There have been some odd theories circulating in Washington recently about who might assume the 5G mantle for the United States should Qualcomm take a serious hit to its business model from the upcoming decision in a case brought by the Federal Trade Commission (FTC) against the company. If Judge Lucy H. Koh of the Northern District of California rules that Qualcomm has been abusing its monopoly power to cause harm to the mobile industry and sharply curtails the rents it can charge for its intellectual property, the company won’t have enough retained earnings to fund investment in R&D. Advanced cellular technology has an investment horizon of five to 10 years. Wireless technologies take years to mature along the dimensions of manufacturability, reliability, features, performance, and cost. Advancing telecommunications standards is not a game you step into overnight.
Apple is coyly letting it be known that it has plenty of firepower ready to deploy toward carrying the 5G banner. This claim is brazen. Apple is nearly clueless in 5G, as illustrated by its having chosen to cozy up to the loser in the wireless modem wars — Intel. As a result of this choice, Apple will be a year or more late to market with its own 5G handsets. Intel already wiffed its first generation of 5G modem, and if it flubs the second, Apple will face a two-year lag in implementing 5G in its iPhones, unless it can find someone else to supply those huge expected volumes, those someones being potentially Samsung, MediaTek, or Huawei — none of which are exactly friendly with Apple. Not playing nice with others has its consequences.
And even though Apple is vigorously trying to knock over the negotiating table by moving into Qualcomm’s home turf, setting up shop, and trying to hire away Qualcomm’s best talent, it doesn’t have much in the way of its own native telecommunications talent. It might take Apple a decade to build the capability for, say, 6G.
Qualcomm currently has the pole position in 5G technology, having contributed substantially to the underlying fundamental layer and having developed the chips that embody 5G capabilities first. 5G is a big step up from 4G. It’s not so much about being faster — although it is that. It’s more that 5G solves other communications problems like latency. Greatly reduced response lag time will enable applications like self-driving cars that communicate with each other directly to avoid collisions. And 5G will enable signal densification for new types of experiences — like venue hotspots. Even more, 5G will be the first wireless system flexible enough to be used with every type of transport, including wire line, wireless, and high- and low-band channels. In the 5G world, digital services will be nearly instantaneous and natural, almost like breathing. When 5G is fully deployed in many localities over the next few years, peer-to-peer interactions will supplement contact with the cloud to deliver multiple simultaneous services — like navigation and enhanced reality. Lag times will be beneath notice.
But let’s just say for a moment that Apple does have the chops to pull off 5G. The Cupertino behemoth is not a caring, sharing sort of bear. It has little history — with perhaps the exception of 802.11 and Bluetooth — of making significant contributions to standards bodies, preferring to keep all its inventions to itself and exploit them directly for commercial gain. In fact, more the opposite: Apple introduces incompatibility on purpose in transport methods, file structures, and other ways to trap its users into the Apple ecosystem and not allow them to easily exchange information with, say, Google’s Android or Microsoft’s Windows. A company that wants to lead in the organizations that hammer out wireless standards has to work with other companies, exchanging and sharing technology advances with them. Nothing wrong with practicing your own patented inventions. Perfectly legal, and even encouraged in the United States. But this is not the company you want to anoint as your steward of the national interest. Apple works for itself only.
Qualcomm, whose business model is explicitly disinterested (it licenses its technology to any implementer that wants to use it), has contributed more to telecommunications standards bodies than any other company in the world. But you know who the number-two contributor is? Not Apple.
Huawei. Yes, Huawei, the Chinese bogyman telecommunications giant. And if Apple by way of the FTC does manage to cripple Qualcomm, you know who will benefit? Not Apple. And certainly not the United States. Cough. Huawei, that’s who. And the Chinese government, which is greatly interested in taking the job of advanced telecommunications leader from the West.
Is all this just the playing out of Steve Jobs’s vendetta against Eric Schmidt, the CEO of Google and an Apple board member at the time of said alleged theft? Is this Steve’s minions carrying on his vengeance for the original betrayal of that Judas Eric’s copying features of iOS? Could be. Steve always vowed to kill Google for it. And he tried and failed the first go round. But here he is again in spirit, a wasp’s nest of angry self-righteousness.
Qualcomm is currently competing on its merits, but its ecosystem includes Google’s Android operating system, the base of most non-Apple phones. This ecosystem is made up of traditional giants like Motorola and Samsung but also newer, fast-growing Chinese companies like Oppo and Xiaomi as well as frenemy Huawei. These companies buy a lot of Qualcomm chips and license its technology happily enough. Could Qualcomm be a proxy for Google? Hobbling Google would be a final victory for Steve. He would win the battle but lose the war.
5G is a multiplayer cake. Huawei is filing a lot of patents these days, but not all of them are fundamental. The foundation of 5G is innovation and standardization in radios, handsets, base stations, and related technology. In this basic area, Qualcomm leads, but Huawei is a close second. Beyond that are the chipsets themselves, the embodiment of the standards hammered out at the committee. Again, Qualcomm is number one, but this lead is not unassailable. Then there are the handset makers, the leaders already being Korean and Chinese. Apple’s share has declined substantially but has been mostly stable in the past few quarters in the mid-teens. Meanwhile, there are base stations, a market already dominated by Huawei, with European traditional vendors Ericsson and Nokia playing second fiddle. And not to be left out, the cherry on top, is the services, provided by companies like AT&T, Orange, Verizon, and many others around the world, each with its own idiosyncrasies. Who leads in 5G? Ajit Pai, the Chairman of the U.S. Federal Communications Commission, thinks the United States does.
Qualcomm is in a unique historical position, able to keep the United States at the forefront of the next generation of communications. Harming it would hurt a national interest.
Today stands Apple, at the pinnacle of corporate heights, yet is still sniveling like an underdog all while throwing around money for legal and publicity services like there’s no tomorrow. And there might not be. Not for telecommunications in the United States, if Apple gets its way.
Over to you, China.