A new agreement between Ericsson and Qualcomm paves the way for 3G - the next generation of global mobile telephony

Ericsson has entered into a series of definitive agreements with the U.S. company Qualcomm that will resolve all disputes globally between the companies relating to Code Division Multiple Access (CDMA) technology.

One standard, three optional modes

Under the agreements, Ericsson and Qualcomm agree to jointly support a single world CDMA standard with three optional modes for the next generation of wireless communications; to enter into cross licenses for their respective patent portfolios; and to settle the existing litigation between the companies.
The cross licenses are royalty bearing for CDMA subscriber units sold by either party. In addition, Ericsson will purchase Qualcomm's terrestrial CDMA wireless infrastructure business, including its R&D facilities, located in San Diego, California, and Boulder, Colorado. Ericsson also will assume select customer commitments, including a portion of vendor financing obligations, related assets and personnel. The agreements are subject to necessary regulatory approvals and other customary conditions.

Settlement of litigation

The agreement settles the litigation between Ericsson and Qualcomm and provides for cross licensing of Intellectual Property Rights (IPRs) for all CDMA technologies, including cdmaOne, WCDMA and cdma2000.
Qualcomm will also receive rights to sublicense certain Ericsson patents, including the patents asserted in the litigation, to Qualcomm's Application Specific Integrated Circuits (ASICs) customers.

Joint support of the ITU

The companies have also agreed to jointly support approval by the International Telecommunications Union (ITU) and other standards bodies, including the U.S. Telecommunications Industry Association (TIA) and the European Telecommunications Standards Institute (ETSI), of a single CDMA 3G standard.
This standard encompasses three optional modes of operation:

• Direct sequence FDD
• Multi-carrier FDD
• TDD

Ericsson and Qualcomm believe that rapid adoption of the single CDMA standard is in the best interests of the industry and allows each operator to select which mode of operation to deploy based on marketplace needs. As part of the agreement, the companies will each commit to the ITU and to other standards bodies to license their essential patents for a single CDMA standard or any of its modes to the rest of the industry on a fair and reasonable basis free from unfair discrimination.

The companies will notify the ITU and other relevant standardization entities of the agreement to remove all IPR blocking currently in force.

The grants of licenses and the settlement of all litigation, as well as the commitment to standards bodies to license their essential IPRs, will become effective upon closing of the purchase of Qualcomm's terrestrial CDMA wireless infrastructure business.

Ericsson ideally positioned for 3G

"With the resolution of 3G and the cross-licensing of our patents, Qualcomm and Ericsson have paved the way for the expansion of global CDMA-based wireless communications," says Irwin Mark Jacobs, chairman and chief executive officer of Qualcomm.

"Ericsson's purchase of our infrastructure division underscores its commitment to CDMA, and allows Ericsson, one of the world's leading telecommunications equipment manufacturers, to expand its CDMA capabilities. Qualcomm can now focus on its core businesses, including CDMA phones and chip sets, the Globalstar and OmniTRACS systems and new opportunities in digital cinema, wireless data and Eudora web products and services."

"Ericsson, through its agreement with Qualcomm - a pioneer in developing CDMA technologies - now has complete 3G competence," says Sven-Christer Nilsson, president and chief executive officer of Ericsson. "We are ideally positioned to support any operator anywhere in the world to migrate to 3G regardless of technology heritage or technology choice."

Current and future CDMA markets

Qualcomm's terrestrial CDMA wireless infrastructure research and development and manufacturing division comprises infrastructure for cellular, PCS and wireless local loop.  The acquisition provides Ericsson with leading CDMA research and development, including the cdmaOne and cdma2000 product lines that Ericsson will further develop and market. Ericsson will establish a global CDMA center in San Diego, California.

"With the addition of cdmaOne and cdma2000, we will be well positioned to serve current and future CDMA markets, including the fast growing CDMA handset market," says Nilsson. "By combining this competence with our industry-leading capabilities in WCDMA, we intend to play a leading role in the converged world of wireless data services."

Qualcomm will incur a one-time charge in connection with the transactions contemplated by the agreements, the details of which it anticipates will be available when the Company announces results for its third fiscal quarter ending March 31, 1999.

Related links:

• Ericsson Pressroom
• Qualcomm

Does this mean that the 3G-harmonization debate is over?

No, but the blocking of IPRs is over. 3G standardization work will continue in accordance with the procedures and timeframe of the ITU and regional standardization bodies, along the way taking into account many valuable contributions from operators. Our agreement with Qualcomm removes any blocking of IPRs relating to all CDMA technologies with both Ericsson and Qualcomm committing to offer our IPRs on fair, reasonable and non-discriminatory terms. At Ericsson, we are very enthusiastic and optimistic that this represents a major breakthrough in paving the way for the conclusion of standardization work with a globally harmonized 3G standard with three optional modes to cater for the interests of the entire wireless industry.

Will you be making new compromises on the chip rate issue beyond the 3.84 Mcps proposal in support of dual-band phones that Ericsson put forward last December?

It is not our intention to do so because we do not think any further reductions of the chip-rate would bring any further benefit in a multi-standard environment. Apart from this, we do not think we should foreclose any of the standardization work.

How does this affect Edge?

Edge will continue to be developed and supported by Ericsson as we have always stated. Edge is not affected by this agreement.

How do you explain your earlier negative view of IS-95?
 
We have consistently claimed that IS-95 does not offer more to customers than
TDMA - and we still do. Our focus with this acquisition is on 3G with wideband technology and new market opportunities for Ericsson.

But now you will also support and market IS-95?

Yes, and our key interest is the market opportunity and the technological expertise that we gain for the multi-carrier evolution from IS-95 into cdma2000.

Why are you buying Qualcomm's infrastructure division?
 
We are acquiring these QC operations for commercial reasons to leverage our global leadership in wireless technologies as 3G starts to come to market. This offers us the possibility of a wider and faster development of our 3G offering.

You have been in fierce competition so far. How do you expect to suddenly
integrate your activities?

First of all, we see a good fit between our organizations. What we gain are key competencies in multi-carrier R&D.  Together with Ericsson's global market presence and our range of product platforms we can now integrate cdma2000 technology and gain in time-to-market and economies-of-scale in CDMA development and product supply.

How does this fit into your overall strategy?

Qualcomm's infrastructure division represents an obvious fit with our strategy of maintaining undisputed leadership in wireless systems technologies independent of system standard. Qualcomm complements by adding new cdma2000 competence as well as R&D resources.

What does this mean for Ericsson's existing TDMA and GSM customers?

Nothing, since our commitment to customers with TDMA and GSM systems remains unchanged and strong. The added technology skills that Ericsson acquires will benefit all our customers.
 

Mobile Next is an Ericsson publication produced in cooperation with Appelberg Publications AB, Stockholm, Sweden.