Qualcomm’s Lawsuit Might Disrupt Telecom Industry

As the US Department of Justice intervenes in the FTC Vs. Qualcomm case, the decision has become more critical as it can cause significant disruptions in the telecom industry

The antitrust division of the US Department of Justice asked Judge Lucy Koh, a federal judge, to hold a hearing on possible remedies to be imposed if Qualcomm is found liable in the antitrust lawsuit. This lawsuit was filed by the U.S. Federal Trade Commission (FTC) two years back, and the outcome can affect the 5G adaptation globally.

The FTC sued Qualcomm Inc more than two years ago alleging that to maintain a monopoly, the company used anti-competitive patent licensing practices. The US, China, and Korea plan to roll out 5G networks in 2019 & 2020, and since Qualcomm makes the modem chips for the devices, the result of this decision can disrupt the global market.

The last trial took place in January and is awaiting a decision in the federal court in California. In the filing by the Justice Department, Judge Koh of the U.S. District Court of the Northern District of California has been asked to make a decision considering “a remedy should work with as little injury as possible to other public policies.”

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In the last two years, multiple lawsuits have been filed by other governments and Apple against Qualcomm. In fact, in January last year, the European antitrust regulators ordered the chip maker to pay a $1.23 billion fine as it used its power to lock competitors out of the market. However, the company also won cases where it successfully persuaded China and Germany to block iPhone sales under the claim that Apple violated its patents.

This intervention of the US Department of Justice has come a week before the Apple v. Qualcomm court battle will begin. The US prosecutors in this hearing plan to prove that Qualcomm’s core business of licensing its patents for baseband processor chipsets has now spun out of control. It has reached a point that no one can compete, innovation has been stifled, and even the consumers are paying more for products. These claims are similar to the antitrust claims made by Apple.

When the case was filed, FTC Chairman Joseph J. Simons left the case because of his prior work where he worked for Qualcomm in private practice. According to experts, the reason why other companies have not sued them is because of the fear of countersuit for infringement or disrupted relationships. Though Qualcomm’s pricing affects the smaller players the most, they too cannot take on the pressures of this litigation to compete against the chipset maker giant.

Judge Koh has already issued a summary judgment in November asking Qualcomm to license its patents at a fair price to its competitors. Whatever be the outcome of the judgment, it will be disruptive to the telecom industry that currently prides itself on being a disrupting influence on enterprise.

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