Dr. Irwin Jacobs Comments on China - "Dogged Persistence"
>> Qualcomm Chief Buoyant Over China CDMA
Tony Munroe
Reuters
05 December 2000
totaltele.com
Irwin Jacobs, founder and chief executive of wireless technology group Qualcomm Inc., expects to look out over China's rooftops a year from now and see a major, commercially deployed mobile phone network based on his company's proprietary CDMA standard.
If, as appears increasingly likely, a new mainland CDMA network is built, it will be the result of dogged persistence by the genial Jacobs, who has spent a significant part of the past year scrapping to ensure that Beijing lives up to a promise made in January that state-owned carrier China Unicom Group would adopt the technology.
"I think they'll be operating networks covering a significant part of China" by January 2002, Jacobs told Reuters in an interview on Tuesday. "I think that there will be very active campaigns to build a subscriber base."
He said he expects China Unicom Group to begin awarding contracts to build the current-generation network starting in early 2001.
Jacobs, armed with a fresh memorandum of understanding from China's top telecoms regulator affirming Beijing's backing of CDMA, said he has upgraded his confidence that the network will be built to "optimistic" from "cautiously optimistic."
But having endured emotional highs and lows as his firm's China plans were on, then off, and recently on-again, Jacobs refrained from promising a smooth journey ahead.
"I don't know of any specific hurdle at this point," he said during an interview in his plush penthouse hotel suite overlooking Hong Kong Harbour. "Things seem to be moving ahead, but there's always room for a surprise or two."
Land Of Seduction, Frustration
As he spoke in his penthouse hotel suite, Jacobs could see the edge of mainland China, a land of seduction and frustration for foreign technology firms eager to serve its 1.2 billion people and exploding information technology base.
China is expected to have 70 million mobile phone subscribers by the end of this year, and in the next few years will surpass the United States as the world's biggest mobile phone market.
"We would have hoped that CDMA (in China) would have started earlier. But whatever it is, it is, and we're looking ahead," said Jacobs, in town for a major telecoms conference. "There's still very large growth to come."
Jacobs sounded confident that CDMA will capture a significant share of the wireless revolution in China, which by some estimates will reach 200 million to 300 million subscribers over the next several years.
CDMA stands for code division multiple access, and in its current generation competes with the European-developed GSM standard, which is much more widely used around the world. CDMA backers maintain theirs is a more advanced, efficient technology. Qualcomm sells CDMA chips and software equipment and earns royalties on equipment based on the technology.
Trail Of Tears, Cheers
Early this year, Qualcomm signed a deal with China Unicom to build a mainland CDMA network, only to find its progress stalled and seemingly doomed as Qualcomm's networks become a bargaining chip in talks over the United States' granting China permanent normal trade relations status.
Complicating Qualcomm's progress, Jacobs said, were competitors vested in the GSM standard who didn't want to see CDMA in China. He also said China, as was the case elsewhere in the world, needed to be convinced that the late-developing CDMA standard was viable.
But Chinese manufacturers of CDMA-based wireless technology mounted a campaign in Qualcomm's support, and in October China Unicom Group announced it would build a network using Qualcomm's current-generation CDMA standard. The recent MOU inked with China's Ministry of Information Industry moved CDMA a step further.
The company's shares, which peaked at US$200 in January, plunged during the broad tech correction and on China concerns to a 52-week low of US$51.50 in July before rebounding to close Monday at US$90, a gain of US$7 or 8.4 percent on the strength of Beijing's confirmation of support for CDMA, revealed in Hong Kong on Monday.
Size Matters
Jacobs said the first phase of Unicom's CDMA network may serve up to 10 million users: "It could be five million, it could be 10 million. We'll have to wait and see."
But he said it is possible the network will be geographically large -- not just confined to major cities.
"There are some indications that there will be broad coverage," Jacobs said. "That'll be something to watch for when they issue the first contracts."
Companies on a "usual suspects" list of foreign CDMA equipment manufacturers, including giants Motorola Inc., Lucent Technologies, Nortel Networks and Ericsson, as well as Korean and mainland Chinese manufacturers, are expected to be among those that may supply CDMA gear in China.
An official with Lucent said it would cost roughly US$1 billion to build the infrastructure for a 10 million-user CDMA network. <<
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