CDMA vs GSM : Can we have a clear winner ?

[AKKU]

I am from India and in India we only had GSM mobile services till a month back . But now the CDMA services have also been launched. I am associated with a CDMA co. I am a novice in this field but all you experts , could you people please give your very concrete opinions on various Technical parameters :
01. Voice Quality
02. Network Relaibility
03. Future Upgradability
04. Data Applications
05. Compatibility with other Technologies
etc as to which is really the better one - CDMA or GSM . This would be very useful info for me as here in India we need to prepare some real solid points on which CDMA could be a bettre option to GSM and on which points we would get beaten by GSM as the war between these 2 technologies has just begun in India- one of the biggest markets

[northform]

GSM is probably the better technology in both the short and long run.

Currently, GSM is able to handle 14.2 calls per MHz while CDMA2000 1xRTT can handle 15.6 calls per MHz using the inferior sounding EVRC codec. GSM is adding DFCA (dynamic frequency channel allocation) as we speak (some carriers have it running now) which increases GSM's capacity to 17 calls per MHz. Another advancement in GSM technology is SAIC or single antenna interference cancellation. Cingular has already begun deploying this technology that increases efficiency by 20% bringing GSM's capacity to 20.4 calls per MHz. Further, carriers are beginning to implement tighter reuse of GSM frequencies than is in effect now. Currently, GSM uses 4/12 reuse (4 cell sites with 3 sectors a piece). Basically, it means that each tower uses 1/3 of the carrier's spectrum. In 6 mo carriers will begin using 1/1 reuse (where every tower is able to use all of the providers spectrum). This would theoretically increase GSM's capacity by 3 times, but will probably be closer to 2-2.5 times more efficient. The tighter reuse is accomplished through the use of frequency hopping. EDGE, which is currently being deployed, but won't come to consumers for about a year, will increase capacity by another 15-20% by enabling a half-rate mode for when there is little/no audio to transmit. Finally, UMTS/wCDMA will blow away Qualcomm's 1xEV-DO/DV. One of the hugest problems with Qualcomm's technology is that you cannot use unused voice capacity for data or unused data capacity for voice.

GSM is more spectrally efficient while maintaining better sound quality. Qualcomm's CDMA does get slightly higher data rates (about 5kbps), but it is fighting a tough battle against a group of companies (including Siemens, Nokia, Ericsson, and Motorola) that have more advanced technology and deeper pockets.

As for compatability, neither technology is compatable with any other. Many CDMA phones can accept analog signals because analog capabilities have been added to them, but it is just as easy to add analog capabilities to GSM phones. The reason that analog add-ons just began in the GSM world is that GSM was primerally aimed at Europeans who didn't have analog networks that were further deployed than GSM networks. It just made no sense to create analog capable GSM phones for a US market that numbered less than 6 million. When ATT and Cingular joined the GSM party in the US it gave credibility to the technology in the US market and Nokia, Ericsson, and Siemens have begun making GSM phones capable of transmitting TDMA and/or analog signals.

01. Voice Quality - GSM. GSM was developed from ISDN digital telephone technology and it shows. CDMA's EVRC codec (the only reason why CDMA still exists) has poor audio quality, but does allow it to compete with GSM's efficiency.

02. Network Relaibility - TIE (maybe GSM). There really isn't a big difference here, but non-CDMA style systems don't suffer from shrinking coverage areas as more users connect to the system.

03. Future Upgradability - GSM. Here is a standard that is not tied to one company's financial status and the GSM upgrade path is more complete.

04. Data Applications - CDMA. GSM is a bit behind, but UMTS/wCDMA will be as capable as Qualcomm's 1xEV-DO/DV

05. Compatibility with other Technologies- TIE (maybe CDMA). Neither is compatable, but other capabilities can be added. It happens more often in CDMA phones because of market conditions.

Facts come from data published by Ericsson, Lucent, Nortel, Motorola, and Nokia (makers of network equipment and/or handsets for both technologies).

