San Diego Union Tribune

March 23, 2007

Verizon, Sprint Nextel oppose ban on imports, fear financial losses

COPLEY NEWS SERVICE

WASHINGTON – Two wireless service providers complained to the U.S. International Trade Commission yesterday that they are caught in the crossfire of a global war raging between San Diego telecom giant Qualcomm and Irvine adversary Broadcom.


 

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But both cell service providers weighed in on Qualcomm's side, asking the commission not to ban the importation of cell phones that contain Qualcomm chips found to infringe on a Broadcom patent.

Mark C. Hansen, an attorney for Verizon Wireless, said Verizon is trapped between the two litigious rivals, who he said are using patent law to “club” each other.

“They're in a nuclear war in 500 different places in 500 different ways,” he said.

Hansen was referring to the legal battles between the two Southern California companies – whose headquarters are scarcely 75 miles apart – before U.S. federal courts and European antitrust regulators.

In a separate patent-infringement case originally brought by Qualcomm against Broadcom, a San Diego federal judge ruled yesterday that Qualcomm withheld key information from a standards-making body and, thus, waived its right to enforce two of its video-compression patents.

In the ITC case, a federal administrative judge determined that some Qualcomm cell phone chips infringe on a Broadcom patent involving conserving battery power when phones are taken outside their networks.

Chip-maker Broadcom has asked the ITC, a federal agency authorized to determine a remedy, to ban the import of advanced cell phones containing the offending chips. Broadcom contends that is the only way it can get relief for the unauthorized use of its technology.

In considering options, the ITC must consider the impact its decision would have on the public.

A ban would prevent the import of certain cell phones with technology that allows high-speed Web surfing and the downloading of music and video.

Representatives of Sprint Nextel, another wireless service provider, joined Verizon in expressing dismay at the losses their company would suffer if the commission bans the phones. They argued to commissioners that a ban would cost the wireless industry millions or billions of dollars, raise cell phone prices for consumers and undermine public safety.

Qualcomm and its supporters testified that the remedy would be too severe, as it would deprive consumers of choice in the mobile phone market.

Broadcom executives said that even if the phones are banned, there will be plenty of comparably priced alternatives, including “smartphones” and other devices with typewriterlike keyboards.

Opponents disputed this.

Rosemary Garavaglia, executive director of marketing for Verizon Wireless, said smartphones and devices such as Blackberrys cost two to three times more than the cell phones that would be subject to the ban. And the alternatives are too complicated for the tastes of most consumers, she said.

Verizon has invested more than $2 billion in an advanced wireless network for the potentially banned phones, and it has expected to recoup much of its investment from selling them.

Existing owners of the cell phones with the chips would not be directly affected by a ban.

Corbett Kull, vice president of North American sales for San Diego-based PacketVideo, told commissioners that the phones could not be duplicated by other devices. His company develops software that allows cell phones to play video.

During the second and last day of the commission's hearing, wireless providers and manufacturers were joined by public safety organizations in urging the commission not to stop the phone imports.

Public safety officials said the ban would deprive emergency personnel of devices that could transmit pictures and other data during an emergency and enable paramedics to reach a heart attack victim more quickly.

The commission has until May 8 to send a proposed remedy to the Bush administration.