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EDSS-295  January 1998

EDSS-295 January 1998

Subject:

Qualcomm's Bliss: A spy or political pawn?

From:

Michael Benavides <[log in to unmask]>

Reply-To:

Telecommunications and the Information Highway <[log in to unmask]>

Date:

Sun, 18 Jan 1998 07:10:02 -0800

Content-Type:

text/plain

Parts/Attachments:

Parts/Attachments

text/plain (189 lines)

        Last month a California man was arrested for espionage in Russia.
News reports say the man was a technician for a wireless phone company,
installing equipment in Russia.

        Here's the news behind the news: Although probably not a spy, this
man is more like a prisoner of war. The war is a global war being fought over
which company will supply most of the world with wireless digital phones.

        The competition is so intense -- not just in Russia, but also in
China, Latin
America, and the rest of the world -- that it has now come to this: People
being arrested and imprisoned.

        The stakes are huge: 2/3 of the world has never used a phone. And
phone
companies from American and Europe are fighting to be the ones to build
equipment for this multi-billion dollar industry.

        Attached is a piece from Don Bauder, the Business Editor of the San
Diego
Union, and a column that appeared in the LA Daily News a month or so ago,
which gives some good detail about what is at stake -- and why this battle is
so important -- important enough, apparently, to put someone in prison. I have
also included a link to a site that contains several other pieces documenting
this fermenting war.

There is also a link to a site that has been documenting this escalating war.
------------------------------------------------------------------------
DON BAUDER
Business Editor
The San Diego Union
03-Oct-1997 Friday

The grass is always greener . . . on the other side of the ocean.

Consider Qualcomm, San Diego's fast-growing telecommunications company.

It competes vigorously with Ericsson, a Swedish concern. Ericsson pushes
its Time Division Multiple Access (TDMA) technology. Qualcomm pushes its
newer Code Division Multiple Access (CDMA) technology.

Recently, Expressen, a newspaper in Stockholm, Sweden, took its hometown
giant to task. TDMA, and its Global System for Mobile Communications (GSM)
derivative, might be out of date, warned the paper's writer, stating
ominously, "Thirty thousand jobs can disappear when the new technology
(CDMA) takes over."

Commented the author, "More and more experts are now asking themselves: Has
Ericsson gone for the wrong technique?"

A Stockholm stock analyst predicts Ericsson shares might fall. A Wall
Street analyst expresses the same fears.

The article quotes an unnamed insider at Ericsson, who says the company
should push the older TDMA now, and then switch to CDMA later.

"CDMA is the technology of the future," declares the article. Ericsson,
which once denounced CDMA, now claims it owns important rights to the
technology, says the publication, quoting a Qualcomm executive saying that
Ericsson doesn't even have a license for CDMA.

Ah, but a prophet is seldom appreciated at home. Qualcomm is getting bad
press here -- specifically, in the Sept. 8 issue of the magazine Telephony.

"Of the numerous manufacturers of CDMA, Qualcomm is among the smallest,"
says the magazine. "The number of people in the world with CDMA phones is
dwarfed by the millions who are using other types."

The magazine did a long study of CDMA, and concluded that its capacity is
far less than advertised, it has problems when subscriber growth is
burgeoning and it "is far from being as mature as other digital wireless
technologies."

Says the publication, "Unfortunately, any meaningful dialogue among
operators and vendors to solve inherent problems in the standard has been
muted by a crusade to establish CDMA as a viable technology at all costs."

Discussions of ways to correct the problems in Qualcomm's system "have been
intentionally suppressed while the benefits have been hyped beyond all
reason," says Telephony.

Then in a long discussion, the magazine asks whether Qualcomm's version of
CDMA costs too much in relation to its benefits. The question of whether
Qualcomm "will ever carry home the trophy of digital wireless champion is
far from certain," says Telephony.

Forbes, however, offers a bit of a mea culpa in its Oct. 6 issue. "We were
skeptical" about CDMA, says the magazine, referring to a late 1995 story.
Now, however, "CDMA has caught on surprisingly fast," says the magazine.
CDMA should have 45 percent of the U.S. mobile phone market by 2004,
according to the Yankee Group consulting firm, says Forbes.

