Friday, June 22, 2007

BREW in Europe, too

At its annual BREW developers conference, Qualcomm this week announced that the Chinese firm Hutchison will be rolling out BREW with its operator 3, which has licenses in the U.K., Italy and elsewhere.

Thus far, BREW’s major operators have been Verizon (US), KDDI (Japan) and KTF (Korea), and China Unicom (China). In the US, Verizon Wireless rebrands the service as Get It Now®. BREW is also supported by two of the smaller US CDMA carriers, Alltel and US Cellular, but not the #2 US CDMA carrier (Sprint).

Launch DateCarrierCountryTechnologyOverall
2001KTFKoreaCDMA13 million 
2002Verizon WirelessUSCDMA61 millionGet It Now®


29 millionEZapuri
2003VIVOBrazilGSM30 millionEscritório Móvel Brew
2003China UnicomChinaCDMA150 millionU-Magic
TBD3UK and 9 other countries3GSM13 million 

Qualcomm has a previous deal with O2 — a competing UK carrier — but that’s only for uiOne, the BREW-derived interface that carriers like because it allows a common look-and-feel for a carrier’s handsets. So if 3 allows European subscribers to download BREW applications, it could mark the first major Qualcomm revenue source in Western Europe.

Carriers have launched some 3G (and 2G) CDMA networks in Eastern Europe, but the only CDMA west of the former Iron Curtain are the tiny Radiomovel Telecommunications in Portugal, and Nordisk Mobiltelefon’s proposed cdma2000 service in the five Nordic countries using the former NMT 450 MHz spectrum.

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Foul tip

If Qualcomm’s count at the ITC (with Broadcom on the mound) is 0-2, then Thursday’s decision by the ITC not to override itself is the equivalent of a foul tip — the count stays unchanged.

In its clutch appeal, Qualcomm got support from the CTIA and the top four US carriers: AT&T (née Cingular), Verizon Wireless, Sprint Nextel and T-Mobile. It also said that its MediaFLO deployment for AT&T and Verizon — the preferred mobile TV solution for 53% of US cell phone subscribers — could be delayed by the ban.

The final possibility is a presidential veto, which (AFAIK) would have to come sometime in early August if it is coming at all.

Mike Dano of the industry’s oldest trade journal, RCR News, mocked the Qualcomm position:
Qualcomm is asking for a presidential veto on the ITC ban. That’s right: Rather than pay Broadcom a simple patent-licensing fee (a payment most other businesses would consider standard), Qualcomm is going to petition the world’s most powerful leader for a veto. I’m sure that President Bush has plenty of time to deal with this situation, seeing as how the immigration thing fell through and all.

Anyway, I guess I can sort of understand Qualcomm’s position: In the interest of its shareholders, the company feels the need to exhaust all options possible. No word yet on whether Qualcomm is going to secede from the United States and form its own independent government where the only valid patents are those developed by Qualcomm—which, to me, is the next logical step if a presidential veto doesn’t work.

I’m sure they will call it “The Confederate States of Qualcomm,” and Paul Jacobs will rule with a gentle, kind hand, much like Aragorn, crowned as King Elessar, ruler of Gondor.
I agree with Dano that it would take some significant prompting for president Bush to intervene. Is he likely to listen to Qualcomm and its allies?

Jacobs ClintonCEO Paul Jacobs’ former bosses — dad Irwin M. Jacobs and co-founder Andrew Viterbi — were known as donors to Democrats, at more than $300k and $50,000 respectively. Irwin Jacobs got his National Medal of Technology from Bill Clinton in 1994.

At this point, Pres. Bush is not running for re-election and his ties to the GOP party machinery weaken by the minute. However, his party and campaigns have strong ties to home state telephone monopoly SBC (er, AT&T), and according the left-leaning Center for Public Integrity, the phone companies and SBC in particular were among the largest Bush donors.

