One senses change happening in the wireless telecommunications industry with the likes of wireless VoIP over cellular, the Amazon Kindle, Apple’s iPhone, Google’s Android and the move toward more open networks.
Whether any of these produce fundamental change in the wireless industry is an open question, says Qualcomm CEO Paul Jacobs, but one thing is certain – wireless broadband is taking off and will change the way networks are used and managed.
Wireless wide area networks are starting to be designed more for data than for voice, Jacobs said in an interview, and that will bring many changes not only to the services but also to the way operators will have to manage their networks.
Asked about changes he sees that could be leading indicators of more fundamental change in the industry, Jacobs cites the wireless VoIP service using Skype being offered by the European operator 3, Amazon’s Kindle eBook reader that uses Sprint’s network for behind-the-scenes delivery, the Android open handset platform and Apple’s iPhone.
“The question is, do any of these things fundamentally cause a change,” he queries. “It still needs to play out before we know. There are certainly desires by some of the new entrants to make some fundamental changes in the industry.”
One thing these efforts share is that they would not be possible without wireless broadband, Jacobs says. But wireless broadband has its own limits because wireless spectrum is a finite resource and next-generation network technology is limited in what it can do because of that resource.
“Everyone is talking about more bandwidth to the user,” he says, but “the gains we’re getting out of technology have diminished.” There are no spectral efficiency gains between HSPA+ and LTE because the only way that LTE can provide higher data rates is by using more spectrum, Jacobs says.
“So the things we’re looking toward the future for are, how do you build a network that provides better data capabilities to the user at a still-reasonable cost to the end user,” Jacobs says. “That’s going to be a real fundamental change going forward.”
Laws of physics dictate that the closer a user is to a cell tower, the higher the data rates. The rates fall as the user travels farther away and may drop off completely inside a building. Carriers ameliorate that decline in performance by using microcells, and now the trend is moving toward installing femtocells.
The problem, Jacobs says, is that microcells and femtocells can create interference in the larger macro network. The challenge, one that Qualcomm has been working on, is how to manage femtocells as part of the macro network so there is no interference. That management has nothing to do with the design of the radio link, but is one layer up in the network architecture.
That network management technology – Jacobs calls it network topology rather than technology – is going to be more important in a 4G network because those networks will be using 10 MHz or 20 MHz wide swaths of spectrum and the chances of interference are higher, Jacobs says.
Qualcomm has been doing a lot of research on network topology and how to manage networks for optimum performance. “We think we can get substantial gains in what the user experience is,” he says, including the use of consumer electronics devices that aren’t phones, like the Amazon Kindle. He says he thinks there will be a lot of different kinds of consumer electronics devices using wide-area networks, including personal navigation devices, gaming devices and cameras.
“Any consumer electronics device can be better if it is networked,” Jacobs says. “The only way to do that is with a [wireless wide-area network]. We’re seeing that happen. We’re spending a lot of effort in that area.”
Some of Qualcomm’s work on network topology became part of Ultra Mobile Broadband (UMB), the 4G technology that competes with LTE. But Qualcomm can use that research to develop similar schemes for LTE, Jacobs says. He admits that UMB is getting less traction among operators than Qualcomm had hoped, but that Qualcomm continues to talk to operators about using it.
Qualcomm’s Gobi chipset strategy is a different take on the change in network access. Gobi marries CDMA2000 EV-DO Rev. A and W-CDMA/HSPA for laptop manufacturers. Enterprises can buy one laptop model and know their workers can connect with nearly any wide area network in the world.
Enterprise laptop users don’t want to think about which network they can use depending on where they are, Jacobs says. He thinks laptops with multiple network access capabilities also will change the way operators price their services, i.e. they could charge for short intervals of access much like Wi-Fi hotspots do now.
Asked about the continuing evolution of Qualcomm in light of last fall’s acquisition of the mobile banking company Firethorn, Jacobs says his company always has been focused on how to use networks to create services and applications. He points to BREW and MediaFLO as examples.
“We saw mobile commerce as a very interesting opportunity,” he says about the Firethorn acquisition.
“It’s almost a certainty that the phone will be the networked wallet of the future.”
Firethorn gets Qualcomm into mobile banking, but Jacobs thinks it can become part of an m-commerce ecosystem that could include the purchase of content, advertising and mobile coupons.
“We continue to look for ways to gain synergies between all these things and the fact that the phone is something that you take with you all of the time,” he says.
There has been renewed speculation in the financial analyst community that Qualcomm might spin off its chip business, something Jacobs says has been looked at in the past but has no plans of doing.
He says Qualcomm has to be prepared for any opportunity and that’s why it has considered a chip spin-off.
“It’s not something that we’ve decided to do,” he says. ‘It’s something that we could do in the future, but it’s not our plan today.”
What would be the benefit of spinning off the chip business? Jacobs says there is no reason for it today because of the synergies between chip technology development and Qualcomm’s licensing business. But he says competitors might attack Qualcomm’s chip business as a way of impacting its licensing rates, so a separation might make sense.
Until now the two have helped each other and “we definitely don’t want to get in the way of that momentum,” he says.