Irwin Jacobs, chairman of Qualcomm Inc., fought a David and Goliath battle during the 1980s to get Code Division Multiple Access technology accepted by the U.S. wireless establishment. Having accomplished that in a big way, Jacobs now is fighting another war of biblical proportion to prevent his San Diego firm from being locked out of the global third-generation wireless market in the next century.
Jacobs recently talked with Washington bureau chief Jeffrey Silva about the trials and tribulations of 3G.
RCR: Could you talk a little bit about your recent trip to Europe?
Jacobs: One of the reasons for going over was to gather information, get a feeling for what operators feel they need in 3G, when they think they need it, and also to communicate our own message that we essentially are willing to license technology that meets basically three principles:
First, that there is a single, unified standard-a converged standard. The reason for that is right now we have multiple standards here in the United States, which is fine. But Europe only has a single standard, so it’s not quite a level playing field. Instead of running into that situation again, going forward, we would rather just have a single standard which might over time evolve into others for 3G.
Secondly, that this new merged standard be friendly to both GSM (European-based Global System for Mobile communications) and the IS-41 (the signaling protocol used in North American standard cellular systems) network. Since there will be somewhere approaching a billion users by the time 3G actually goes into operation, then those will be on both of these networks.
One should be equally friendly to both. We’re not trying to get any additional consideration for IS-41 over GSM, but it shouldn’t be the other way either.
Thirdly, the technical side. We’re very happy that everybody-almost everybody-has accepted CDMA-in fact, direct sequence CDMA-as the proper technology to use. And so one is now down to issues of technical choices and parameters that have to be made in rounding out a standard. Our position is if there are two choices, A and B, that if A is technically superior or has cost advantages, or offers other features, choose A. But if they’re roughly the same-I can’t demonstrate A is better than B one way or another-then choose the one with the best evolutionary path.
Since the air interface is CDMA, that best evolutionary path will be cdmaOne. That’s essentially the principles which I view almost like motherhood. But there are others that don’t want to follow that particular path.
RCR: What will you do if Europe rejects cdmaOne?
Jacobs: We think, first of all, they are rethinking the situation. There is further attention being paid to convergence. Whether it will occur or not, according to those principles, I’m not sure. But if there is a standard that doesn’t meet those principles and involves our essential IPR (intellectual property right), for example, W-CDMA (wideband CDMA), we have informed ETSI (European Telecommunications Standards Institute) requires our essential IPR-that we would not license according to the fair and equitable statement that they request.
RCR: Will you bring litigation?
Jacobs: No. Only if someone tries to implement a system using our IPR, then there would be litigation. I doubt if it would ever get that far … If you leave the essential IPR in it would be foolhardy for a manufacturer to build knowing they’re violating an essential IPR.
RCR: Why do you think Europe has balked at convergence? Some say Qualcomm licensing is too expensive. Is that what you’re hearing?
Jacobs: Well, I think there are probably a lot of different reasons. First, with respect to the price of licensing, we currently have 57 companies-maybe more now-licensed for cdmaOne. It’s obviously growing very rapidly. So the license fees are not an inhibition to growth nor a significant economic factor insofar as equipment. Nobody likes to pay royalties to anybody else. I would understand that the lower the royalty, the better people like things.
But, having said that, it’s not inhibiting the growth of the system. Indeed, the cost of equipment drops percentage-wise by the percentage one pays in royalties every several months. So it’s not a major factor.
Of course, in designing a new standard-although presumably decisions are made on a technical basis-in fact most, companies try to get some of their own IPR in so they can use that to reduce the amount they would pay. That’s understandable. That’s just the standard way of playing the game. We don’t have a great problem with that.
In this particular situation, the present ETSI W-CDMA standard includes our essential IPR. It’s already there. It’s not a question of more or less. As long as you acquire that, then one needs to obtain an agreement in order to make use of it. So that problem is already there. If they want to avoid the use of that IPR, then you design a rather different system. But, of course, the cost of that rather different system and the effectiveness could be much worse.
RCR: What do expect from the U.S. government on 3G?
Jacobs: If you look at the situation, the U.S. has been very open. You bring a C-GSM (a GSM-based CDMA standard) system and have it approved in three months. You cannot do the same thing these days going over to Europe with cdmaOne, IS-95. Although it has claimed that it’s a democratic and open process, in fact, there are many structural blockages in voting and equities that make that very difficult. So that’s something we discussed in Europe and I would hope that situation improves.
If new spectrum is awarded (in Europe) and a single standard is specified that is not equally available to U.S. companies, I think the U.S. government would be concerned. If some practices are followed that might be viewed as more of an industrial policy for Europe, as opposed to a way to approach a fair and open marketplace in telecommunications, there would be some concern. I suspect right now everybody is watching the situation very carefully.
RCR: How do feel about being accused of trying to game the U.S. 3G standards process?
Jacobs: I was incredulous that, I guess it was Edward Black, and then it was backed up by someone else in the CCIA (Computer & Communications Industry Association ) … I was incredulous that he sent such a letter without ever checking to find out whether it was factual. And, of course, it was not factual, it was incorrect, if the company he had in mind was Qualcomm. I thought it was irresponsible. (Black is president of CCIA.)
RCR: Where will you go from here?
Jacobs: First, an interesting thing I believe has occurred. The U.S. has taken a lot of heat even in the U.S. press about the fact that the U.S. has an open-market approach, allows multiple standards, there’s competition, etc. and people have been saying, `Gee whiz, that has caused the U.S. to fall behind.’