Irwin Jacobs’ counterpart, Broadcom chairman and co-founder Henry Samueli (and his wife Susan) seem to mainly spend their political money on state races, in addition to $75 million spent buying the Stanley Cup.

If Bush backs Qualcomm and most of the industry over Broadcom, is that politics or good policy? Would Clinton have done any different (I think Clinton clearly would have favored Jacobs, particularly as a lame duck). Conversely, if the European Commission backs most of its telecom manufacturers — and Broadcom — over Qualcomm, is that politics or good policy?)

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Wednesday, June 20, 2007

China's 3G plans

In February 2001, I made my first (and thus far only) visit to China, to research Qualcomm’s efforts in China. The result was an MBA teaching case “Qualcomm in China,” published in two parts by Ivey Business School (A and B) and in a slightly different form by the Asian Case Research Journal (DOI: 10.1142/S0218927502000257 and DOI: 10.1142/S0218927502000269). This case is the basis for the China market entry discussion in the 2005 book The Qualcomm Equation.

[China Mobile dealer]When I finished the visit (and the research), the one thing I was itching to follow up on was China’s plans for its own 3G standard, TD-SCDMA. It was obviously a big issue: direct efforts by the Chinese government to delay 3G deployment and protect access to its market to help Chinese firms develop a national (and nationalistic) technology, to help Chinese firms gain privileged market access and (as with DVDs) pay less in foreign patent royalties.

Also interesting was the role of Siemens. By then, it was already an also-ran in the global mobile phone industry and thus were transferring technology to the Chinese in hopes of gaining market access; since then, they sold their handset business to BenQ (a business that then went bankrupt) and transferred their infrastructure to a joint venture with Nokia.

I really wanted to follow up on this — it was a top goal of mine, since this was obviously the next big standards battle, both in terms of market size and also as a technology policy issue. But I lacked the funds, time and language skills to pursue it, so put it aside to do “someday.”

This week I’m attending DRUID, the main European academic conference on the economics of innovation. I was fortunate to meet Hui Yan (or as they would say in Singapore, YAN Hui), a doctoral student of my friend Prof. Bent Dalum at Aalborg University in Denmark. Hui spent 4 years working for mobile phone companies in China, including Motorola and Nokia.

Hui is doing her dissertation on TD-SCDMA development and policy, focusing on the complex interactions between the Chinese government, domestic operators, domestic manufacturers and foreign manufacturers. At the DRUID conference on Wednesday, she presented a paper summarizing her findings thus far. She describes the long complex path that the Chinese government has taken in nurturing and protecting TD-SCDMA.

Today, China has no 3G service, while more than 450 million subscribers are using 3G in 134 countries worldwide. GSM carrier China Mobile once hoped to roll out WCDMA service in 2004. As with CDMA carriers in Japan and Korea, China Unicom could presumably upgrade from cdmaOne to cdma2000 at any time it wants.

Hui reports that both major carriers would prefer to use the upgrades to their existing technology (presumably because they prefer proven solutions than relying on the unproven new technology.) However, she reports that China’s MII has again delayed 3G another year to 2008 (or later) so that TD-SCDMA will be viable before any 3G licenses are awarded. Writing as from a Chinese perspective, she laments that this “Chinese” technology only has 7% of its patents held by Chinese firms, versus 66% by the three big European manufacturers (Nokia, Ericsson, Siemens).

As with the rest of the world, 3G is being pushed by manufacturers looking to sell multibillion dollar infrastructure upgrades; in this case, this is the shared interest of foreign and domestic manufacturers, even if they prefer different technologies. Meanwhile, absent proven demand for 3G services, the Chinese carriers would prefer to just keep growing their market penetration.

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Tuesday, June 19, 2007

Qualcomm's W-CDMA/cdma2000 chipset

Once upon a time, the Europeans and Japanese that strategically allied to make a common W-CDMA standard in hopes of pre-empting the Americans and dominating the world, but that didn’t happen.

