AWSJ: China Unicom, Qualcomm Settle On Preliminary Deal
Dow Jones News Service ~ January 31, 2000 ~ 6:00 pm EST
By Matt Forney
Staff Reporter
BEIJING - Qualcomm Inc. has reached an agreement with China United
Telecommunications Corp. to license and deploy Qualcomm's technology in China's
fast-growing mobile communications market.
The deal was struck during negotiations over the weekend, but neither Qualcom nor
China Unicom has been willing to confirm the agreement, which is still preliminary and
must be approved by several Chinese agencies in a process that could take several
weeks.
If accepted, the agreement would give China Unicom a mobile-phone technology called
CDMA, or code-division multiple access, a standard Qualcomm developed that has
become the dominant in the U.S. China Unicom will be able to use the technology as a
new selling point in its battle to lure customers away from China's main operator of
mobile communications networks, China Telecom. Around 90% of China's 43 million
mobile-phone users subscribe to China Telecom's service, which uses the GSM, or
Global System for Mobile communications, wireless technology that is prevalent in
Europe.
"Now we move to the approval process," says a participant in the negotiations. "There
are almost no issues left - we agreed, but there is no contract yet," the negotiator added.
The deal must be approved by the State Development Planning Commission and the
Ministry of Information Industry, among others.
The deal lets China Unicom license a technology called cdmaOne from Qualcomm, the
San Diego-based company that holds many patents for mobile-phone technology.
Qualcomm will collect a royalty fee for sales of equipment using its patents, such as
wireless handsets and ground stations.
The deal could affect the development of mobile-phone standards in Asia, where a large
market such as China may influence regional industry trends. China Unicom has licensed
the so-called second-generation cdmaOne. Many companies are furiously working on
third generation wireless technology, which will enable users to download video and
other products to handheld devices, such as mobile phones.
That next generation is still a few years away, but already companies are vying to set the
industry standard. One option - called wide band CDMA - is prevalent in Europe.
Qualcomm holds relatively few patents for this type of CDMA technology.
Another option Qulacom is developing is called CDMA 2000. With its latest deal in
China, Qualcomm stands a better chance in the future of convincing China Unicom to
upgrade to CDMA 2000.
(END) DOW JONES NEWS 01-31-00
06:00 PM |