[bobolito]

Northform, that's nice and dandy, but I bet if you gather the facts from companies other than Ericsson, Lucent, Nortel, Motorola, and Nokia you would get a totally different answer. My point is, that which technology is better depends on who you ask. In my opinion, whichever is better should be weighted based on the user's experience, not on how feasible it is for the carriers to implement it. I also think that both GSM and CDMA are very close in capabilities when it comes to the user's experience. The truth is they both have their pros and cons. If you are a GSM fan and think it is better, then you would normally know where to look and find positive facts about GSM which normally come accompanied by negative facts about CDMA. If you are a CDMA fan and think it is better, then you would normally know where to look and find positive facts about CDMA which normally come accompanied by negative facts about GSM. Bottomline, once again, it depends on who you ask.

[AKKU]

Thanks Bobiloto for your opinion. Being a Moderator could you please bring bothe GSM and CDMA experts to give some inputs on this question so tha we can hear both versions and the decide who is better.

[IdiOTeQnoLogY]

the only reason cdma exists is because of EVRC codec?

i got a chuckle out of that one.

your information read more like a propoganda report- what bobolito said is true- each manufacturer will portray their technology in one manner or another.

but there was some 'way out there' information in that post- oh the things companies will say.

[bobolito]

I can think of several GSM savvy people in this forum, but I can't finger any specific CDMA experts. Maybe there are some that I am not aware of. I am more TDMA knowledgeable than GSM or CDMA. But I am sure that people from both teams will pop in eventually as they find this debate. I suggest you perform a search in this forum for GSM and CDMA. Type GSM in one search field and CDMA in the other and select AND in the middle. You'll see what I mean when you go there. Also, select all forum categories. There are extensive debates that have taken place in the past about this subject. I am sure you will find plenty to read.

[michiganeric]

Perhaps this document will help. I printed it a few months ago but didn't have a big enough binder clip to hold all the pages together. This is only about CDMA; I'm not aware of any primers like this pertaining only to GSM, TDMA, or iDEN, but I'm sure they exist somewhere. HTH.

--
Eric

[northform]

Without EVRC, CDMA wouldn't have the capacity or quality to compete with GSM. Using the standard 13kbps codec would use up too much spectrum (although it would still me more efficient than TDMA) and the standard 8kbps codec is years behind TDMA in audio quality.

GSM is strictly better in most instances. CDMA has a slight data advantage, but it is waning and CDMA lacks the voice quality that GSM has. Even if you look at where GSM is today, you can see that it is about equal in capacity and better in quality. In the future the GSM camp will have both. As a provider, it makes no sense to go with CDMA now (especially not outside of the US). GSM handsets are 30% cheaper. The technology isn't beholden to one company.

There definitely aren't CDMA experts (who cheerlead the technology) here and there is a reason for that. People who know about these things see why GSM is the better alternative from a technological standpoint.

[TacoBellGrande]

NorthForm, if CDMA is so bad, then why is the next generation of GSM based on WCDMA?

At the physical layer, CDMA offers considerable benefit over GSM. Power management is better, handoffs are beautifully executed, echoes (multi-path) improve the signal (as opposed to the conventional degredation). I simply don't believe your numbers on spectral efficiency. Everything I've heard is that CDMA is far more spectrally efficient. I'll admit, ABC news isn't known for their coverage, but they were near the top of google, and here's their numbers:

ABC News

As for WCDMA blowing away 1xEV/DO, I'm not so sure. Why do you say that?

So here's my answers to the questions:

1.) Voice Quality -- People say GSM. I'd have to compare. But the CDMA quality isn't bad, IMO.

2.) Network reliability -- In theory CDMA can handle handoffs (going from tower to tower) with much better reliability as it receives and transmits on two frequencies simulataneously. I'd say in practice, its largely dependant on the carrier and to a lesser extent, the equipment manufacturers.

3.) Future Upgradability -- An upgrade from IS-95 to 1x is supposed to be ridiculously simple. Most of the equipment stays, so I'm told. With WCDMA this is not true.

4.) Data applications -- CDMA is ideal for data. This is true for both WCDMA and IS-95/1x/whatever.