The whole global roaming argument seemed like a nonstarter, as a few people said at the time. Sure, Europeans wander around within the EU and perhaps to Mediterranean beaches, but how many go to the US or Asia? How many Americans travel enough outside North America to care about GSM (W-CDMA) coverage? I can’t imagine it’s more than 5%.

But without a single standard, there was an interest in having dual-mode phones — more from the CDMA subscriber sides than the GSM side, since there are lots of W-CDMA only countries and only a few that are exclusively or dominated by cdma2000. Thus for years, Qualcomm has been planning and now offering MSM chips that support both the W-CDMA and cdma2000 variants of 3G technology.

Reading the Financial Times last month, I saw a brief (and glowing) review of the Blackberry 8830 “World Edition”, which uses the Qualcomm chips to provide a dual mode capability. It also got a generally positive review by InfoWorld. and from CNET. Someone said that there have been other dual mode phones (presumably by LG, Samsung or Sanyo), but if there have, they have not been visibly marketed in the US.

The original US reviews were with Verizon, but now Sprint is advertising that this phone is “coming soon.” So both companies have an attractive alternative to the claims of AT&T (née Cingular) promoting world phones.

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Friday, June 8, 2007

Qualcomm’s Hail Mary

I know Paul Jacobs didn’t go to Boston College, he’s taller than Doug Flutie, and it’s the wrong religious metaphor. Still, Qualcomm’s strategy for dealing with the ITC decision seems like a “Hail Mary” play.

Thursday’s press release responding to the decisions was posted after business hours. It begins:
Although all of the Commissioners agreed that a disruption in the supply of EV-DO and WCDMA handsets would negatively impact the public interest and public safety, the remedy fashioned by the majority does not protect the public interest or public safety. QUALCOMM will ask the Federal Circuit Court of Appeals to stay enforcement of the ITC's order and ask the President to veto the ITC's decision. QUALCOMM maintains that Broadcom's patent is invalid and not infringed.
Hmmm... If the patent is invalid and not infringed, shouldn’t there be an action in a court of law to win a determination to that effect?

The press release continued:
Having chosen not to develop an EV-DO solution and having failed in the marketplace to generate interest in its WCDMA products, Broadcom brought this litigation against QUALCOMM but has used it as a vehicle to attack the U.S. cellular industry, even though Broadcom has never accused any wireless manufacturers or operators of infringement or any other wrongdoing. The public injury that would result from the remedy imposed by the Commission is grossly disproportionate to any benefit flowing to Broadcom from such broad enforcement of a recently-purchased patent. Broadcom does not make or sell EV-DO chips, and Broadcom's claims that it can supply WCDMA products for the United States have been rebuffed by WCDMA operators in submissions the operators made to the ITC.
Qualcomm lost by a 4-2 vote — 2 commissioners did not favor a ban. Last October, when the ITC administrative law judge ruled against Qualcomm, it praised the judge for not recommending a “downstream” remedy; I can’t verify this, because the judge’s report does not appear to be on the ITC website. Still, the ITC enforces its orders via an import ban, unlike a Federal court that imposes fines or other remedies.

Its press release continues:
QUALCOMM and the U.S. wireless industry will seek an emergency stay from the Federal Circuit and a Presidential veto of the ITC's ruling on several grounds, including that Broadcom's ITC action will harm U.S. consumers, impact public safety and national security and harm the U.S. economy by stunting mobile broadband deployment. By punishing completely innocent cellphone manufacturers and wireless operators that were given no opportunity to contest Broadcom's infringement claims, the ruling also raises serious issues of due process and fairness.
The Verizon and Sprint websites are silent, although CTIA (representing all the carriers) says:
CTIA-The Wireless Association® believes today’s decision by the International Trade Commission will cause enormous undue harm to tens of millions of American wireless consumers, and urges President Bush to veto the ITC importation ban. The ITC decision unnecessarily decreases competition, and denies millions of consumer’s access to innovative wireless broadband products. This decision flies in the face of public policy that encourages the availability of broadband services and products, and could have the unintended effect of impairing the wireless industry’s efforts to improve communications in areas such as public safety. Consumers should not have to pay the price for a legal debate that could be settled by other means.
Whilte the UT reports Sprint Nextel as being focuced on a work-around, it quotes Kyocera Wireless (Qualcomm’s former handset division) as supporting the veto, as does Verizon:
“This is a bad order for the industry, and it's a bad order for wireless consumers,” said Verizon spokeswoman Nancy Stark. “It would freeze innovation.”
Still, this seems like a longshot effort; as one lawyer’s site says, “a presidential veto is extremely rare.”

