QUALCOMM INKS CHINA CONTRACT>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>Thursday February 17 5:18 AM ET
China Finalizes Mobile Phone Pact With Qualcomm
By Matt Pottinger
BEIJING (Reuters) - China Unicom has signed an agreement with San Diego-based Qualcomm Inc that paves the way for the Chinese telecommunications operator to build CDMA mobile phone networks, state media said on Thursday.
The deal, first announced on February 1, gives Chinese manufacturers access to Qualcomm's (NasdaqNM:QCOM - news) patents on the U.S. technology in exchange for royalty payments.
The arrangement also opens the door for China Unicom, the country's number two phone company, to begin rolling out CDMA (Code Division Multiple Access) networks ahead of its planned multibillion dollar overseas listing this year.
The company, formally known as China United Telecommunications Corp, sees CDMA as a cornerstone of its strategy to challenge rival China Telecom, which dominates the mobile phone industry with networks based on European GSM (Global Standard for Mobile Communications) technology.
Many engineers argue CDMA offers higher voice quality than GSM and provides a more solid foundation for the next generation of advanced mobile services, such as video and Internet phones.
``The framework agreement signed here enables us to deploy a CDMA network as we planned,' the China Daily quoted Yang Xianzu, chairman and president of China Unicom, as saying.
Army Poses Cdma Challenge
But China Unicom faces another obstacle to achieving its target for an 11 million subscriber-capacity network this year.
Companies backed by the People's Liberation Army (PLA) are already operating CDMA networks in several key markets, including the cities of Beijing, Shanghai, Guangzhou and Xian, and the northern province of Hebei.
China Unicom could find itself embroiled in a price war in those markets just as it sets out to build its new business.
The PLA-backed firms appear to be glaring exceptions to an 18-month drive by President Jiang Zemin to sever the bond between the military and big business. Yet industry regulators said the ventures were legal.
Regardless of who ends up operating CDMA networks in China, the Qualcomm pact is good news for Chinese manufacturers, who largely missed out on the country's GSM network boom.
Foreign vendors such as Nokia Corp (NYSE:NOK - news), Motorola Inc (NYSE:MOT - news) and Ericsson (LMEb.ST) scooped up billions of dollars in contracts to supply that market, already one of the biggest in the world with 40 million subscribers.
Chinese firms such as Great Dragon, ZTE, Jinpeng Electronic Information Machine Co, Datang Telecom and Huawei will stand shoulder-to-shoulder in competition with Nortel Networks Corp (Toronto:NT.TO - news), Lucent Technologies Inc (NYSE:LU - news) and other foreign companies bidding for Unicom contracts. |
