updated 02:25 pm EDT, Fri June 8, 2007
Qualcomm Chip Ban
The US International Trade Commission on late Thursday instituted a ban on Qualcomm chipsets that could have a potentially chilling effect on certain American cellphone carriers. Following a loss by the chipset maker to rival Broadcom in a patent dispute, future cellphones that integrate the hardware will be blocked from import to the US. The ruling doesn't affect existing cellphones that could be in violation of the patent but will prevent carriers from upgrading their lineups to include newer handsets that use the controversial technology, which handles power-saving measures on phones when they fall outside of coverage areas.
While Broadcom applauded the decision, Qualcomm accused its opponent of trying to compete through courts rather than products, saying that Broadcom had "failed in the marketplace to generate interest" in its chipsets. If maintained, the ban could limit the choice of cellphones in the US, Qualcomm added. The electronics giant planned to seek an injunction and was ready to ask President Bush for a veto, citing the potential damage.
"This is a bad order for the industry, and it's going to freeze innovation," said spokeswoman Nancy Stark. "We were never [formally] accused of infringing on anything yet we're being punished."
Cellular provider Verizon is also calling for an appeal, as the company stands to suffer the most over the long term should the ban hold without an alternative in place. Over 80 percent of its current lineup technically violates the relevant patent, though the company hadn't yet said how its future models would be affected by the restriction.
Sprint will also be affected by the ruling, as the challenger to Verizon uses a similar CDMA cellphone network and therefore is more likely to use cellphones that violate the patent. MIT economics professor Jerry Hausman has indicated that either or both companies would likely be forced to raise subscription rates to help find alternatives.
Market leader AT&T says it was also affected and is considering its options, but hasn't revealed the extent to which its current phones would infringe on the patent or how many future handsets would be affected.
In spite of the restriction on its own business, AT&T may stand to partially benefit from the decision. Its upcoming June 29th release of the iPhone may either avoid infringing on the Broadcom patent or launch before the ban takes effect, potentially escaping the ban altogether.
Devices such as Motorola's RAZR2, however, are more likely to see a delayed release and if barred from stores could help AT&T's appeal in the market by reducing the number of alternative to the Apple device. AT&T is likely to carry the RAZR2 in one variant by the end of the summer but would have its advantage eliminated by an equivalent model that would land at Sprint and Verizon.