The UT and others note that Qualcomm is working on a work-around, but it will take time. Since they lost before the judge almost eight months ago, I don’t know why they didn’t start a crash project back then. The UT also says the patent expires in three years, suggesting Qualcomm would like to stall until then.

Meanwhile, Broadcom is just waiting for Qualcomm to settle — presumably one that would give it access to Qualcomm’s portfolio:
We simply want to be adequately compensated for the use of our intellectual property. To that end, we have made it clear to Qualcomm that we are open to discussions regarding the potential for licensing of our patent. The ball is in Qualcomm's court.

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Thursday, June 7, 2007

Broadcom 3, Qualcomm 0

6/7/7 is Broadcom’s lucky day. After winning a December case over one patent before America’s International Trade Commission, Broadcom today convinced the ITC to ban the import of any new cell phones with Qualcomm chips.

Yes, existing models are grandfathered in, but the impact of the ruling is still dire for Qualcomm. The ban will not only prevent LG and Samsung from introducing new CDMA phones in the US, but it will also cause AT&T (or T-Mobile) to rule out any W-CDMA phones with Qualcomm chips.

Needless to say, Broadcom was quite pleased with the ruling, and used it to spin its position that the commodity chip producer was wronged by the company that invented CDMA:
In this case, Qualcomm and its customers have been importing products that use Broadcom's valuable intellectual property without permission. As Broadcom continues to develop cutting edge wired and wireless communications and multimedia products that enable the convergence and communications trends that are touching consumers in their daily lives, we are gratified to know that the results of our investments and hard work will be protected from infringers like Qualcomm.
With a gun to Qualcomm’s head, Reuters reports that “Broadcom Corp. said on Thursday it is open to discussions for Qualcomm Inc. to license its technology patent.” Broadcom’s goal has always been to break Qualcomm’s business model — to get it to budge on its full-royalty-for-all policy. The ITC victory is its best shot ever to do so.

No word on how hard it would be for Qualcomm to invent around the one patent (6,714,983), i.e. produce a non-infringing chip. Last month, Qualcomm also lost a Federal case (litigated on Broadcom’s home turf) over three other patents (6,847,686; 6,389,010; and 5,657,317).

Qualcomm must comply with the ITC order while appealing the original verdict, so now it faces the dilemma of solving the immediate problem vs. continuing to fight in hopes of an eventual win.

No word on what Qualcomm said at its 3:30 p.m press conference, but the stock lost about $2 billion in market cap today. Overall, the stock is down about 9% since its peak last month at slightly over $46.

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Wednesday, June 6, 2007

Robots at NEL

The Navy has been on Point Loma for more than a century. The San Diego Historical Society notes how that Naval Radio Station Point Loma dates to May 1906. During World War II, University of California Division of War Research conducted sonar research out on the point.

[Building 33]In 1945, the Naval Electronics Laboratory was founded on Point Loma. By 1954, as the photo archive demonstrates, Building 33 (right) was already the central “topside” building. NEL was renamed to NELC in 1968, which is what it was called when I first visited the lab’s Building 33 in 1975 as a high school student attending the citywide physics contest.