****************************************************************************
For a complete reprint of the Espressen article of June '97 and other related
postings, go to:

 <A HREF="http://members.aol.com/pbdevine/diginews.html">Digital Wireless
Phone Digest</A>

****************************************************************************
From Los Angeles Daily News

"FAST-TRACK" MASKS REAL ISSUE:
U.S. BUSINESSES AHEAD OF THE GOVERNMENT IN CREATING JOBS;
FREE TRADE THE ONLY WAY TO KEEP IT UP
by Brian P. Devine
11/08/97

   FORGET NAFTA and "fast-track." That's not the biggest story
on international trade. By itself, fast-track won't create one job
or make one sale for an American company. Only American companies
can do that.
   And they are - all over the world. Including companies from
Southern California. The troubling part of the fast-track debate is
that some people believe that international trade is bad for
America and American jobs.
   And that is a bigger story than the NAFTA/fast-track
controversy.
   It's clear from the "Stop foreign trade, save American jobs"
tenor of the discussion over fast-track that many people are not
aware of how many American jobs are created right now through trade.
   For example, around the world, American companies are waging
a good old fashioned trade war over a new kind of telephone called
wireless digital phones. All Americans need to know about this new
war is that telephone companies in America, Europe and Asia are
drooling over the two-thirds of the people on this planet who have
never used a telephone. And providing billions of new phones for
the world will create hundreds of thousands of jobs - either here,
or in Europe and Asia.
   So the stakes are huge.
   Traditional phone systems require copper, roads, wire,
technical expertise, laws, and other infrastructure that we take
for granted, but that most of the world simply does not have.
Perhaps a part of a country is too remote, or mountainous, or wire
laid in the morning is stolen by the next day.
   Whatever the reason, for the first time, phone companies
around the world think the new wireless digital phone systems will
enable them to provide phones to these people. Billions of phones.
   That is because these new wireless digital phones are so
powerful that countries will not need the roads, copper, and much
of the other infrastructure to install them. Just a few base
stations and handsets.
   Wireless digital phones are instant infrastructure. A quantum
leap that, for many countries, will be the most important piece of
industrial infrastructure they will ever get. An instant passport
into the Information Age.
   But not all wireless phones are created equal - and here is
where the battle begins for American companies. Countries around
the world are deciding - even as you read this - whether to use the
newer, more powerful, American-backed standard, called CDMA; or the
20-year-old European standard, variously called TDMA or GSM.
   The European companies like the TDMA standard because they've
been using it for more than a decade. It's not as powerful as its
American counterpart, but it is more familiar. And because
Europeans have billions invested in this technology - that although
outdated, they think is good enough for some of the less demanding
countries of the Third World - they are going to fight to get the
most they can out of this investment.
   But if The Wall Street Journal is to be believed, the
Europeans may be fighting a losing battle. The Wall Street Journal
recently reported that South Korea had created tens of thousands of
jobs and become a telecommunications powerhouse in Asia because it
had backed, early on, the American CDMA standard.
   Other journals report TDMA systems in Europe cause problems
with medical devices such as pacemakers and hearing aids. (So much
so that one wag says that TDMA really stands for Terminally
Disables Medical Appliances.)
   In journals and newspapers across the U.S. and in Sweden,
Mexico, Brazil and Korea, the drumbeat for the American CDMA
technology is getting louder and louder as its superiority is
demonstrated over and over throughout the world.
   One of the biggest proponents of TDMA is in Sweden. But even
this company's hometown paper, Expressen, recently reported that
Swedish telecom engineers and others fear that Sweden will lose
30,000 jobs because their country's most important export is based
on a soon-to-be obsolete technology.
   All this has little to do with NAFTA. Left to their own
devices, American companies are quite capable of winning this war
over telecommunications standards. The most troubling aspect of the
NAFTA/fast-track debate is that American politicians in Washington
seem to be uncertain about our place in the world economy.
   That means, more than just raising or lowering a few tariffs,
our leaders may not be devoting the resources to the educational
and trade infrastructure that will help our companies compete in
the global economy.
   That's bigger than NAFTA, more important than fast-track and
the biggest reason why hundreds of thousands of Americans will be
creating products for export around the globe. Or not.

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