5.) Compatibility with other technologies -- Neither are compatable with anything, except to say that IS-95 is compatable with 1x (but they're very similiar in structure).

[northform]

Thank you for a knowledgeable, constructive comment TacoBellGrande.

CDMA is simply an air interface. Truthfully, what people call CDMA is actually IS-95 (sorry, I've been reading your post piecemeal and didn't read below before writing the before). There is nothing inherently wrong with seperating calls by code rather than frequency/time.

As for voice quality, if you don't live in a rural area, you probably won't see degradation from overuse. But still, the CDMA codec aren't as advanced as GSM's and you can tell when people use certain parts of speech (especially the letter s). They just don't come through as crisp.

They do transmit to two towers at a time, but it must break the first connection before the new connection begins to handle the call. GSM phones already continuously scan and test out new towers before breaking the current connection and making the new one. There really isn't an advantage there.

Well, CDMA is as compatable with 1x as GSM is with GPRS. Phones that don't support GPRS don't/can't use it. The same holds true for 1x.

The upgrade from IS-95 to 1x is simple, but so is the upgrade from GSM to GSM/GPRS. 1xRTT is not more advanced than GSM/GPRS. Both are stop gap solutions until the true next-gen technologies (1xEV-DO/DV and wCDMA) come around. In an upgrade from GSM to wCDMA, most of the equipment remains the same. Remember that wCDMA is not completely new stuff. It uses all of the GSM codecs and such. The upgrade to wCDMA from Qualcomm's CDMA isn't too dificult either since you can keep all of the rake antennas and such and merely add the GSM specific stuff.

A CDMA style system is not more ideal for data. Your getting switched circuit mixed up with packet data. Packet data is MUCH better for sending data then switched circuit, but both technologies support both. GSM and CDMAOne data are switched circuit and run at 14.4kbps. GPRS and 1xRTT use packets to achieve their speed and un around 40-60kbps (there isn't a distinct speed because many things effect the speed such as packet loos).

I cannot read your ABCNews link because it gets me to some web1000 thing. I'd assume that they used GSM and CDMA's numbers from years ago. The problem is that GSM has evolved since then while CDMA hasn't gotten any more efficient (at least on paper). CDMAOne had an 8kbps codec from the begining and Qualcomm used that to demonstrate its efficiency. The only problem is that it was almost never used because it sounded terrable (many people said worse than analog). So, until the EVRC codec came out, pretty much everyone was using the 13kbps standard codec. Now almost everyone uses the EVRC codec because of its better handling of bit rate errors. It looses the nuances of speech because it is only 8kbps, but people no longer sound like robots when bit errors come through. The EVRC codec is an 8kbps codec like the standard 8kbps codec so it doesn't increase efficiency over it, but the fact that carriers use the EVRC codec means that their network capacity increased. So, although CDMAOne has gotten better, it hadn't in terms of numbers because QComm's original numbers were for something that no one used.

CDMA being more spectrally efficient is what QComm and the US gov't want people to believe. It doesn't mean that it's true. They (QComm) have a millitant marketing department, while GSM has no marketing department since it was developed by so many people in partnership. For the most part, GSM didn't need a marketing department. The world saw its merits and went with it. All of western Europe adopted it. Only a fraction (about 2%) of eastern Europe uses something different (TDMA). Around 85% of the Asia/Pacific region already uses GSM with Mobile One, Smart, Piltel, and two of So Korea's 3 carriers moving to GSM/wCDMA from QComm's CDMA. The Africa/Near East region uses GSM 90% of the time with the sole TDMA carrier (Israel's Cellcom) moving to GSM. CDMA is only a 4% player here. In Latin America GSM will be 88% of the market and CDMA will have 12% when the network upgrades that TDMA providers are undertaking are done, but already GSM is at 45%. In areas outside of the US, the churn rate for CDMA is staggeringly high and the companies actually grow smaller everyday rather than larger while GSM providers snatch up the customers that drop CDMA services. Then there is North America which is 35-40% CDMA. Most TDMA providers have gone the GSM route and GSM will soon outnumber CDMA in North America. GSM hasn't had to convince people.

