Telecom Group’s Incompetence Will|Cost Millions, Smart Card Maker Says

ALEXANDRIA, Va. (CN) - A federal lawsuit claims that despite repeated warnings from wireless companies, the Telecommunications Industry Association took no action while it was running out of wireless codes. As a result, one of the world's largest smart card providers says the TIA now denies code requests, costing it and others millions of dollars.

More than a decade ago, the Federal Communications Commission ('FCC') delegated to the Telecommunications Industry Association ('TLA') - the principal trade association and standard-setting organization for the global communications industry - exclusive responsibility for the allocation and conservation of finite unique 32-bit electronic serial codes that manufacturers of mobile telephone equipment must embed in their devices so that the devices can be identified within a wireless network," according to the federal complaint. "Today, these codes are contained within 'smart cards' that provide wireless handsets their functionality and also enable wireless subscribers to switch devices without losing their existing telephone numbers or personalized characteristics.

"Under its established and binding procedures, TIA is obligated to fill a manufacturer's code requests on a first-come-first-served basis, taking account of the manufacturer's historical code usage and customer demand. However, because the pool of available codes is limited, and the demand for mobile communications equipment is increasing, the finite pool of unique 32-bit identifying codes that TIA administers will eventually be exhausted. This reality was known from the start, as only 4.3 billion unique codes can be derived from the 32-bit range, and TIA is expressly charged with addressing the eventual exhaustion of existing codes through careful management (such as by retrieving and recycling unused codes) and by devising a new numbering system to which manufacturers and wireless service providers may transition before the existing code pool is gone. As a result, TIA, by its own admission and as this Court previously has determined as a matter of law, owes a clear duty to those who depend on the public resource that it manages.

"TIA has flagrantly shirked its responsibilities. For nearly a decade, TIA stood on

the sidelines as the pool of available codes careened unchecked toward critical exhaust. And when TIA finally took action, it was too late: TIA could only attempt to mitigate the dire effects of code scarcity rather than prevent it. Instead of adhering to its obligations, TIA therefore began to prorate code requests among requesting manufacturers and even to discriminate against the largest users of the resource.

"This scheme has carried predictable but grave consequences for Plaintiff and the entire Gemalto family of companies (collectively, Gemalto'). Gemalto is a leading manufacturer of smart cards that must contain serial codes from TIA. Notwithstanding Gemalto's historically stronger demand for codes, its timely application and payment for them and its demonstrated customer demand, TIA has failed to meet Gemalto's code requests in accordance with TIA's own rules. TIA even intentionally favored other, smaller and less established manufacturers over Gemalto in its code assignment. And as a result of TIA's refusal to provide Gemalto with manufacturer codes on a first-come-first-served basis, Gemalto has been unable to provide its customers with coded cards in a commercially reasonable manner.

"Consequently, Gemalto has suffered direct financial losses running into the millions of dollars, and it continues to suffer a diminution in market share, as well as unquantifiable harms to its reputation and good will.

"Plaintiff brings this lawsuit to obtain redress for the injuries that TIA has caused through its negligence in performing the code pool management and allocation responsibilities delegated by the FCC."

Gemalto is represented by Steven Hollman with Hollman & Hartson of Washington, D.C.

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