The European Commission took another step to promote the LTE standard for the fourth generation of wireless telecommunications by announcing a further investment of €18 million in this technology, de facto ditching the alternative WiMax.
Although many consumers in the EU have yet to experience the services provided by 3G networks, the EU Executive announced its support for an evolution of the trialed 4G technologies, the so-called LTE Advanced, expected to enable Internet speeds a hundred times higher than those of 3G networks.
The new funding will be released next January and follows €25 million that Brussels has already invested in research on LTE between 2004 and 2007.
Even if the Commission officially keeps the door open for WiMax, it appears clear that, by further funding its competitor, Brussels has already made a political decision with important economic consequences.
“It is the first time the Commission clearly comes out in favour of LTE”, an official from the Commission acknowledged to EURACTIV.
“With LTE technologies, Europe’s research ‘know-how’ will continue to set the tone for the development of mobile services and devices around the globe, just as we did in the past decades with the GSM standard,” pointed out Information Society Commissioner Viviane Reding.
Indeed the GSM standard (also referred as 2G second generation mobile phone system) was so successful because Brussels singled it out, thereby ditching all the alternatives.
Winners and losers
The announcement from the Commission is good news for the consortium composed by Nokia Siemens Networks, Ericsson, Alcatel-Lucent and others which support the LTE standard.
Many EU telecoms operators, among which T-Mobile, Orange and Telia Sonera, have already committed to using LTE and invest nearly €6 billion by 2013, according to figures reported by the Commission in a note.
Brussels’ move will instead hit the consortium supporting WiMax. The hardest hit will be Intel which leads the WiMax venture. This adds to the problems the US chipmaker is already experiencing with the EU Executive for its anticompetitive behaviour, which triggered the highest fine ever imposed by Brussels (EURACTIV 14/05/09).
In the WiMax consortium there are also US Cisco, Clearwire and Sprint, and Korea Samsung. Many Chinese, Japanese and Taiwanese operators also support the WiMax standard.
The Qualcomm’s dilemma
The EU’s push towards LTE and the contrasting attempts from the WiMax consortium bring forward the question: will the patents necessary to develop 4G networks be available for the standard developers?
If a patent holder is reluctant to participate in a venture or if impose licensing terms that are not fair, the entire project could fail. It is like buying all the material and the know-how to build a house, but lacking the authorisation to begin construction.
The US giant chipmaker Qualcomm is thought to hold several key patents to develop 4G standards. The company is currently under investigation in Brussels for alleged abuse of its dominant position whilst holding patents to develop the 3G standard.