VOIP – an emerging IP battlefield

In the vast realm of information technology IP, mobile telecommunications seem to present the battlefield of choice. The whole field is migrating from second- to third-generation networks in order to offer large range of services, and the underlying chip technology is becoming more integrated. And the large players, many them true gladiators and veterans of past fights (Qualcomm, Texas Instruments, Nokia or Broadcom), are extremely busy slapping infringement patents lawsuits at each other.

This is a global battle. Qualcomm’s competitors have petitioned the European Commission for a Microsoft-type inquiry, and Broadcom is trying to block imports of litigious components in Qualcomm’s US products. The battle got so heated and visible that it now largely determines the market valuation of the major players.

As investors appear to pay less attention to the strong growth of the mobile sector and the good financial performance of companies concerned, and focus instead on the potential outcomes of IP, a new battlefield is emerging: intellectual property for Voice-over-IP (VOIP) technologies.

This is a rapidly growing market – and it is finally getting ready for the prime-time, as those of us who have been increasingly using Skype have noted. Skype traffic appears to be growing at better than 10 per cent a month. If this trend continues, VOIP will become as ubiquitous as e-mail and wi-fi.

VOIP is already quite litigious, with Vonage, a leading VOIP operator facing five infringement lawsuits. But take a look at the companies that have recently filed VOIP patents, and the potential for major battles looks very serious. Companies include Intel, IBM, Texas Instruments, Motorola, Lucent, Broadcom and Qualcomm. Their entry into VOIP highlights continuing the convergence of key telecommunications technologies.

One may wonder about the likely impact of widespread litigation on the underlying market. Interestingly, the impact appears concentrated on the supply side: the intensity of conflicts reflects a ferocious battle for market share or, even more, control of de facto standards.

On the other hand, the consumer side appears less affected and continues to enjoy the benefits of lower costs and better technology. One would be tempted to say that the IP market is working well – if not for the fact that this is not a market but an administrative process managed by courts and regulatory bodies such as patent offices and competition offices.