>> US Qualcomm Worried 3G Profitability Fears May Hurt Rev
02nd February 2001,
source: Dow Jones
Qualcomm Inc. is worried that mobile carriers' growing uncertainty about the profitability of the next-generation technology known as 3G may delay its commercialization, cutting into the company's licensing revenue, a senior company official said Friday.
Jeffrey Belk, the company's senior vice president in charge of marketing, said Qualcomm stands to earn identical licensing fees regardless of which of the two main 3G standards - CDMA-2000 or WCDMA - equipment vendors and carriers eventually adopt.
"The royalty rate we get is the same," he told Dow Jones Newswires, adding that both employ proprietary technology belonging to the company.
However, if service providers hold off on plans to roll out third-generation cellular technology, Qualcomm could suffer, he said.
European carriers, in particular, after paying tens of billions of dollars for 3G spectrum licenses have recently begun showing signs of hesitation in making further hefty investments in building 3G networks.
While 3G is expected to bring supercharged data capabilities like the high-speed Internet to the handset, the carriers have said it's unclear whether consumer demand for such services merits such heavy up-front costs.
Belk said the real danger for Qualcomm is if carriers choose to stay too long with interim upgrades to their existing GSM, or Global System for Mobile services, networks such as GPRS, rather than forging ahead.
"If it stops at GPRS, we're unhappy," Belk said. GPRS increases the usability and data-transfer speed of today's Wireless Access Protocol, or WAP, services but is viewed by most telecom analysts as just a transitional phase on the way to 3G.
Belk said users want true broadband and compared dependence on such "2.5G" technologies to driving on dirt roads with better horses and carriages rather than entering the automotive age.
Qualcomm derives the majority of its revenue from royalties.
While it owns rights over the CDMA standard used by U.S. and Korean carriers, the majority of existing mobile networks in the rest of the world employ the rival GSM system. <<
- Eric - |
