Nokia’s misinterpretation of today’s CDMA standard means the vendor’s legacy handsets won’t work with new 1X systems CDMA carriers plan to launch later this year. The problem could be a setback for the world’s largest handset maker, which worked hard during the last year to overcome technical problems and gain CDMA carriers’ trust.

All of today’s CDMA phones are designed to work on future data-intensive 1X systems. Nokia discovered that its CDMA handsets would default to analog when operating on a 1X system because they won’t be able to read the new 1X sync channel.

A Nokia spokeswoman characterized the problem as a minor technical glitch that can easily be corrected with a software patch. It’s part of 23 minor and five fatal flaws that need to be cleaned up in the 1X standard, which isn’t a frozen standard yet, she said.

“This will have no impact on carrier or consumers,” the spokeswoman said. “What is going on now is not just an issue of Nokia phones, but how we applied the specification, and we do believe there are other issues out there.”

Perry LaForge, executive director of the CDMA Development Group, said the 1X standard as it is written today is stable, and the CDMA industry is trying to help Nokia correct the problem without any commercial disruptions.

“It is clear [Nokia] implemented the specification incorrectly,” LaForge said. “I can tell you that, right now, no one is characterizing any fatal flaws in the [1X] standard. People are in the implementation process and are happy where the standards are. Most of the changes proposed in the specification are more for grammatical clarification as opposed to any significant changes.”

A CDG working group is collaborating to agree on an appropriate solution to the compatibility problem. Rather than risking any rollout delays of 1X technology or customer service problems, carriers likely will implement software patches. Sprint PCS, which characterized the problem as minor, said it expects to make changes to accommodate Nokia’s legacy handsets as it upgrades to 1X systems.

“The CDG and carriers are very extraordinarily reluctant to do anything that would delay the rollout of 1X even slightly,” LaForge said.

Still, analysts believe Nokia’s new problem could leave a bad taste in the mouths of operators. Nokia has worked diligently to improve its dismal market share in the CDMA handset market and rebound from technical glitches that plagued its early products.

“As far as Nokia and CDMA are concerned, there’s no such thing as a minor software problem,” said Bryan Prohm, senior analyst with Dataquest.

During the past year, Nokia gained business with Verizon Wireless, which accepted one Nokia model, the 5185i. Sprint PCS does not purchase any handsets from Nokia.

“It remains to be seen what additional Nokia units we will sell—if any—because of this issue of the forward compatibility with 1X,” said Jim Gerace, Verizon’s vice president of corporate communications. “It is a big concern to us.”

Last week, Nokia introduced its first CDMA phones for the Korean market and unveiled two new models for the Americas market earlier this month. These phones will work with 1X, the Nokia spokeswoman said.

Another irritation to the CDMA community is a perceived standards war Nokia launched during last month’s Cellular Telecommunications & Internet Association show. Nokia introduced its GSM 850 product by touting the advantages of GSM over CDMA and questioning CDMA’s migration path to the third generation.

“The last thing Nokia wants to do is kick off another holy war,” said Timothy Eckersley, vice president of customer operations in North America for Nokia.

Eckersley reiterated GSM’s advantages over CDMA, including its clear migration path, open intellectual property rights and more economical handset business.