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U.S. CDMA Alliance is a Victim of Qualcomm

At the beginning of July the U.S. wireless industry association, CTIA, filed an amicus curiae brief in the United States Court of Appeals for the Federal Circuit supporting a stay of the International Trade Commission's (ITC) sweeping order that prevents new and upgraded wireless products that incorporate certain Qualcomm semiconductors from being imported into the United States.

The Qualcomm chips in question have been found to infringe upon a Broadcom patent. Regardless, the CTIA brief was offered "in support" of an Emergency Motion filed by Qualcomm Incorporated, Verizon Wireless and other petitioners.

In the "friend of the court" brief, the CTIA argues that "the ITC has not only exceeded its statutory authority by barring non-liable parties from importing certain products, but in doing so will inflict significant harm upon American public safety, innovation and economic productivity."

A section of the brief reads; "The downstream exclusion order will deny American consumers a wide array of new and upgraded third-generation (3G) wireless broadband devices (in which Broadcom's chips cannot, for the foreseeable future, be substituted); will devalue expensive 3G wireless networks put in place in anticipation of the excluded devices; will wipe out the investments of enterprises that supply infrastructure, components, new services and devices predicated on wide consumer adoption of 3G; and will threaten public safety by denying citizens and first responders the 3G devices they need to report and respond to imminent threats."

Today the CTIA issued yet another press release stating that the "CTIA is deeply concerned that the ITC order banning new models of wireless broadband handsets will cause unprecedented economic harm to tens of millions of American wireless consumers, and because of that we urge President Bush to veto the order."

Is this really a crisis that requires Presidential intervention? Frankly, if you represent a U.S. mobile phone service provider that had the misfortune to align with the CDMA standard, or any one of the numerous vendors and suppliers in their value-chain -- then yes, their situation seems desperate.

The U.S. market has already trailed the 3G market leaders within the Asia-Pacific and European regions. Mobile value-added services in North America are already under-performing analyst expectations, and so the last thing that this volatile situation needed was yet another setback.

While most of the world markets aligned with the GSM mobile phone "de facto" global standard, some of the U.S. carriers were slow adopters and the market is fragmented with viable CDMA infrastructure still in place and fully operational -- pending the availability of more 3G handsets that might help to stimulate consumer demand.

That said, this scenario is filled with irony, because Qualcomm had the distinction of being known for its aggressive litigation practices, to protect their own IP patents for the proprietary elements of the CDMA standard. Handset manufacturers and some mobile service providers have also criticized Qualcomm for what they deem to be unduly high licensing fees. Now Qualcomm wants relief from the situation that it created.

Moreover, the CTIA plea for decisive action seems to add more fuel to FCC Chairman Kevin Martin's claim that wireless "open access" policy is now required to create a truly competitive marketplace for technology neutral wireless services in America, and thereby revive the process of innovation -- in an attempt to catch up with the Asia-Pacific and European market leaders.

However, if an open access proposal is to be successful in removing the restrictive wireless service shackles imposed upon U.S. consumers, then it must require a true wholesale service provision. Anything less, and Americans will likely continue to be held captive by the mobile phone service provider anti-competitive business practices.

In the meantime, Qualcomm and its alliance partners are in a very tough situation -- just imagine how odd it must be for the presiding judge to hear Qualcomm's legal counsel appeal for their client as a innocent victim of an over-zealous Broadcom. Hopefully, the attorneys can keep a straight face as they deliver that message to the court.

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