Your analysis is much too general and, though well articulated, suffers from a lack of recognition of how things really are in the telecom arena in China.
There are two issues with respect to royalty flow from CDMA. Firstly, there is Unicom and the domestic Chinese CDMA phone manufacturers implementing CDMA who are using Q's ASICs and technology. The manufacturers pay for the ASICs. Period. Full stop. No payment, no ASICs. Ergo, no phones. No problem. End of story.
The infra suppliers to Unicom are licensed and, as foreign entities, all pay like they are contractually bound to. Again, no problem. Period. Full stop.
The second, more difficult, problem is what happens when China Mobile makes a 3G decision. Let me suggest to you that the recent flap is probably about CM and little else.
Perhaps The Rich Janitor will chime in to give us his technical views on TD-SCDMA. From the bit I've seen, it is unsupported, untested, difficult to do from an infra standpoint, and no one is contemplating doing handsets, Nokia's grandstanding notwithstanding. [NB: Why the Chinese would want Nokia to get into another technologically challenging 3G standard when it has difficulties with any flavor of CDMA is beyond me, but is a topic for another time and another place.]
The sad fact is that while WCDMA and CDMA2000 had billions of development dollars poured into them and are now in various stages of commercialization, TD-SCDMA has languished in the laboratory. The standard might be a very good one for all I know, but it simply has not been competing while its opponents have racked up contracts and buckets of development dollars. This is the momentum trend that TD-SCDMA will have difficulty competing against even if there is a concerted effort to get it going.
There is no chance, given the momentum and financial trend, that TD-SCDMA will be a viable world-wide 3G standard. The Chinese know it and the rest of the world knows it. Are the Chinese willing to risk their future export markets on a bluff? I should think that if they adopt TD-SCDMA and not pay royalties on it, the price they will pay for doing so will be to lose any chance to become a major exporter of 3G handsets and other 3G products. They'll get killed in the WTO for doing so. I don't think this is a price they are willing to pay. It is also, paradoxically, a possible reason why Nokia and other companies that don't want to see future Chinese competition are willing to make a few noises about supporting TD-SCDMA.
This is about getting the best deal for CM's 3G choice. Since Q is at the center of the 3G tornado, collecting royalties from either CDMA2000 or WCDMA, don't you think that the Chinese are well-advised to trumpet their own standard in an effort to get some competitive advantage over Q when the CM 3G choice is made?
Reminds me so much of KDDI, and the ridiculous back and forth see/saw that it put Q through before capitulating in favor of the best technology.
A question, John: If you believe that the Chinese will try to avoid paying royalties on WCDMA and/or CDMA2000, how are they going to get ASICs if they don't have the present ability to make them and are unlikely to be able to make them for a long time? And, being in such a weak bargaining position, why would they risk a WTO battle?
C2@dr.jshouldhavenevergiventhemabreak.com |
