Verizon Wireless Kinda Sorta Stabs Qualcomm In The Back - InformationWeek

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7/20/2007
07:37 AM
Eric Ogren
Eric Ogren
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Verizon Wireless Kinda Sorta Stabs Qualcomm In The Back

Not that it had much choice in the matter. With the ITC's ban on importing 3G chips from Qualcomm mere weeks from taking effect, Verizon needed to take steps to ensure it could continue to sell new phones. So it struck a licensing deal with Qualcomm competitor Broadcom.

Not that it had much choice in the matter. With the ITC's ban on importing 3G chips from Qualcomm mere weeks from taking effect, Verizon needed to take steps to ensure it could continue to sell new phones. So it struck a licensing deal with Qualcomm competitor Broadcom.Verizon Wireless will pay Broadcom $6.00 for each 1xEV-DO handset, PDA or data card sold after the effective date, subject to a maximum payment of $40 million per calendar quarter and a lifetime maximum payment of $200 million. The agreement provides Verizon a license to the six Broadcom patents currently being litigated between Broadcom and Qualcomm. Broadcom offered Qualcomm this same $6-per-chip deal, but Qualcomm turned Broadcom down.

The move was certainly unexpected. Verizon had initially voiced support for Qualcomm, which lost a patent infringement case to competing wireless chipmaker Broadcom. The U.S. International Trade Commission eventually banned Qualcomm from importing the infringing chips, which contain technology related to power consumption. The ban would effectively prevent Verizon (and Sprint and Alltel) from selling any new models that contain the 3G chips in question. Obviously this wouldn't be the best thing in the world for Verizon. So it had petitioned the ITC, along with other corporations, to overturn the ban.

It has now reversed its position, is ceasing efforts to help Qualcomm, and signed a licensing deal with Broadcom instead. The agreement allows Verizon Wireless to sell new handsets and other wireless devices, ensuring the availability of the latest cell phone technology in handsets and PDAs to consumers and businesses.

Qualcomm issued a statement shortly after Verizon's news became public, reiterating its position on the ban:

Although the announced deal would appear to reduce the risk of disruption of Verizon Wireless' network, it does not resolve the problems arising from the ITC's order for the many other wireless carriers affected by the ITC's order, their tens of millions of subscribers, their suppliers, and the public safety and other vital organizations that depend upon their networks and services.

It will be interesting to watch how Sprint, Alltel, and other regional CDMA carriers attempt to get around the ban. It has been rumored that Sprint and Qualcomm were collaborating on a software work-around that would allow Sprint to continue selling 3G phones. Nothing official has been announced from either company, though.

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