M1, Singapore's second-largest service provider, was planning on basing its future phone network on CDMA (code division multiple access). Qualcomm has made billions of dollars licensing its CDMA technology to network operators.
But in November, M1 chief executive Neil Montefiore said the company would instead use a network based on GSM (global system for mobile communications), the European phone standard. Late Monday, Montefiore said during a speech at a conference that it would cost US$500 million to launch a GSM network, compared with US$1 billion for a network based on CDMA.
Analysts think M1's decision may help cement the perception that GSM is on its way to becoming a global standard for "3G", the name for new phone networks that carry the promise of always-on handsets capable of making voice calls or receiving data at broadband speeds. About 60 percent of the world's phone networks are GSM, with another 10 percent based on a standard called TDMA (time division multiple access), which is similar to GSM.
By comparison, most industry watchers say CDMA has captured 15 percent of the world's phone networks.
"Because MobileOne is a small carrier, it shouldn't have much material impact on Qualcomm's business model," said Peter Friedland of WR Hambrecht, which just initiated coverage on the Qualcomm stock with a positive rating. "But perception-wise, if a carrier decides not to use CDMA, that's not great news at all."
Qualcomm did not immediately return a phone call for comment. But Qualcomm spokeswoman Ann Stowe recently said the brewing standards battle is a moot point. The company in March announced it was creating a chip to make phones capable of operating in both a GSM and CDMA network.
"This is not a battle between these two standards, both will be good for Qualcomm," Stowe said during an interview last week.
Singapore itself, while a small country, looms large on the telecommunications radar screen. It has a tremendously high penetration rate of cell phones and is considered to be one of the bellwether areas for the potential success of the next generation of phones and phone networks
Without a CDMA carrier, phones that use this system won't be able to get any service in the country, said Tole Hart, an analyst with market research company Gartner.
"Singapore is a pretty important place to be," he said.