipset market at least on the surface. In the mid-1990s, the pioneer in the CDMA business attempted to open up the 2G-based CDMA standard by licensing its internally-developed cdmaOne chip set technology to four companies: DSP Communications (later acquired by Intel), LSI Logic, PrairieComm (later acquired by Freescale), and VLSI Technology (later acquired by Philips).
In more recent times, Samsung, Sony, STMicroelectronics and TI have separately attempted to enter the 2G-based CDMA chip set fray.
But over the years, not one company has successfully developed a CDMA chip set to rival Qualcomm. Intel, LSI Logic and Sony separately failed and exited the CDMA chipset business some years ago. ST recently threw in the towel. Samsung has failed to get a product out the door. Even mighty TI has stumbled in the arena.
Simply put, it has never been a fair and open market. By the time a CDMA-based chipset hopeful enters the fray, Qualcomm is at least two generations ahead with a chip product equipped new and advanced features for the technology. And most handset makers are reluctant to use a tardy, unproven CDMA chipset other than those from Qualcomm.
So it’s no surprise that Qualcomm aggressively competes or treads on anti-competitive waters in cdmaOne or its 3G variant, dubbed cdma2000.
Moving into the present, the EC complaint alleges that Qualcomm is playing hard ball in the rival WCDMA camp. “The companies believe that Qualcomm's anti-competitive behavior has harmful effects for the mobile telecommunications sector in Europe, as well as elsewhere, because carriers and consumers are facing higher prices and fewer choices,” according to the EC complaint.
Qualcomm wants a bigger piece of the pie in WCDMA, but one doubts that the fabless chip maker is the cause of higher prices and fewer choices in 3G.
3G has simply been a major disappointment in the first place. In the U.S., for example, the technology has been a no-show. It’s been a bust in Asia-Pacific as well. In Singapore, for example, 3G handsets are too clunky and the services are too expensive.
In late-2003, South Korea’s SK Telecom started commercial WCDMA services in Seoul. The offering attracted few subscribers, mainly due to technical glitches, handover issues and poor handsets.
“The government solved the handover problem, the signal disconnection when cell phone owners move from the WCDMA network to other networks and vice versa, via technology development,” according to a recent report from The Korea Times. “However, dual-band-dual-mode phones, which operate under both W-CDMA and current CDMA networks, are rare, hampering the full-fledged takeoff of the 3G offerings.”
Perhaps the cell-phone industry should spread the blame for its 3G woes. And one also wonders why consumers would even consider 4G mobile services, especially with the advent of WiFi, WiMAX and a combination of the two broadband WLAN technologies.