Text of new (corrected) WSJ article on Korea / carriers' choices.
(Again -- sorry if already posted).
South Korean Firms Lean Against
New Qualcomm Wireless Technology
By HAE WON CHOI, PUI-WING TAM and KHANH T.L. TRAN
Staff Reporters of THE WALL STREET JOURNAL
SEOUL, South Korea -- The top three cellular-phone service providers in
South Korea are leaning against adopting Qualcomm Inc.'s next-generation
technology for mobile telecommunications services, but they said a final
decision hasn't yet been reached.
SK Telecom Co., Korea Telecom Corp. and LG Telecom Co., which are
all vying to get licenses from the South Korean government to provide
next-generation services, said they prefer to adopt the wireless code
division multiple access, or WCDMA, technology from Finland's Nokia
Corp. and Sweden's Telefon AB L.M. Ericsson rather than from
Qualcomm, based in San Diego. All three, however, said their preferences
may change.
The three companies said they favor WCDMA against Qualcomm's
CDMA2000 because they expect that the WCDMA will be more widely
used globally than CDMA2000. "We want to adopt a technology that can
be used across the world," said Lee Jung Hwan, a spokesman at LG
Telecom.
The other reason is cost, they said. "It would save us money to use Nokia
and Ericsson's technology over Qualcomm's if we decide to use the
WCDMA," said Won Hong Sik, an assistant manager at the public
relations team at SK Telecom. All of South Korea's cellular phone services
uses Qualcomm's CDMA technology, and royalties from Korea have been
a major source of revenue for Qualcomm.
Officials who were able to talk about the royalty rates at Qualcomm in
Seoul couldn't be reached for comment.
South Korea's Ministry of Information and Communication will be giving
three licenses for next-generation mobile services, called IMT-2000, by
year end and companies are expected to place their bids by end of
September.
"When the companies place their bids, each bidder must decide whether it
is going to adopt the CDMA2000 or the WCDMA technology," a
spokesman at the ministry said. "So we will know by September what
technology each company will choose."
WCDMA, developed by Nokia and Ericsson, competes with Qualcomm's
CDMA2000 in the global wireless industry, company officials said. Both
technologies offer a coterie of sophisticated technological access including
high-speed Internet access and Web browsing through cellular phones.
Christine Trimble, a Qualcomm spokeswoman said Qualcomm "doesn't
believe an official technology decision has been made in Korea," adding
that the company was "in ongoing conversations with our customers there
and with the government." Ms. Trimble also said Qualcomm "expects
Korean operators will support both modes -- WCDMA and
CDMA2000."
She noted that Qualcomm holds patents for both WCDMA and
CDMA2000 and has already extended licensing agreements for these, so
that licensees pay the same royalty rates no matter which CDMA standard
is used.
Some analysts said that whatever the decision from Korea's main wireless
operators, it wouldn't have a huge impact on Qualcomm.
Brian Modoff, an analyst at Deutsche Bank Alex Brown in San Francisco,
said that Qualcomm still benefits no matter what version of CDMA is used
in Korea because the company gains royalties "regardless of which version
of mobile CDMA an operator chooses to deploy."
Nonetheless, shares of Qualcomm slid in heavy trading on Friday following
the reports from Korea.
As of 4 p.m. on the Nasdaq Stock Market, the stock was down $5.0625,
or 8.2%, to $56.625, down 8.2% from its previous day close of
$61.6875.
Write to Hae Won Choi at haewon.choi@wsj.com, Pui-Wing Tam at
pui-wing.tam@wsj.com and Khanh T.L. Tran at khanh.tran@wsj.com
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