Flarion Buy Solidifies Qualcomm's Wireless Broadband Position - InformationWeek

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Flarion Buy Solidifies Qualcomm's Wireless Broadband Position

By acquiring Flarion Technologies, Qualcomm will instantly strengthen its position in the booming wireless broadband market as well improve its international offerings and position itself for the coming battle for dominance in mobile digital broadcast markets.

By acquiring Flarion Technologies, Qualcomm will instantly strengthen its position in the booming wireless broadband market as well improve its international offerings and position itself for the coming battle for dominance in mobile digital broadcast markets.

Announced Thursday, Qualcomm said it will pay about $600 million for Flarion, which has been privately held but financed by a blue-chip lineup of investors including Cisco Systems and Deutsche Telekom's U.S. unit, T-Mobile.

The acquisition also brings Dr. Andrew Viterbi, a Flarion director, back into the Qualcomm fold. Viterbi was a co-founder of Qualcomm in 1985.

The acquisition merges advanced wireless technologies--Qualcomm's increasingly dominant Code Division Multiple Access (CDMA) standard with Flarion's Orthogonal Frequency Division Multiplex Access (OFDMA) and its FLASH-OFDM.

Flarion had suffered a blow earlier in the year when Nextel Communications, which had been trialing its FLASH-OFDM in North Carolina, merged with Sprint, which had already committed to roll out Qualcomm's high-speed EV-DO service.

"When SprintPCS and Nextel chose their target architecture based on CDMA2000 EV-DO, it clearly put Flarion's future in question," said Joe Nordgaard, managing director of telephony consultancy Spectral Advantage.

Flarion responded by moving aggressively in international markets and scored some successes, most notably in Finland, traditionally a wireless bellweather. Earlier this summer, the government of Finland awarded an operating license to Flarion for its FLASH-OFDM technology.

Flarion has staked out a position in the 450MHz spectrum band, and while its strength there is an asset, it raises the question of what its position will be vis--vis Qualcomm's CDMA.

"The dilemma is how Qualcomm will proceed in pursuing the 450 spectrum since CDMA450 and Flarion (OFDM) now are competing for the same spectrum," said Nordgaard. "CDMA450 has a commanding lead at this point (internationally) with 25 operators and over 900 networks up and running by year end."

The 450MHz spectrum is not used for advanced mobile communications in the U.S.

Nordgaard noted that Flarion's technology lends itself to the coming roll out of wireless digital broadcasting, adding that much of the acquisition can probably be traced to "pre-positioning auctioning of TV spectrum that will be available in the next few years."

Qualcomm's CEO, Dr. Paul E. Jacobs, hailed the acquisition, but made clear that its CDMA technology will dominate the firm going forward. In a statement, he said: "We believe CDMA will provide the most advanced spectrally efficient wide-area wireless networks for the foreseeable future, but with Flarion we can now more effectively support operators who prefer an OFDMA or hybrid OFDM/CDMA track for differentiating their services."

Rajib Laroia, the founder and CTO of Flarion, also noted that CDMA wireless is the basis of major international standards.

The acquisition is also expected to shore up Qualcomm for the coming collision with WiMAX, the wide-area broadband technology slated for widespread adoption next year.

Qualcomm said another $205 million could be added to the $600 million purchase price if certain milestones are reached. The deal is subject to regulatory approval, but Nordgaard said he believed the acquisition would be given the green light because there is significant competition in the markets Qualcomm will address.

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