NELC remained up at the end of the point through 1977, when it disappeared once and for all. (Actually, the buildings, missions and people remained, but it became NOSC in 1977 and SPAWAR Systems Center - San Diego in 1997). For decades, NELC (and NOSC) were big on C3 (command, control, communications). But today the buzzphrase is C4ISR (Command, Control, Communications, Computer, Intelligence, Surveillance and Reconnaissance).

Tuesday I went back to Building 33 for the first time in more than 20 years, for the SDTC Military SIG event “Rise of the Machines 2: A Field Trip to the Center of Excellence for Small Robots”. The program focused on the robotics research being done by the Navy and the DoD’s Joint Robotics Program.

In contrast to the Terminator 3 movie evoked by the program title, the Navy speakers emphasized the ongoing human control of the various aerial, land, sea surface and underwater robots. Still, one of the major advancements is to have robots go to a location (or patrol a pattern) without direct human interaction, to improve the labor efficiency so that one driver can manage more than one UAV/AUV. (For robots doing IED disposal, it appears that the robot occupies the attention of at least one operator).

One interesting thing is that the Navy (and the rest of DoD) are using some off-the-shelf commercial platforms for some missions. Some of the land-based robots are based on iRobot products (makers of the Roomba). The mine searching robot (with side-scanning sonar) came from Hyroid — a spinoff of MIT’s Woods Hole Oceanographic Instutite — which makes the Remus AUV that can be yours for only $250K or so.

The computing issues were also in many ways similar. The Navy is putting existing legacy apps into XML wrappers, so that a SOA will allow users to access data from a wide range of sources. No more word-of-mouth (or piece-of-paper) relaying results between different screens.

The communication problems, however, seem very different. Unmanned vehicles at the fringes of a carrier battle group (or a Littoral Combat Ship) go in and out of range of the combat IP network. Once they come in range, they need to authenticate and upload data quickly (before they leave again) rather than spend a few minutes rebuilding perfect routing tables as a commercial product does.

The Navy also faces unique reliability concerns. One speaker noted that the Navy needs to learn from the ad hoc denial of service attack mounted by Russian hackers against Estonia that shut down its Internet access for days, causing considerable economic damage. The attacks should be theoretically impossible if the military ships are not connected to the public Internet, but then again how do sailors get e-mail from back home?

The creation of MilSIG and integration of CommNexus with local Navy research and contractors is being led by SDTC director Vice Admiral Walter R. Davis, USN (Ret). Davis is a former F-4 and F-14 pilot who became a commander of a carrier and then a carrier battle group. It appears he ended his career as the head of the Navy’s communications networks in the office of the Chief of Naval Operations (N6), which seems a fitting position for someone trying to bring the Navy’s communications concerns before the San Diego telecom industry.

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Friday, June 1, 2007

In praise of cheap wide pipes

This weekend I’m in Marina Del Rey (near LAX) at the annual conference of researchers who study the mobile communications industry.

The conference has a very international flair. One session I attended was about the (under) adoption of mobile TV in Korea and the UK. Another was a multi-country study on attitudes towards mobile data adoption.

Given the concerns of the industry for revenue growth, it’s not surprising that mobile data is a big topic here. Why aren’t more users using mobile data? What are the killer applications? What kind of content will create demand and make money? What is the relative mix of short content (e.g. 30 second clips) vs. long content (entire TV shows or movies)?

And what will be the pipes? Will they be the 3G cellular pipes? Or will they be one of the alternatives, such as personal Wi-Fi, business Wi-Fi, Wi-Fi hotspots, municipal Wi-Fi or WiMAX?

Both for transport and for content, there were many concerns about business models because winning business models for wireless data are few and far between. The one exception is that Japan’s DoCoMo (reportedly) collects a 9% charge for billing/invoicing all m-commerce transactions.