Verizon is THE reason that CDMA is popular in america. They have coverage due to their 800 licences. Once Cingular upgrades their 800 areas to support GSM, people will feel comfortable enough with the technology's coverage that it will see greater adoption too.

[emag0rad]

Northform, you're a hoot. Thanks for the entertaiment.

[bobolito]

The upgrade to wCDMA from Qualcomm's CDMA isn't too dificult either since you can keep all of the rake antennas and such and merely add the GSM specific stuff.

Northform, "merely add the GSM specific stuff" is a lot of work, similar to the move from TDMA to GSM. Remember that there has to be a migration from ANSI-41 to GSM MAP. WCDMA runs on GSM core while CDMA, 1X and EV-DO run on the ANSI-41 core.

[Kenster]

AKKU,

Early this year, I met a friend's friend who used to work for Motorola here in Chicagoland but has been working the past year in India as a project manager to help spearhead his company's new CDMA nationwide network in India. And yes he did say that they were ready to launch in Q1 of this year. How do you like the pricing package thus far? How does the GSM versus CDMA camp compare in terms of pricing? What he told me regarding the prices seems quite amazing -- a lot less than over here in the US.

Although India has been a GSM based country, the cellphone penetration is not even close to that of say the European nations nor countries like Japan, Hong Kong and South Korea. The projections are that the CDMA camp in India will outpace the GSM camp within a few years. This will be potentially huge because India has close to 1 billion people. The CDMA camp will be able to offer an unbelievable pricing package and the user base will skyrocket past the GSM camp. This is the actual prediction.

Mind you, everyone knows that the GSM camp has a much bigger user base throughout the world but that is not to say that the CDMA camp isn't growing. In addition to India, you will find CDMA2000 (and many up & coming ones) in many Asia-Pacific countries such as South Korea, Hong Kong, Indonesia, Thailand, Vietnam, Malaysia, etc. In the western part of the world, CDMA has a strong presence or will have soon in most countries here besides the US/Puerto Rico such as Canada, Mexico, Colombia, Brazil, Peru, Equador, Chile, Dominican Republic, etc.

I am glad to see that India has embarked on some friendly competition that will definitely spearhead some pricing and technological competition amongst the carriers. You see in Europe, GSM was the mandated standard and you're unlikely to see CDMA2000 competing there as well. That's too bad because India, like the US & Canada, will see some friendly and healthy competition which I think is good for the marketplace.

Now, CDMA2000 has many technological advantages but of course we all know that it is dependant on many factors including the distribution of cell sites relative to the call volume and such forth. AT&T and Cingular here are spending an obscene amout of money to convert over to GSM, then upgrade to EDGE and then upgrade to WCDMA. The upgrade to WCDMA will not be easy nor cheap -- it is a major equipment overhaul. The CDMA camp will not have as difficult a time to migrate to the next generation services. Moreover, former employees at Nokia have indicated that they have had problems trying to perfect equipment on CDMA, and it will be even more difficult on WCDMA and so they have their work cut out for them. Whereas the CDMA camp, already have years and years of experience with CDMA.

Nobody is claiming that CDMA2000 will win over the GSM/WCDMA camp to become the defacto world wide standard. But CDMA2000 camps will have a strong presence in key regions such as the entire Western Hemisphere and in many key Asia-Pacific countries - and that will be perfectly fine. For example, I use a Blackberry email communicator which perfectly suits me, my employer as well as many other business users out there -- I don't give a rat's ___ if the Blackberry communicator isn't the world standard.

I'll have to research some more into this but my understanding is that WCDMA was born out of defiance against Qualcomm, not because it was technically superior. CDMA2000 actually has the technological advances and requires less spectrum, but out of defiance to pay Qualcomm full royalties on a technology that a single American company had come up with. If Europe wants to mandate a standard then that's fine. Mind you, the growth of the Internet which was based on the TCP/IP protocol was NEVER a mandated standard by the government and look how it's grown to be adopted freely world-wide. The US has always embraced competition. What if the gov't mandated that we can only have 1 standard gaming machine? Then there would be no competition between Nintendo, Sony and Sega systems. We like competition and we will foster it to promote healthy technological growth, competition and choices.

