Sprint, the mobile broadband king maker

Had it not been for Sprint’s decision to sign-up with Qualcomm when it was getting started on Sprint PCS, Qualcomm would not be the behemoth that it is today. Think of it as a decision that rivals IBM’s decision to go with Intel processors instead of Motorola silicon and using Microsoft’s DOS on its PCs. I made this point in my story of Qualcomm for Business 2.0. It was the kingmaker.

Strangely enough, as mobile broadband becomes a reality, Sprint finds itself in the same position. Investors Business Daily says Sprint is experimenting with mobile WiMAX, IPWireless and Qualcomm’s technologies.

“Most of the world is unhappy with Qualcomm,” said Barry West, Sprint’s chief technology officer. “They feel that its licensing model is egregious. “No one else is in our position right now … We have all the assets. We have a vision of wireless interactive multimedia services.”

This is the first time anyone this senior from the CDMA/EVDO camp has openly criticized Qualcomm. South Koreans companies are also complaining about Qualcomm, and are pushing WiBro hard. Sprint, it seems might be turning up the heat on Qualcomm. I think it is more of saber rattling than anything. We have already heard reports that Sprint-Nextel is going to use the MediaFLO system.

From the way I understand is that the Qualcomm’s royalty structure doesn’t really effect the carriers at all. The profits come from the pockets of equipment makers and device makers. However, a lot of people forget that the royalty revenues of Qualcomm are quite small in comparison with its chipset business, which is the yoke it uses to drive down prices of “handsets.”

They sell highly integrated chipsets, that Asian vendors can use to churn out handsets by millions. It is essentially the same tactic Intel has used to get fat off the PC-land. Knowing how Qualcomm works, I am sure they have a contingency plan in place.

“Sprint often tries many technologies,” Jacobs said. “In the end, we tend to see eye to eye about what the technology road map should be.” One of Qualcomm’s reasons for buying Flarion was getting its hands on key OFDM patents. Since WiMax is partially based on OFDM, Qualcomm could ask makers of WiMax gear to pay royalties. Qualcomm hasn’t said whether it plans to do that. “We do believe we have IP (intellectual property) in WiMax,” said Jacobs.

In other Sprint news, Martin Geddes says that Sprint Local could become a major headache for the Bell operators. I think so to. Marry it to some of the other smaller local phone companies, Qwest and SureWest. That is one hefty competitor.


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