WASHINGTON-A federal appeals court last week overturned the Federal Communications Commission’s rejection of Qualcomm Inc.’s pioneer’s preference application, saying the agency was inconsistent in awarding licenses for innovative broadband personal communications services technologies.
The court said there was disparate treatment of Omnipoint Corp., which received a pioneer’s preference New York broadband PCS license, and Qualcomm, the San Diego-based developer of Code Division Multiple Access technology.
In particular, the three-judge panel said that while Omnipoint and Qualcomm adapted existing technologies to the 2 GHz PCS band-which under FCC rules should not have qualified either for a preference-Omnipoint received one and Qualcomm did not.
Given that, it is not clear whether the court is saying the FCC erred in giving Omnipoint a pioneer’s preference or that Qualcomm should now get one. The court did affirm the FCC’s denial of broadband PCS pioneer’s preferences to Advanced MobilComm Technologies Inc./Digital Spread Spectrum Technologies Inc., Freeman Engineering Associates Inc., Viacom International and Advanced Cordless Technologies Inc.
“The Commission is still weighing its options,” said an FCC lawyer.
Originally, the FCC awarded pioneer preference licenses for free. But pressure from Congress, particularly Rep. John Dingell (D-Mich.) and various interest groups prompted the agency to make pioneer’s preference winners pay a discounted price for their permits.
Last year, Dingell inserted language in an FCC reform bill to kill the program. Instead, the bill died and the program lives on.
“There is some sense of vindication,” said Kevin Kelley, senior vice president of external affairs in Qualcomm’s Washington, D.C., office. “The market certainly has recognized what was the innovative technology.”
Kelley said that of the 90 broadband PCS pioneer’s preference applications, Qualcomm’s CDMA technology is the most widely used.
Indeed, the top digital pocket phone providers, Sprint Spectrum L.P., PrimeCo Personal Communications L.P. and NextWave Telecom Inc., are using or planning to use CDMA technology in their networks. Other carriers are using Global System for Mobile communications, which was developed in Europe.
GSM technology has been refined over time and equipment is readily available in a competitive market where time to market is paramount. But CDMA boasts greater channel capacity, and several major carriers are betting on it for the long-run.
Besides vindication, the court’s ruling has monetary meaning for Qualcomm.
Qualcomm wanted a Miami PCS license, which in the A- and B-block auction fetched more than $100 million.
Discounts for broadband PCS pioneer’s preference licenses in New York, Washington, D.C., and San Diego-Los Angeles ranged from 50 percent to 75 percent, or about $446 million total. Moreover, pioneer’s preference license recipients get favorable financing terms.
The case was remanded to the commission and is now before the Wireless Telecommunications Bureau.