Qualcomm Inc (QCOM)

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A Peak At The Wireless Future

August 12, 2005

http://www.mobilepipeline.com/blog/archives/2005/08/a_peak_at_the_w.html

Qualcomm's planned acquisition of wireless broadband vendor Flarion Technologies is much more than just another business story. It speaks volumes about the future of mobile access.

At the very least, it means that, even as 3G is struggling to catch hold, 4G is on the way. A number of pundits and market analysts have been saying that, ultimately, cellular carriers will offer OFDM-based technology, not cellular-based data access. WiMAX is one such technology and Flarion's FLASH-OFDM is another.


That's not to say that OFDM wireless broadband will replace 3G technologies such as EV-DO but, rather, cellular operators will be offering both. Qualcomm's customers are, ultimately, cellular carriers. Since it already has a corner on the 3G market for CDMA-based cellular networks, its acquisition of Flarion is a strong indication that Qualcomm considers OFDM technology another technology of the future. With Qualcomm now on the wireless broadband bandwagon, CDMA carriers will ultimately have this wireless broadband technology built into their cellular infrastructure equipment such as base stations alongside standard 3G technologies.

This is good for both users and the cellular industry. It's good for users because it will give us more choices in terms of the mobile technology we use. It also will mean that our cellular operators will be able to provide fast access over broader areas than they can with cellular data services.

This is good for the cellular industry because the cost structure of wireless broadband technology is such that even small wireless ISPs can afford to launch service. If those carriers bundle wireless voice-over-IP services to their mobile wireless broadband offerings, they will be competing directly with the cellular operators. However, if the cellular operators can easily add wireless broadband to their infrastructure, they have a better chance of fending off this new competition. It also gives the operators a shot at being fixed broadband providers because the wireless broadband service a customer buys from, say, Verizon Wireless will work as well in the home or office as it does while the customer is mobile.

Another reason the Qualcomm acquisition of Flarion is important is that it provides serious competition to WiMAX, which has received the lion's share of the wireless broadband word-of-mouth up to this point. If anybody is wincing at this acquisition, it has been Intel, which has been acting as though it expects WiMAX to dominate just as Wi-Fi has. Now, that seems less likely.

Bottom line: This acquisition signals the direction of the cellular industry and, more important to users, the advent of an era of strong competition among access providers. Most mergers and acquisitions have an impact only on the companies involved and their shareholders. The biggest impact of this acquisition will be on users and, for the most part, I think that impact will be positive.

Posted by David Haskin at 09:12 AM / Permalink