The world has begun to observe a trend fueled by the rise of open systems that appears to pervert conventional economics and business behavior. This is a terrible analogy but it's the best I can do: one cannot grab a handful of jelly, squeeze hard, and expect to get a better grip on it - it just squeezes through your fingers. The "jelly" in my analogy is technological progress that is now more widespread than ever... and now widely distributed via the Internet. Technological progress is no longer the sole province of large corporations... but many corporations still think that technological progress is their sole province and use methods like patent infringement lawsuits to try to retain their dominance. That technique worked well in an era of centralization where a patent suit usually addressed another company, but in an era of millions of "infringers" - those who download music, operate telephony gateways, write open source software, or use wireless technology... trying to "squeeze" will ultimately fail.
The first time I observed this trend was the rise of downloaded music in the era of (the original) Napster. The music companies prided themselves on "killing Napster" when in reality, the real (perverse) result of that effort was to fuel the rise in alternative forms of delivery of music - hundreds of them. In the Napster era the music industry had to deal with Napster and a handful of similar operations. Now there are hundreds of music sharing networks - shut one down (when they can be found) and more spring to life. Killing Napster didn't save the music industry - sales and revenues continue to decline.
A very recent action of this same kind of fight that will result in "winning the battle, but losing the war" is Verizon's successful lawsuit against Vonage for patent infringement. I predict that "winning" this lawsuit will ultimately ruin Verizon. Here's why: what Verizon successfully prosecuted Vonage for was methods of interconnecting Voice Over Internet Protocol (VOIP) service with the legacy Public Switched Telephone Network (PSTN). Because Verizon chose the path of "ruining" Vonage instead of gently co-opting it (like buying it), it's inevitable that the trend towards "VOIP-only" will accelerate. Who wants to launch a VOIP/PSTN integration service now, with the certainty that Verizon will sue? So, the answer is to move towards "use PSTN when you must, and use VOIP for everything else". Verizon will ultimately lose, because the increased use of VOIP means that there will be far less use of their very expensive PSTN infrastructure - lines going down streets that are only 50% in use (and therefore generating only 50% potential revenue... while still costing 100% of maintenance and repair), not to mention expensive phone switches that are idle more and more of the time.
Yesterday Microsoft signaled its intent to crack down on Linux, claiming hundreds of specific patent infringements. The thinly-veiled threat is to sue... but who can Microsoft sue? Individual companies that use Linux? Well, that will hardly win a new customer over to Windows. If it sues major Linux software companies like Red Hat and "succeeds", like the music industry "succeeded" in killing Napster, all that will happen is that Linux distributions will become even more decentralized and Microsoft will end up trying to sue individuals, much like the music industry is doing right now to no great effect. Not to mention Microsoft's ultimate nightmare scenario of bringing a patent lawsuit against "someone" only to get to trial and have that someone say to the judge and jury "As soon as Microsoft pointed out that they had a legitimate patent claim on something we did in Linux, we fixed the code in Linux immediately and the majority of Linux distributions since that day have not infringed on that Microsoft patent."
In the Broadband Wireless Internet Access industry, Qualcomm is beginning to rumble that it has the ability to crack down on a very broad swath of the Broadband Wireless Internet Access industry because of its extensive patent portfolio relating to wireless communications. In considering Qualcomm's position, the above examples are instructive. First, Orthogonal Frequency Division Multiplexing (OFDM) is a technology that was not invented by Qualcomm (as seems to be the case with Code Division Multiple Access- CDMA). Second, Wi-Fi (802.11-nearly_every_alpha_suffix) is now very widespread, diverse, and it will be very, very hard for Qualcomm to prosecute every vendor, worldwide, that uses OFDM. It will be hard enough just to fight some the bigger competitors - Qualcomm versus Cisco, for example, would be an epic battle. With the rise of digital signal processing, wireless systems have already moved into the realm of software-defined radios where the capabilities of the radio are far more defined by the software in the system than the hardware of the system.
Soon enough, this will also be the case with WiMAX (802.16-various), which may be why Qualcomm is finally beginning to "act like they're thinking about acting" in beginning to challenge the rise of OFDM.
Smart companies have learned at great expense not to bet against technological progress... just ask AT&T, once one of the largest, most respected, most profitable companies in the world. Heck... ask Western Union, once more dominant in telecommunications than AT&T. What the smar(est) companies of this century need to understand now is not to bet against the technological progress that can be brought to bear by widely-dispersed, very smart people on (what are perceived as) problems like intellectual property infringement claims and lawsuits. In 1993, John Gilmore said in Time Magazine: The net treats censorship as a defect and routes around it. In this century, it could be said that "The distributed base of highly intelligent, motivated individuals that can now collaborate via the Internet treats claims of intellectual property infringement such as patents as a challenge, and often just simply codes around them."
Open Source is now beginning to enter the realm of software-defined radio... (Gnu Software Radio, High Performance Software Defined Radio (HPSDR), TuxPhone), how long will it be before Qualcomm is in the same position as Microsoft is now regarding Linux?
Not to mention [Qualcomm's] ultimate nightmare scenario of bringing a patent lawsuit against "someone" only to get to trial and have that someone say to the judge and jury: "As soon as [Qualcomm] pointed out that they had a legitimate patent claim on something we did in [OFDM/Wi-Fi/WiMAX], we fixed the code in [OFDM/Wi-Fi/WiMAX] immediately and the majority of [OFDM/Wi-Fi/WiMAX systems] since that day have not infringed on that [Qualcomm] patent."
By Steve Stroh
This article is Copyright © 2007 by Steve Stroh.
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