Qualcomm braced for EU probe into fees

Qualcomm, the company behind the CDMA mobile phone standard, is bracing for an investigation of its licensing fees by the European Commission, prompted by complaints from handset makers and rival chipmakers.

Qualcomm is being scrutinised by the same team in Brussels that investigated Microsoft and Intel, which dominate PC operating systems and microprocessors.

The San Diego-based company has achieved a similar position of influence over the mobile phone industry and its opponents are hopeful that a formal investigation is imminent over what they say is its refusal to license patents on “fair, reasonable and non-discriminatory terms”.

“We gave in a response [to the complaints], so it’s a little bit of a waiting game now,” Paul Jacobs, Qualcomm chief executive, told the Financial Times. “I guess I won’t be surprised if there’s an investigation.”

Legal advisers to Texas Instruments and Broadcom, the two chipmaker complainants, say the conclusion of a Microsoft appeal against a Brussels decision that it abused its dominant market position means the Commission can now turn its attention to Qualcomm.

Qualcomm’s opponents alleged last October that it had reneged on a commitment it made in the 1990s when Europe decided to move from the GSM system to adopt W-CDMA for third-generation (3G) mobile phones – a wireless standard partly based on Qualcomm’s CDMA technology.

TI, Broadcom, Nokia, Ericsson, NEC and Panasonic all complain Qualcomm has failed to honour a promise to license its technology on reasonable terms – levying the same royalty rate on W-CDMA as its own 3G brand – CDMA 2000 – when its intellectual property is a much smaller proportion of W-CDMA.

Mr Jacobs said the royalty rate was a low single-digit percentage. It was justified by the company’s research and development that Qualcomm had carried out to develop a technology that had created a competitive market for other companies to make profits.

He said an investigation would not have a big effect on the company he was willing to protect the company by breaking it up if needs be.