Third-generation wireless technology, often dubbed 3G, will offer users high-speed Internet capabilities and new voice services over mobile phones. But the drive forward had been slowed by what some analysts have called a "holy war" between the two companies.
Each company has supported a different version of a wireless technology called CDMA which, until today's agreement, appeared to be largely incompatible. Making matters difficult, Qualcomm has held intellectual property rights in the CDMA technology that it refused to license to its rival, throwing the future of the wireless standard into doubt.
On its face, today's agreement between the two companies appears to eliminate most of those hurdles, although significant technical details still remain.
The two companies will jointly support a single "family" of standards, which they say will allow worldwide use of the next generation of mobile phones. That has been a key goal for much of the wireless industry, which is split between a number of incompatible technologies.
Ericsson's purchase of Qualcomm's infrastructure division also will add a new competitor in the existing CDMA phone world, which could eventually translate into lower prices for users, some industry insiders said.
"This is a red-letter day on the calendar that will go down in wireless history," said Craig Farrill, vice president of strategic technology for AirTouch Communications.
But today's truce between the wireless world's biggest antagonists doesn't necessarily mean an end to the third-generation squabbling.
The new "family" of CDMA standards will provide an upgrade path for today's GSM and CDMA phones, which together make up a majority of wireless users worldwide. The next generation of phones using this standard will continue to support both of these separate technologies, the companies said.
But a third incompatible standard, TDMA, remains outside the scope of the newly formed club. While it is used by a few companies worldwide, it is the primary technology across Latin America, for the U.S.-based AT&T wireless service, and other large operations in Canada, East Asia, and Eastern Europe.
"We're back to the religious wars, but with different players," said Ian Gillott, an IDC wireless analyst.
That dispute may also work itself out by November, when standards bodies will determine a final third-generation standard. The TDMA backers have made moves to work together with GSM manufacturers, and some analysts even think the three camps will eventually reach a larger agreement.
Analysts also note that Qualcomm's and Ericsson's new single-standard rhetoric does little more than link their formerly competing standards together into a "family," and clears the path for a single wireless phone that can support both
"No matter how you look at it, it's still in effect going to be three standards," noted Elliot Hamilton, director for U.S. telecommunications consulting for the Strategis Group. The "single standards" will simply involve a more complicated phone that is able to switch back and forth between the three "modes," he said.
The rapprochement between the two feuding companies will make carriers' life easier, and likely speed the rollout of the technology, Hamilton added
"We're really quite thrilled by this announcement," said Jonathan Marshall, a spokesman for AirTouch Communications, one of the biggest international wireless carriers. AirTouch and its new merger partner, the U.K.-based Vodafone, have been among the chief backers of a truce between the various CDMA standard camps, since the new company supports both technologies.
"The most important thing is that we'll be able to move forward and get a standard without the threat of lawsuits and companies withholding their intellectual property," Marshall added.
Marshall said the agreement would likely translate into lower prices for consumers down the road, since a single phone standard--even a three-mode version--would allow manufacturers to take advantages of economies of scale.
But Gillott warned that the price effect would likely not be substantial. "This stuff is going to go down from bloody expensive to expensive," he said.
Third-generation technology is expected to reach the market in late 2000 or early 2001.