Trade Group Looks for a Pause, Not a Downturn, in Digital Wireless Sector

11/19/08Follow @bvbigelow

As the CDG North America Regional Conference convenes in San Diego today, Perry LaForge, the trade association’s chief executive, says he has a lot to feel good about.

LaForge says he started working on behalf of CDMA, or code-division multiple access, after getting a preview of the wireless technology in 1988, when San Diego’s Qualcomm was barely three years old. It wasn’t until 1989 that Qualcomm co-founder Irwin Jacobs actually demonstrated his concept to the telecommunications industry.

“I pulled together the initial carrier consortium,” says LaForge. “I worked with the Japanese and Koreans… We convinced Samsung and LG to produce cell phones based on CDMA.”

LaForge’s has a bigger and more formal role now as head of the CDG, the CDMA Development Group. Looking back over the past 20 years, he says, “I think we have fundamentally changed the wireless landscape…We fundamentally changed an industry” that had already committed to a rival wireless technical standard. “It’s something that I take a great deal of pride in.”

The CDG represents roughly 100 leading CDMA operators and wireless equipment manufacturers. Yet as several hundred people gather for the two-day conference, industry questions about the viability of CDMA still seem to linger.

Even though Qualcomm ranks today as the world’s second-biggest maker of wireless chips, the rival GSM Association (for Global Systems Mobile communications) says 82 percent of the global market for mobile devices is based on its digital technology standard.

Despite GSM’s global dominance, and a broader migration to next-generation GSM technologies, LaForge maintains that CDMA operators continue to upgrade their networks to provide capacity for escalating voice and bandwidth-intensive data traffic

“There’s a lot of talk about 4G systems, but one thing I suspect is that when there are economic downturns that people tend to hunker down with the systems they have,” LaForge says. CDG members also have worked aggressively to reduce costs, getting the cost of CDMA handsets below $30 apiece, LaForge says.

The global economic downturn became apparent at Qualcomm earlier this month when the chip maker reported a 22 percent drop in profit in the quarter that ended in September.

Qualcomm CEO Paul Jacobs told analysts last week that in the face of slowing demand, the company has stopped developing a next-generation wireless technology called Ultra Mobile Broadband, or UMB. Jacobs says the chip maker will put its resources into another high-speed technology called Long Term Evolution that Verizon Wirelss and other major customers have backed.

Jacobs indicated, though, that he expects the wireless industry to go through a pause, rather than a downturn, amid the broader financial crisis—a sentiment that LaForge echoed in our conversation yesterday.

“The macro-economic environment obviously impacts a lot of different sectors,” LaForge said. “But a lot of folks believe that the wireless industry in general will probably fare better than other sectors.”

Bruce V. Bigelow is the editor of Xconomy San Diego. You can e-mail him at bbigelow@xconomy.com or call (619) 669-8788 Follow @bvbigelow

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