"Korean persecution [sic] said Friday that it didn’t see any illegality in the technology transaction between Hyundai Syscomm, Korea’s CDMA provider and UTStarcom, a US-based vendor that mainly does business in China.
Seoul Central District Public Prosecutors' Office dismissed the case filed by the Ministry of Commerce Industry and Energy against Hyundai Syscomm on illegal transactions of CDMA technologies.The prosecutors had verified legitimacy of the contract about CDMA intellectual property right between Hyundai Syscomm and UTStarcom and concluded that the contract is not in violation of relevant law."
According to the Prosecutors’ Office, as though Hyundai Syscomm entered into a $12m contract to transfer 2.5G CDMA technologies to a Korean subsidiary of UTStarcom, the transfer could hardly be seen as an export contract as the contract was concluded between two “Korean” companies. Also, as major CDMA technologies are still in the super computer of Hyundai Syscomm, technology transfer has not been occurred yet, the prosecutors added.
By Seong-ju Lee
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UTStarcomm was never really at risk here. The former Hyundai employees were. More to the point is Hong's scrappy attitude.
UTSI has been propelled by deals in China that gave them first mover advantage in supplying PHS networks and handsets. Could be wrong, but my take is that that was done by having the Ministry of Information Industries, under the State Council, change their minds about whether UTSI's PAS version of PHS could be installed piggyback on the fixed copper wireline networks in the cities, which had been expensively overbuilt and underutilized by the brutally inefficient State-owned monopoly China Telecom before Telecom was broken up. In other words, a big, free base for PHS customers and UTSI. PHS is a crappy mobile technology, especially cheap if you take it off from the existing infrastructure and set it up for a captive, underserved dense population of needy subscribers.
UTSI's huge customers (the reduced fixed provider China Telecom and the former fragment of the old Telecom called Netcom) have never had licenses to do mobile. But there are insider economic factions in the government, the techno-education system, and in the manager breeding farms with conflicting connections and objectives.
A few things happened in 2003: PHS was declared a fixed technology, and what had been a red light for PHS in the big cities was changed to green-ish amber. Demand was bursting and the regulators basically looked the other way as the first 10 million subs got handsets and happy, then 60 million more because this was a good thing "for the people".
Unfortunately, it's also self-defeating on the whole. Telecom and Netcom had no mobile licenses specifically so that they would not compete with the gov't darling China Mobile (another fragment of the old Telecom, stuffed with old Telecom insiders) and China Unicom, which bought into CDMA mostly as a WTO bargaining chip). But those 70 million subs PHS would have been better served with either GSM or CDMA then, now, and in the future.
That heavy handed-gov't interference with the process of buildout and uptake of a communications network, which regulated superior technologies out of the running, could not have been benign, as far as I can tell. Big bucks changed hands, and the insiders are in the government. That's what Hong Lu pulled off and maybe he can do it again.
$25 billion in 3G infra over the next three years in China. UTSI may get some, but they would have to be given those wins, because they can't possibly compete on a level playing field with the likes of ZTE, Huawei, Nortel, Lucent. Watch for a last gasp pump and insider dump.
[Pure ignorant speculation, just watching, no position.] |
