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KDDI, Unicom Near Forging Cooperative Technology Deal
Japan, China Operators to Swap Mobile Internet, 3G Knowledge
By ROBERT A. GUTH and MATT POTTINGER
Staff Reporters of THE WALL STREET JOURNAL
The second-largest mobile-phone operators in Japan and China have forged a cooperative alliance that could boost U.S.-based Qualcomm Inc.'s plans to expand its wireless technology in the region, people familiar with agreement said.
Japan's KDDI Corp. and China Unicom Group were expected to sign an agreement Tuesday evening to swap knowledge about mobile Internet services and third-generation wireless technology. KDDI, which operates networks that run on Qualcomm's CDMA standard, would also provide Unicom with guidance on deploying the technology. Further, the agreement would enable subscribers from both sides to "roam" between the two networks without switching handsets.
The deal doesn't involve any investments between the companies and is unlikely to open the way for KDDI to enter the highly restricted Chinese telecommuications market, says a person close to Unicom who is familiar with the agreement.
The agreement's larger significance, say industry executives, is that it could help determine the success of the CDMA technology in the closely watched China market, which in turn could spur the technology's development throughout Asia. KDDI's cooperation could help Unicom get off to a smooth start in the critical early stages of its deployment of CDMA networks. The success of that rollout is seen as important to KDDI and other regional operators who use the technology, since a thriving market in China would drive down the price of CDMA equipment and handsets world-wide and encourage innovation of cutting-edge services that would attract subscribers.
It also would benefit San Diego-based Qualcomm, which earns royalties on sales of equipment and handsets. "The Chinese market has so much weight it could turn the regional market in favor" of CDMA, contends Ming Louie, president of Qualcomm China.
Unicom and KDDI declined to discuss details of the agreement, although a spokeswoman for Unicom confirmed the accord was to have been signed Tuesday. KDDI President Yusai Okuyama was in Beijing to sign the deal, according to a person familiar with the agreement.
Last month, Unicom signed $1.4 billion in contracts with local and foreign equipment suppliers to build a 13.3 million-subscriber CDMA network this year. If the service -- which industry engineers say allows faster mobile Internet and data services than a European-backed rival standard -- is a hit with consumers, Unicom says it will expand to as many as 50 million lines within a couple of years. KDDI, which has relatively long experience running CDMA networks, operates the second-largest wireless Internet service in one of the world's most advanced markets for such services.
The talks come as Japan's dominant wireless carrier, NTT DoCoMo Inc., has been struggling to form tie-ups with Asian wireless operators. For over a year the company has been in and out of talks over taking a minority stake in South Korea's SK Telecom Co. but has yet to reach an agreement. Meanwhile, Vodafone Group PLC last year bought a stake in China Mobile, reducing DoCoMo's chances of forming a tie-up with that operator, China's largest.
Write to Robert A. Guth at robert.guth@awsj.com and Matt Pottinger at matt.pottinger@awsj.com. |
