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

med from
former C-block license holders. QUALCOMM is currently exploring its
opportunities to participate in the auctions.

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