But now we suddenly find that, indeed, the U.S. is not behind. Because of allowing this flexibility, we have CDMA systems operating here-the technology is moving ahead, well developed-and will continue to improve and provide the capabilities that people desire in a next generation just through the normal evolution. So the U.S. and other countries whose companies that have adopted this technology are on a very, very positive path. Right now, by holding out CDMA to date in Europe, I think they’ve set their own companies and their own operators back a certain distance. So looking forward, what I would hope would happen is that there is recognition that convergence is desirable and that one should not try to build in an advantage for GSM. But rather that it work as a worldwide standard. The main, new contribution of this is not to make voice more efficient. It’s not going to be more efficient than IS-95 as it evolves, but to provide high-speed, high-burst
-rate data particularly aimed at the Internet.
RCR: So is the 3G debate about phones or more about
powerful, unwired laptop computers of the future?
Jacobs: I think it’s really a marketing and a trade battle and has nothing really to do in the near term providing these (computer) services. If you talk with most operators, and again I talked with several operators in Europe where they see their needs, clearly voice pays a lot of the bills these days. The data is coming along. We have very, very good quality and very good spectral efficiency for voice with cdmaOne. But in addition to that, we have the ability to carry data very efficiently and as IS-95B, now C, get implemented, we’ll have data rates efficiently up to the roughly 100 kilobit-per-second range.
At which point, almost all of the services that you’d like to provide for mobile users, and indeed for wireless users-e-mail, the synchronization of calendars, address books-all that’s done very effectively at even lower rates. Even reading and monitoring Web pages on a fairly small device is handled exceedingly well at these data rates. There’s not a significant market demand at this point for services that won’t be easily accommodated with the evolution of the existing systems that are underway. It really, it seems to me, is a path for companies that haven’t adopted CDMA to try to move to CDMA but do so, while forcing enough differences so that existing manufacturers and operators don’t have advantages. And that’s what we object to.
RCR: Do you think Rep. Morella and others in Congress have more to say on 3G?
Jacobs: I don’t think Congress would legislate backward compatibility or anything of that sort. Again, what everybody is watching for, is that there be a fair and equitable process; that intellectual rights are not trampled on in arguing for some special trade allowance; that spectrum be awarded in a manner that allows real competition. That’s the area Congress will focus on, not on a particular technology.
On the other hand, if in order to gain advantage for one region or another-one boosts a system that is intentionally non-evolutionary-then the question is why are people doing that? And that could get attention.
RCR: When will 3G be on the market?
Jacobs: Some are saying the year 2002. I’ve seen one company that’s had earlier dates. I think indeed it’s going to be later than that. There’s a lot of standards’ work to be done, there’s an issue of deciding what the market really is and is there a market demand for it. The only area-group-that may be pressing for an earlier time … Clearly there are some companies that have a competitive problem with spectral inefficiency of their existing systems. One way is to go is to change to cdmaOne. Another way would be to go to a new system were it available early enough. Also, there are regulators who might wish to try to repeat the success of GSM in that by legislating that this particularly technology be used across Europe in this new frequency band.
Indeed, it was very successful both from the point of view of allowing roaming across Europe-which was the original intent-but also to build up something of an industrial policy-jobs. You can now roam across Europe so you don’t have to worry about the issue any longer and that’s a much simpler requirement than specifying that you must use this particular standard.
RCR: You had to prove yourself in the U.S. What’s been most disheartening about making the case for cdmaOne in the global arena?
Jacobs: Actually that’s the most heartening part. We’re not being asked to prove ourselves. That part is great. The disheartening part is people now adopting it (CDMA) but doing it in a way that would cause additional expense to companies that had the foresight to adopt CDMA earlier. The fact (is) we have to fight another battle in order to get convergence, in order to get a reasonable set of principles followed in moving to another standard. So that’s a frustration.
The second frustration is trying to make contributions within ETSI and having them tabled to having them disregard it. I’m hoping that situation will change.
RCR: What makes you think that will change?
Jacobs: The times are changing. Without a strong IPR position, things probably would not change quickly. But that does get everyone’s attention. With that attention, I’m hoping people take a much more reasonable position.
RCR: How do you feel about the fact that other U.S. wireless equipment manufacturers have not been as vocal as Qualcomm about 3G?
Jacobs: For any company, it’s a very complicated situation. We’re somewhat unique. We’re CDMA and we don’t have GSM technology, although we’d like to be able to introduce a CDMA interface with a GSM network.
Lucent Technologies Inc. has a very strong belief that the evolution of cdmaOne does provide the strongest, most capable system and certainly they’ve been supporting that. But even there, they have European parts of the company that are providing GSM equipment and probably are somewhat less strong in support. Motorola Inc. has a significant GSM business. They’ve also been focusing a lot internally recently, so they’re taking a little less visible position.
But each of those companies have been part of developing cdma 2000 and they’re all playing an active role on this evolution.
RCR: Given that, is there any chance Qualcomm could be sold to Lucent?
Jacobs: I guess in business almost anything is possible, particularly these days. I’m not looking to be acquired. One always looks for interesting strategic relationships, possible arrangements. But as far as the whole company being acquired, that’s not something we’re doing.
RCR: Anything you would like to add?
Jacobs: I think that, indeed, it is going to work out in the following sense: That the choice of CDMA means that our IPR becomes important. We’re committed to finding a converged standard, but we would not be willing to license a second standard that didn’t meet those fairness requirements. And we don’t think most companies would want to proceed with those types of IPR issues wide open. What we’re hoping is that even if it takes a little more time, that companies and various standards bodies get together and converge on a single standard that is equally fair to GSM and IS-41 and that doesn’t make changes needlessly to existing CDMA.