By the way, as far as Nokia's embracing of WCDMA? It depends which department you speak with as they do also have a CDMA group....see the press release below directly from Nokia:

Nokia commends approval of CDMA2000 1xEV-DV as 3G standard by the ITU
07-15-2002

CDMA2000 1xEV-DV standard brings high data rates and spectral efficiency for CDMA2000 1x evolution


Nokia (NYSE: NOK), as the world's leading global manufacturer of wireless handsets, applauds the publication of CDMA2000 1xEV-DV (data and voice) by the Telecommunications Industry Association (TIA) and the subsequent approval by the International Telecommunications Union (ITU) as an official 3G standard. This new specification was successfully supported by a number of companies, including nokia, Motorola, Sprint and Texas Instruments. The CDMA2000 1xEV-DV standard represents a practical and efficient evolution path for CDMA2000 1x carriers transitioning to third generation networks.

With the CDMA2000 1xEV-DV solution and its ability to have voice and data users in the same band, carriers are able to best optimize the cost of deployment of their 3G network according to the real data needs of their customers, said Soren Petersen, senior vice president and general manager of CDMA for nokia. Users also benefit from CDMA2000 1xEV-DV networks, not only from improved speeds, but by being able to simultaneously perform voice and data tasks on the same device, which nokia sees as being an important piece of the 3G picture.

CDMA2000 1xEV-DV offers peak data rates of 3-5 Mbps and a typical throughput rate of 1 Mbps in a 1.25 MHz frequency channel, all while providing operators the flexibility to balance their voice and data traffic by dynamically allocating bandwidth on demand. CDMA2000 1xEV-DV also enables services such as streaming video by providing a real-time packet data connection and` provides full legacy support for existing IS-95 and CDMA2000 1x devices.

CDMA2000 1xEV-DV allows users to perform two high-value tasks simultaneously on a single RF section device. For example, a user could download e-mail from a corporate server while on a voice call, minimizing the down time resulting from performing these tasks individually, said Adam Gould, CDMA chief technology officer for nokia. The ability to perform concurrent voice and data sessions also opens up the possibility for developers to create compelling new tools, such as rich multimedia applications for remote presentations or virtual meetings.

Already a leading global manufacturer of IS-95 and CDMA2000 1x handsets based on nokia's own chipsets, nokia plans to develop and market new terminals based on nokia-designed CDMA2000 1x EV-DV chipsets.

[bobolito]

I think that in the end, they will both co-exist peacefully with the birth of dual-mode GSM/CDMA phones. Just wait and see.

[Kenster]

Well we already know that WCDMA is heavy on spectrum, which is why many European countries spent an absolutely obscene amount of money on sprectrum. One thing I would like to clarify is this -- the fact that WCDMA requires more spectrum is not a marketing fabrication of the Qualcomm camp. Anyone can go found out the specs for themselves.

It is the WCDMA camp that designed it that way! The designers had to steer away from the original Qualcomm 3G CDMA proposal, more so to do with political reasons and came up with an alternate form -- WCDMA -- which eventually Nokia/Ericsson lost in a patent court case because of the infringement upon many of Qualcomm's CDMA patents. Furthermore, it was the WCDMA designers that spec'd out the "wideband" design because they decided/determined that more sprectrum by design was required to support/engineer the high data speeds. They did not believe that such high data speeds could be supported under the narrowband CDMA implementation.

Again, it is the WCDMA camp that orginally diverted from the Qualcomm's 3G CDMA design, claiming that more sprectrum (thus the wideband form) was required to engineer the high data speeds. Perhaps Qualcomm used this to their advantage in their marketing but it is not a fabrication.

[Badams1]

I'm not too sure about all this technical mumbo-jumbo......but having owned and used both........GSM was better with audio quality and reception.

