When it comes to rolling out 5G, there are a lot of moving parts. At the heart of the 5G story sits Qualcomm, the company that makes wireless chips for your phone and develops and licenses other technology in the wireless industry.

Qualcomm has been pushing 5G hard — the future of the business hard. But there are aspects of the 5G rollout it can’t control, like how long it’ll take for infrastructure to make it into every neighborhood in the country. The company is also the subject of a Federal Trade Commission investigation over whether it abused its monopoly position in 4G technology to charge too much for licensing. It also settled a long-running lawsuit with Apple over the same thing last April.

I spoke with Cristiano Amon, the president of Qualcomm, about all this at CES in Las Vegas last week. He started the conversation with the 5G promise. The following is an edited transcript of our conversation.

Cristiano Amon: Basically, you bring the computational power of the cloud, all of the data that exists in the cloud, to any device. One of the things we said in the very beginning of this 5G transition: In the 5G era, artificial intelligence will develop side by side with 5G, just because you’re connected to cloud, you have a lot of data, you can apply machine learning to all that data.

Wood: 5G is also a technology that I think we’ve been waiting for. We’ve been talking about the promise for a long time. Consumers being consumers, people are getting impatient. At what point do you think people are going to get frustrated, or they’re going to say, “This is all hype and no reality”?

Amon: I agree. Those things take time. For you to have all of those benefits of the technology, you have to have coverage. Infrastructure needs to be built. Unless you have coverage, you’re not going to get there. We have a couple of things that we’re dealing with as an industry. First, if you look at the United States, one of the No. 1 obstacles when you’ve talked to operators is actually the ability to get new sites up. They are working with municipalities one at a time. China, for example, has identified 1 million sites for 5G until the end of 2020.

Wood: It also sounds like 5G deployment is really important to your long-term business success. I can just hear the open source community saying, “Listen, you could potentially make some of this available for everybody to build on to accelerate the ecosystem.”

Amon: That’s what we do. If you were an automaker, or if you were an industrial company — let’s say you’re Bosch, and you’re making manufacturing robots and you want to add 5G, you have to build an engineering capability of a Samsung or Apple to be able to deal with this. What Qualcomm offers is we provide you a license, we provide you a chipset, we provide you a reference design, we provide your software that you can easily add cellular to your robots, to industrial machines, to your car. If you don’t have a model that is horizontal and creates an ecosystem, you actually prevent all of those other industries to get access to sell it. They have to build a cellular or phone company to be able to do it. That is why we think [that with] 5G we’re going to see an expansion of the licensing model, not the other direction.

Wood: This is a little bit of a left turn. We’ve been doing a lot of coverage on climate and how technology and the tech industry can help us adapt, be more resilient, maybe maintain emergency communications. How do you see Qualcomm’s role in sustainability and resilience and climate conversation overall?

Amon: It’s interesting, and I agree with you. I didn’t expect that question. The way we think about it is first, at the very basic, we are a company that developed technology for a battery-powered device. We don’t have the luxury and the technology that we do to assume that we’re going to be plugged to the wall. We’ve probably been building a lot of efficiency. That’s no secret why we’ve been so successful in automotive, because like all of the other industries, [the auto industry is] really trying to address how they can be more efficient, consume less fuel, consume less electricity. I think that’s one of the things that we contribute to. The other thing is, by making everything connected, there’s a significant increase in productivity. We always said that every year that goes by, you do more of your work on your phone. I think that’s going to change over time with everything connected: productivity. People will be able to do more than work at home. They will be able to connect with other people without having to be there. I think there’s a lot of indirect benefits of basically providing a technology that allows everything to be connected.

Wood: I do want to talk about licensing, because parts of that business model have come under scrutiny. Qualcomm has been in a long legal battle with the Federal Trade Commission over whether some of those licensing agreements have reached monopoly status. Do you plan to approach 5G licensing any differently, in light of those disputes?

Amon: Look, there’s not much I can tell you about the dispute, other than the public statements we’ve made. We’re very pleased, and I think it was the right decision for us to be granted a stay, and I think we’re waiting for the appeal. What I can tell you is we actually have a very vibrant license business model that actually enables competition. We’re very pleased that we have many companies that signed a 5G license with Qualcomm independent of the dispute and even post the ruling. That [validated] that we have a competitive business model and actually one that provides growth in competition in the industry.

Wood: You first joined Qualcomm in 1995 when the company was just 10 years old, and you’ve left and come back since then. But I wonder what that journey has been like in this entire ecosystem.

Amon: It’s an incredible company. I was fortunate enough to join before the first CDMA network was launched, so I was able to see every single transition of wireless 1G to 2G to 3G to 4G and now 5G. I’ve been through all of those. It’s really fascinating to see how cellular has changed society. It’s one of those few opportunities — and I think all of our employees feel that — you can work on something that actually changes society. It’s also interesting to see that we made bets that everybody — and each one of those bets, no exception — told us [was] not going to work or there’s no need for this. We’ll be able to see as we stay with that vision, the transformation. I don’t want to go back all the way to CDMA, but I’ll tell you an example. When we first talked about 4G, it was fascinating to see all of the analysts on their Blackberries sending emails to each other saying, “Who needs 100 megabits per phone? Nobody needs it. I have everything I need. I have my email, I have all of the GSM — all good enough for email.” Where are the BlackBerrys now? Now we see people saying “Oh, 5G is hype. Who needs to be connected with the cloud and multiple gigabits of speed?” We’ll see.

Related links: More insight from Molly Wood

You heard Cristiano Amon touch on the topic of Qualcomm’s legal disputes. Seeking Alpha has a story up that talks about how the Trump administration wants to argue at Qualcomm’s FTC appeal. The hearing is set for Feb. 13. Last fall, Bloomberg reported that the FTC is at odds with the Trump administration, which really doesn’t want the U.S. to fall behind China in terms of 5G technology. The company owns more than 140,000 patents on almost all aspects of cellphone technology. Licensing that tech is how the company makes most of its profit, although most of its revenue comes from selling chips. 

A U.S. district court judge previously ruled that Qualcomm licensing agreements hurt competition and ordered the company to renegotiate all its deals with phone makers. But, on appeal, that order was put on hold until the FTC case is settled. Members of the FTC, including Chairman Joseph Simons, say it was very unusual for the administration and the Justice Department to intervene in the antitrust investigation. It also said that the FTC is not happy about it, but it also shows you just how worried this administration is about getting to 5G first. 

Remember last year around this time when there were rumors that Trump’s national security team wanted to actually nationalize a single 5G network in the U.S.? Qualcomm has friends in high places.

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