The World of Wireless

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Every once in a while, a technology emerges that changes the business landscape. In business parlance, some of these “disruptive” technologies have staying power and, like electricity, become a part of everyday utility. Microsoft’s Windows is one example. The often-maligned computer operating system is now standard issue on 90 percent of computers sold.

Other groundbreaking technologies cause momentary disruptions but fade or are killed when they threaten the established order. Peer-to-peer computing, popularized by Napster, comes to mind. The technology proved its consumer value when more than 50 million users flocked to the renegade Web site to swap music files. The music industry, armed with copyright law, pulled the plug on the fun last year, and it’s unlikely the powers that be will ever allow a Napster-like service to see life again.

Rarely, however, has a San Diego business produced either type of globally disruptive technology. Qualcomm’s code division multiple access (CDMA) wireless phone technology breaks that dry spell. And unlike its counterpart in the peer-to-peer music-swapping world, CDMA is here to stay. Indeed, the geeky-name system is poised to become the Windows of the mobile-phone arena, prompting many observers to declare Qualcomm the Microsoft of wireless.

How so? CDMA powers only about 15 percent of wireless networks today, running a distant second to the older, more established global system for mobile communications—GSM, the standard used in about 65 percent of the world’s mobile networks. In Europe, GSM is virtually the only system used. But peek over the horizon, say to 2006, and the global ratio will be turned on its head, with Qualcomm’s CDMA emerging as a worldwide standard for wireless communications. It’s like going to a Star Wars movie—you already know how it’s going to end.

The reasons for this inevitable turn of events can be seen here and abroad. In the domestic scenario, the nation’s three biggest wireless providers, Verizon Wireless, AT&T Wireless and Cingular, which collectively hold 57 percent of the U.S. mobile market, are facing a spectrum squeeze. Like lanes in a freeway, radio spectrum—the airwaves allotted to wireless carriers —provides the avenues for wireless voice and data traffic. And like real estate, there’s only so much to go around. The big three carriers, particularly Verizon, are burdened with older, analog networks, which use spectrum inefficiently—like using a motor home for trips to the grocery store. As a practical matter, inefficient networks mean more dropped calls and angry customers.

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