But I like the CDMA phone selection better than GSM's.

[img]i/expressions/face-icon-small-smile.gif[/img]

[northform]

wCDMA is only covered by ONE QComm patent and it was designed that way. There was no court battle.

Yes, wCDMA requiries more bandwidth to set up a system, but it can handle more callers per MHz than 1xEV-DO/DV so it requires less MHz per caller. No licences are for less than 10MHz, so any Qcomm advantage is no advantage whatsoever.

[Kenster]

Hmmm...I beg to differ -- let me offer you some information:

Qualcomm mum on licensing plan

By Ben Charny
Staff Writer, CNET News.com
November 7, 2002, 2:31 PM PT

The companies that control most of the patents for what may become the dominant cell phone standard have agreed on what they say is a relatively modest licensing fee. But one big patent owner is so far holding out.

San Diego-based chipmaker Qualcomm, which owns about 20 percent of the patents on the W-CDMA (wideband-code division multiple access) standard, hasn't yet indicated whether it will endorse a fee plan floated by rival Nokia and a group of other companies.

Handset makers Nokia, Ericsson and Siemens, along with Japanese mobile communications company NTT DoCoMo, own at least 60 percent of W-CDMA patents. The companies all agreed not to charge makers of cell phones and cell phone network equipment more than 5 percent royalties to use any of the various patented W-CDMA techniques.

W-CDMA doubles the calling capacity of any cell phone network and creates a wireless Web with download speeds of up to 364kbps. It's expected to dominate the world's cellular stage because any carrier, regardless of what kind of network it operates, can upgrade to the standard without building a new network. That's a benefit no other standard, such as GPRS (General Packet Radio Service), can offer.

NTT has the world's only working W-CDMA network, but most other carriers are expected to finish upgrading by 2005. U.S. carriers planning to move to the standard, which is also known as UMTS (Universal Mobile Telecommunications System), include AT&T Wireless.

Bill Plummer, Nokia's vice president of strategic and external affairs, said equipment makers Fujitsu, Matsushia Communication Industrial, Mitsubishi Electric, NEC and Sony have "expressed their willingness to cooperate" with the 5 percent fee cap.

"We are supporting what we think are modest rates on a global basis," Plummer said.

A Qualcomm representative did not immediately return a phone call seeking comment on whether the company plans to endorse the cap. Qualcomm owns about 20 percent of the W-CDMA patents, according to Shiv Bakhshi, a wireless analyst with IDC.

Qualcomm has a tough decision to make. On the one hand, the 5 percent cap could help keep down costs for phone and network makers, ensuring attractively low prices on W-CDMA handset and infrastructure equipment.

On the other hand, Qualcomm makes nearly all its revenues from licensing intellectual property to equipment makers; it might not want to set a limit on how much it can charge for its products, Bakhshi said.

By comparison, other W-CDMA patent holders, including those agreeing to the cap, also get revenue by manufacturing and selling phones and phone networking gear. That makes them less hesitant to set a cap, Bakhshi said.

"If patents is all you have, why would you cap it?" Bakhshi said.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

TheStreet.com:

Qualcomm Says Three CDMA Patents Upheld in Korea, Europe
By Aileen Gallagher
Editorial Assistant
1/23/01 3:35 PM ET

Patent offices in Korea and Europe have upheld three digital wireless technology patents belonging to Qualcomm (QCOM:Nasdaq) in proceedings initiated by Motorola (MOT:NYSE) .

All three patents involved code division multiple access, or CDMA, technology used in mobile phones to transmit data and overcome problems with fading and interference.

