WASHINGTON-Qualcomm Inc. is waging a major court battle against the Federal Communications Commission to gain recognition of Code Division Multiple Access technology innovation in personal communications services and the potentially lucrative prize that comes with it. The Qualcomm case will be briefed in the U.S. Court of Appeals for the District of Columbia Circuit in December. Oral argument is set for April 22, though there is a push by the court for a negotiated settlement.
In addition to its pioneer’s preference appeal, Qualcomm is involved in a big patent lawsuit and in an aggressive, high-stakes lobbying effort to incorporate its CDMA intellectual property into a global third-generation mobile phone standard.
The pioneer’s preference lawsuit keeps alive arguably one of the most bizarre wireless controversies in history. The acerbic crossfire included accusations of improper lobbying, sloppy FCC review of the 96 pioneer’s preference applications and claims that winning technologies were largely duds that are in scant use today.
Indeed, Congress thought it settled the matter for good in a 1994 trade bill that forced three pioneer’s preference winners cumulatively to pay at least $400 million for three broadband PCS licenses. The FCC originally told Omnipoint Corp., American Personal Communications L.P. and Cox Enterprises Inc. they would receive those licenses for free because the companies-through their technology innovations-advanced the wireless industry. The Treasury ended up charging $700 million for the three licenses.
Under the 1994 law, the FCC was supposed to shut down the pioneer’s preference program on Sept. 30, 1998. However, in further legislation, Congress moved up that date to Aug. 5, 1997.
When Qualcomm was not awarded a pioneer’s preference, it challenged the FCC’s decision to dismiss its application in federal appeals court here in 1994. The FCC said Qualcomm did not deserve a preference because the San Diego firm merely adapted CDMA 800 MHz technology to 2 GHz.
Qualcomm argued the FCC subjected Qualcomm’s application to harsher scrutiny than it did to other applications.
The court, while agreeing with the FCC argument that technology adaptation was not innovative and did not merit a preference, concluded in January 1997 the FCC inconsistently had applied pioneer’s preference rules to the detriment of Qualcomm. The court ordered the FCC to reconsider the Qualcomm application.
The FCC on Aug. 29, 1997-three weeks after the sunset date of the pioneer’s preference program-dismissed Qualcomm’s application and a slew of others.
The FCC told the court it had no choice but to reject Qualcomm’s application because the program had ended. Qualcomm disagrees.
Of the pioneer’s preferences granted, it is unclear how extensively the technologies are used today. APC’s preference is for spectrum sharing. Omnipoint’s preference was for a hybrid digital technology, but the company champions Global System for Mobile communications technology.
Alex Netchvolodoff, vice president of public policy for Cox, said cable-based PCS technology-for which it received a pioneer’s preference-initially was used substantially in Cox’s Southern California PCS system but was not exported to other markets because of technology and management problems with other cable TV partners in the Sprint PCS venture.
