Qualcomm-Flarion deal may rock wireless world

IDG News Service - Qualcomm Inc.'s planned acquisition of mobile broadband vendor Flarion Techologies Inc. sets up a powerful competitor to the emerging mobile WiMax technology and its deep-pocketed proponents, such as Intel Corp.

Alternatives to mobile WiMax have appeared to face futures as niche technologies even though mobile WiMax itself isn't expected to hit the market until at least 2007. Industry analysts and others have seen the pending standard for mobile WiMax as the basis of multivendor competition that will cut prices and drive broad adoption. Now Flarion, vendor of a WiMax rival technology that is already shipping, will have the muscle of the developer of Code Division Multiple Access (CDMA) and key third-generation (3G) mobile technologies.

Qualcomm on Thursday agreed to buy Flarion for about $600 million, plus an extra $205 million or so if certain goals are met over the next few years. Flarion, in Bedminster, N.J., sells equipment based on a version of Orthogonal Frequency Division Multiplexing (OFDM), a system also used in WiMax and some other technologies. Flarion's version, called FLASH (fast low-latency access with seamless hand-off) OFDM, makes more efficient use of radio spectrum than WiMax and other systems, according to Ronny Haraldsvik, vice president of global communications and marketing at Flarion.

Just as Qualcomm's CDMA has fought against Global System for Mobile Communications (GSM) for years, gaining footholds mostly in North and South America and Asia, Flarion was facing a standards juggernaut armed with superior technology, according to Tad Neeley, a principal at Los Angeles-based equity investment company Gemini Partners Inc. Now a line has been drawn between standards-based, Intel-backed WiMax and Qualcomm-backed FLASH-OFDM, he said.

"There are benefits to scale, so Intel [may] rule the roost, but Qualcomm has been a wildly successful company," Neeley said.

In addition to its existing relationships with service providers, Qualcomm can provide the resources for marketing and ongoing service and support of FLASH-OFDM worldwide, said IDC analyst Shiv Bakhshi. Qualcomm will continue to support Flarion's existing deployments and trials, the company said.

FLASH-OFDM won't replace the CDMA-based technologies at the core of Qualcomm's business, according to Jeff Belk, senior vice president of marketing at the San Diego-based company

Qualcomm bought Flarion to better equip itself to supply a variety of wireless technologies, Belk said. The company will forge ahead with the evolution of its 3G technologies, CDMA2000 and Wideband CDMA (WCDMA), with greater capacities and features in technologies such as High-Speed Download Packet Access, Belk said. But as operators acquire spectrum in different bands and try to deploy distinctive services,