[LA GMR panel]Given the location, it was appropriate that the first plenary session focused on video entertainment. The panelists for the session entitled “Mobilizing Digital Hollywood” were:
  • Derek Broes, Senior VP Digital Entertainment, Paramount Pictures (ex-Microsoft)
  • Chris Brunner, VP Mobile Content and Services, Univision, Online — selling TV content
  • Neil McGinness, IMG — mainly selling sports content through deals with various sports leagues
  • Mark Young, Disney, VP Business Development and Strategy
  • Bill Sanders, Sony Pictures Television International, VP Mobile Networks Programming and Digital Product Development (formerly with HBO)
SMS is highly profitable with limited bandwidth, but a key issue for rich multimedia content is the characteristic of the pipe. Among the key issues:
  • The bandwidth for individual users. 3G is now offering a megabit/second, as does Wi-Fi, but fiber to the home is offering tens of mbps.
  • The efficiency of the bandwidth. In an earlier session, Dave Tilson’s paper on mobile TV noted that in one of the UK trials, cellular networks could only support 6 mobile TV users per cell. Sony’s Sanders said that carriers see mobile data like a health club membership: “They want you to pay your monthly fee but not show up too often”
  • Pricing. For single professionals and students, switching from a home-based broadband to a PCMCIA-based broadband (each at $30-$40/month) is realistic. But otherwise, Elizabeth Fife reported that for the US respondents of the Worldwide Mobile Data Service Study, the most popular answer was that users were willing to pay about $5-20/month for mobile data service.
So a lot of the interest is in moving traffic off the cellular network to other sources, such as municipal Wi-Fi or commercial WiMax service. Seamless switching between cellular and Wi-Fi/WiMax is a key concern of most firms in the mobile industry — except of course for the carriers.

Still, both 802.11/802.16 alternatives have problems. The hopes and claims of municipal Wi-Fi systems have not been proven, and most (if not all) are failing to hit their financial and adoption goals.

WiMax has been sponsored by Intel as a direct attempt to bypass Qualcomm and cellular carriers. However, the business models have not yet been proven. I wonder about the capacity — if each antenna only supports 60 concurrent connections, how many antennas do you need to build to cover a city? If you are building cells (with backhaul), how are the economics different than cell phones?

One way to increase capacity is to go Back to the Future: instead of unicast, go to a broadcast (“multicast”) model (i.e., the 1950s TV model). Usually this means moving the traffic off the network to new spectrum: terrestrial VHF or UHF (like MediaFLO) or direct satellite broadcast (as in Korea’s S-DMB). For something like live broadcast of the World Cup, it’s hard to imagine another solution that will offer the economic or spectral efficiency. One of the Hollywood panelists (didn’t see who) specifically praised MediaFLO and its economic efficiency as potentially changing the whole mobile content industry.

There is one other example of mobile video — in its infancy — being like TV of 60 years ago. Particularly in the US, cable TV, direct broadcast satellite and the Internet have fueled a fragmentation of media industry, ending the dominance of the “big three” TV networks that reigned for the first two decades of US television. But as I listened to the presentations today, it was clear that there will be limited capacity for mobile video — just as there were no more than 12 VHF channels in the US (typically 3-6 per metropolitan region) in the 1960s, and only 2-4 TV channels in Japan and most of Europe through the 1980s.

I asked about this in another session. Sanjay Pothen is COO of Metroworldwide, a company responsible for product placement that is trying to do product placement and sponsored content for mobile phones through its Pliq subsidiary.

So, I asked Pothen, is mobile TV going to be like cable and the Internet — a fragmented, niche-oriented market? Or is the limited bandwidth going to mean that mobile only succeeds in mass markets. His reply: “We’re betting on the masses. I’m spending no time on niches.”

In the US, MediaFLO is the mass media pipe for the two largest carriers (Verizon and Cingular) that have 53% of the market. Sprint (not quite 24%) is planning on using WiMax (based on the Korean WiBro) for its next generation broadband. It may be that Sprint has to target unicast niche markets, while the big carriers deliver the mass market content more cheaply.

Photo credit: Picture of Derek Broes, Bill Sanders and Marc Young © by Marc Davis of Yahoo, via Flickr.

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