KOREAN LAWMAKER ASKS QUALCOMM TO ABIDE BY MFRR CLAUSE
SEOUL, Aug 22, 2001 (AsiaPulse via COMTEX) -- A Korean lawmaker has sent a letter to Qualcomm Corp. requesting that the U.S. company remain faithful to the most favorable royalty rates (MFRR) agreement included in the contract that permits local companies to use its technology.
In his August 21 letter to Qualcomm's CEO Irwin Jacobs, Rep. Kim Hyong-o, chairman of the National Assembly's Science, Technology, Information and Telecommunication Committee, said that the Korean people were concerned by recent developments in Qualcomm's relations with domestic cellular phone manufacturers.
He pointed out that Korea was the first country to commercialize the code-division multiple access (CDMA) technology for its wireless service sector, and this move had contributed greatly to the growth of Qualcomm.
The lawmaker from the opposition Grand National Party, said domestic cellular phone manufacturers had adhered to the 1993 infrastructure and subscriber unit license and technical assistance agreement, despite criticism that it was unfair and placed Korean companies at a disadvantage.
In particular, he said that Qualcomm's recent demand that Korean firms either choose the "Korean-style" royalty rate of 5.25 per cent for products sold in the country and 5.72 per cent for export, or the "Chinese-style" system, which offers 2.65 per cent for domestically sold products and 7.00 per cent for exports, conflicted with the spirit of the MFRR.
"MFRR means that Korean companies should receive the most favorable royalty rates in all specific market areas, whether the products are sold abroad or in the domestic market," he said, stressing that royalty rates applied to Korean companies should match the lowest levels around the world.
He also said arguments that the price of cellular handsets have risen and that Qualcomm should insist on a greater share of the earnings are unfounded.
"The rise in unit costs are attributable to multimedia devices added for the convenience of the users and have nothing to do with the use of the U.S. company's technology."
He concluded by saying that benefits for Korean companies and Qualcomm can only be maximized when close cooperation exists between the two sides, and hoped that everyone would work for closer cooperation.
Meanwhile, an aide to the lawmaker said that the letter was a means to gauge the U.S. company's stance before the start of next month's parliamentary audit, and that once they received a reply on the matter, parliamentary level measures might be contemplated.
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