Qualcomm said in a press release that the Korean Intellectual Property Office and the European Patent Office invalidated all of Motorola's claims on the patents. Motorola isn't the first to question Qualcomm's patents in court. Other telecom companies, including Ericsson (ERICY:Nasdaq ADR) and Nokia (NOK:NYSE ADR) , have also challenged Qualcomm's mobile phone technology.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ~~~~~~

Ericsson Drops Three "Essential" Patents from Lawsuit Against QUALCOMM and Surrenders Two Others

Ericsson's Actions Further Undercut Ericsson's Claim to Hold Essential Patents for CDMA Standards

October 20, 1998 - QUALCOMM Incorporated (NASDAQ: QCOM) today announced that Ericsson, Inc. and its Swedish parent Telefonaktiebolaget LM Ericsson have dismissed with prejudice all claims under three of the patents asserted against QUALCOMM in the litigation brought by Ericsson in Marshall, Texas. In a further development, Ericsson, in papers filed with the United States Patent and Trademark Office, also admitted the invalidity of the claims of two other patents asserted against QUALCOMM in the lawsuit, and surrendered those patents. All five patents are among the eight patents that, beginning in December 1995, Ericsson repeatedly told the telecommunications industry were "blocking" patents or were "essential" to make or use cellular products compliant with IS-95 and other cdmaOneÃ???? standards.

In December 1995, Ericsson represented to the Telecommunications Industry Association and others that it held eight allegedly essential patents for IS-95. QUALCOMM challenged Ericsson's representation, and Ericsson filed a patent infringement lawsuit against QUALCOMM in Marshall, Texas in September 1996, eventually bringing a total of 11 patents into the case. QUALCOMM counterclaimed against Ericsson for unfair competition, stating in court filings that "Ericsson has knowingly made false and unfounded claims, including the assertion that it owns or controls patents that are 'essential' to the manufacture, use or sale of products that implement the IS-95 standard" with the "inten[t] that its false claims ... would have an anticompetitive effect and injure QUALCOMM's business." Ericsson's dismissal or surrender of the majority of the supposedly essential patents substantiates QUALCOMM's charge that Ericsson deliberately misled the industry.

"The IS-95 standard has not changed and Ericsson's patents have not changed since Ericsson first publicly contended that these five patents were essential to IS-95. In light of those facts, Ericsson's recent actions and admissions can only confirm QUALCOMM's complaint that Ericsson wrongfully and falsely claimed essential patents," said Louis Lupin, QUALCOMM's senior vice president and proprietary rights counsel. "That Ericsson waited more than two years to dismiss these meritless claims sheds light on its motives. These events show that Ericsson's statements to the industry with respect to its CDMA patent position are not believable."

Unlike QUALCOMM, whose CDMA patent position has been accepted by more than 55 major telecommunications companies that have entered into royalty-bearing licenses with QUALCOMM, Ericsson has yet to announce a single royalty-bearing license under any of Ericsson's alleged CDMA patents for any CDMA standard. Moreover, Ericsson has not identified any essential patents it claims to hold with respect to any proposed third generation CDMA standard, including the W-CDMA proposal it has promoted in Europe, Japan and elsewhere, despite specific requests to do so from standards-setting bodies. Consequently, it is not surprising that notwithstanding Ericsson's threatened and actual litigation against CDMA equipment manufacturers, Ericsson's claims to hold essential CDMA patents have not been accepted.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~


Qualcomm vs. Nokia

The entire wireless industry is pretty much resigned to the fact that CDMA is integral to 3G. But is it an integral part of W-CDMA? Nokia says "No," and is fighting Qualcomm's CDMA patents. It's a battle of titans over control, power, and payment, and Qualcomm pulled out its trump card with Spinco.

By Todd N. Lebor (TMF TeeTime)
November 24, 2000

According to the Nokia (NYSE: NOK) website, third-generation (3G) wireless includes three standards: WCDMA-DS, MC-CDMA, and UTRA TDD. No matter what these letters stand for, it is obvious from a glance that CDMA (Code Division Multiple Access) is essential to 3G. To emphasize the point, UTRA TDD is also referred to as TD-SCDMA. Hmmm. Notice a pattern here?

The prince that was once CDMA will soon become a king. TMF Mycroft challenged this position in his recent Rule Maker article. He contends that 3G is a long way off, and investors should pay more attention to the 2G and 2.5G markets. Maybe so, but as the acronym soup in the opening paragraph established, CDMA will be essential to 3G whenever it arrives. According to the International Telecommunications Union (ITU), that will be 2001.

