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FCC Grants QUALCOMM Pioneer Preference

The Federal Communication Commission late Friday awarded QUALCOMM Inc. "pioneer" status for its efforts to develop Code Division Multiple Access (CDMA) digital wireless technology as part of an eight-year-old court settlement.

In addition to being added to the Commission's Pioneer's Preference program, QUALCOMM received a $125 million voucher that it can use at any FCC spectrum auction to purchase one or more licenses over a the next three years.

The voucher is fully transferable and can be used in whole or in part by any entity in any auction, including those in which QUALCOMM is not a participant.

The FCC award is the result of a July 1999 U.S. Court of Appeals decision in which the federal regulator was ordered to grant QUALCOMM pioneer status. Under the Commission's defunct Pioneer's Preference program, the FCC awarded spectrum grants to technology innovators in an effort to promote the rapid deployment of wireless services to American consumers.

In 1992, QUALCOMM was denied a pioneer designation for its development of CDMA technology. It challenged the Commission's decision in the U.S. Court of Appeals until it finally prevailed in July last year.

In August 1997 the Commission terminated its pioneer's preference program and dismissed 13 pending requests for acceptance as part of its compliance with the Balanced Budget Act. The law amended the Communications Act to terminate the authority of the FCC to provide preferential treatment in its licensing procedures for pioneers.

Dr. Irwin Mark Jacobs, QUALCOMM chairman and chief executive officer, said it would accept the court-awarded grant to further develop and deploy CDMA digital wireless technology.

"CDMA is now being adopted worldwide for third-generation voice and wireless Internet access," Jacobs said. "Our latest evolution uses standard 1x (1.25 MHz) bandwidth to provide the highest efficiency and greatest Internet data rates entering commercial service this year and next, with a wider bandwidth (5 MHz) being introduced perhaps a year or two later, which may evolve to provide competitive performance."

The FCC's pioneer's preference program was established in 1991 to provide a means of extending preferential treatment in its spectrum licensing processes. The program was eliminated in 1997 following Congressional legislation that terminated the FCC's authority to continue the program as part of the country's balanced budget law.

In the near six years of the program's existence, nearly 140 parties completed more than 1,500 applications for pioneer's preferences in various services, while only five applications for special status were granted. QUALCOMM is the only company that successfully appealed in court to obtain its pioneer's preference treatment.

In 1993, pioneer's preferences were granted to Volunteers in Technical Assistance, Mobile Telecommunication Technologies Corp., American Personal Communications, Cox Communications Inc. subsidiary Cox Enterprises Inc. and Omnipoint Corp. subsidiary Omnipoint Communications Inc. for development of satellite and wireless communication services.

While other technologies recognized as pioneering by the FCC have seen only limited deployment, QUALCOMM's technology is used by nearly 60 million subscribers and the firm has licensed its CDMA patent portfolio to more than 75 telecommunications equipment manufacturers worldwide.

The Commission over the next several months has scheduled two spectrum auctions, one in the 700 MHz band and one for licenses reclai