In the wireless world, Qualcomm (Nasdaq: QCOM) and CDMA are practically synonymous. Nokia and handsets share a similar connotation (sorry, Motorola (NYSE: MOT)). Why don't these industry behemoths just get together like Microsoft (Nasdaq: MSFT) and Intel (Nasdaq: INTC) did in the 1980s, and divide up the industry rather than carrying on like a couple of kindergartners in a playground spat? What's with the lawsuits and negative sentiment? Why can't we all just get along?

Simple. Because when a computer using an Intel chip pre-loaded with Microsoft Windows is sold, Intel does not have to fork over part of its profit to Microsoft. Dr. Irwin Jacobs, Qualcomm's Chairman and CEO, has concocted just such a scenario. He wants a cut from every CDMA product sold. Every handset. Every base station. Every commercially viable CDMA mobile system. Nokia is still looking for its checkbook.

How did this whole mess get started? After all, Nokia has been involved with CDMA for years. Many think Nokia is anti-CDMA. Not true. Nokia has a long history with CDMA, dating back to 1991 when it established an office in San Diego (home to Qualcomm). It has always been a member of the CDMA Development Group (CDG) and even helped improve CDMA over the years. It released the first dual-mode and tri-mode/dual-band CDMA phones. In fact, Nokia is a licensee of Qualcomm's CDMA rights.

The trouble started with CDMA itself. CDMA's technological advantage over other standards like GSM and TDMA threatened to upset the wireless industry. CDMA was developed with the best technology in mind, not the most accommodating technology. In other words, CDMA development was not tainted by the political and territorial issues that influenced GSM and TDMA. CDMA is a pure breed, and GSM and TDMA are mutts. Therein lies the problem.

Qualcomm has surrounded CDMA with so many patents that even speaking those four letters in public merits a royalty payment. Nokia builds the most phones (81 million in 1999 for 31% of the global market) and does not want to pay Qualcomm a percentage of its cut for each one sold. Let me rephrase that. Nokia does not want to be Qualcomm's whipping boy.

For the past few years, wireless industry titans such as NTT DoCoMo (Nasdaq: NTDMY) and Nokia have challenged the validity of Qualcomm's CDMA patents around the world and have lost. Courts such as the European Patent Office (EPO) and the Japanese Patent Office (JPO) have ruled in Qualcomm's favor time and time again, with each ruling representing a notch on Jacob's bedpost and a motivational kick in the gluteus maximus to Nokia and gang.

Enter W-CDMA. Wideband CDMA was created for several reasons and one of them was not necessity. Politics? Yes. Ego? Yes. Independence? Yes. Need? No. CDMA offers the commonality, compatibility, quality, global usability, and multimedia capability desired by the ITU in establishing a 3G standard. Sure, W-CDMA offers a link between GSM and 3G, but it also gives competitors a way around Qualcomm and, therefore, loosens Qualcomm's grip on the future of wireless technology.

W-CDMA offers a technological progression from current 2G GSM networks to 3G W-CDMA networks. As it stands today, GSM (Global Standard for Mobile Communications) is the digital wireless leader, with nearly 70% of the global market, according to the EMC World Cellular Database. Almost all of Europe and most of Asia Pacific use GSM. CDMA threatens to unseat GSM as the global standard as we approach 3G reality. If this happens, it means billions in infrastructure spending to replace the existing GSM networks in Europe and Asia Pacific, not to mention AT&T's (NYSE: T) TDMA network here in the States. W-CDMA was developed with this in mind.

W-CDMA also provides royalties to Nokia and Motorola, which both hold GSM intellectual property rights (IPR) necessary for W-CDMA. These IPRs are more than revenue streams; they are bargaining chips used when negotiating cross-licensing agreements.

Cross-licensing agreements are common practice with technology companies, and are often win-win scenarios. Both parties give up rights to proprietary technologies or processes for access to rival technologies or processes that enhance their own product, and neither company shrinks its margins in the process. Sm