"WiMAX vendors may think that they don't have to worry about Qualcomm's OFDM patents, but they are mistaken. Qualcomm will enforce them."
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SEOUL - Qualcomm Inc is likely to be entitled to royalties from manufacturers of handsets for South Korea's new wireless Internet standard, potentially dealing a blow to Seoul's ambition to commercialize the new technology, according to a US-based researcher.
The South Korean government plans to begin commercial operations of the "WiBro" service that allows users to maintain a broadband Internet connection on mobile devices even while they are in motion.
SK Telecom, the nation's top mobile network, and KT Corp, the biggest fixed-line broadband company, are already offering pilot services for the new technology based on the WiMAX wireless
standard. Big-name equipment vendors include Samsung Electronics, the world's third-largest handset maker.
On May 18, the New York-based ABI Research said in a statement that WiMax equipment vendors must consider Qualcomm royalties, pinpointing "a potential ongoing cost that is being widely ignored by the WiMAX industry."
In the statement, Philip Solis, an analyst of ABI Research, claimed Qualcomm would probably push to collect royalties from the WiMax equipment vendors after acquiring Flarion Technologies, which owns patents relating to orthogonal frequency-division multiplexing (OFDM), a core technology used in the new service.
"Qualcomm will certainly continue to man the toll-booth," Solis said in the statement. "The company will enforce them vigorously. That has a direct bearing on the plans of WiMAX vendors, who must factor these royalties into their business models."
The analyst cited a recent royalty agreement between Qualcomm and US company Soma Networks as the first such deal concluded by Qualcomm. But the issue remains widely ignored by the industry, Solis said.
"WiMAX vendors may think that they don't have to worry about Qualcomm's OFDM patents," said Solis, "But they are mistaken. Qualcomm will enforce them."
For more than a decade, South Korean handset manufacturers such as Samsung Electronics and LG Electronics Inc have paid royalties to Qualcomm for using its code division multiple access technology, the world's second most-popular wireless technology.
While San Diego-based Qualcomm, the world's second-largest wireless chipmaker, developed the CDMA technology, South Korean companies were the first in the world to commercialize it.
Since 1995, South Korean companies had paid a total of 3.03 trillion won (US$3.1 billion) to Qualcomm in CDMA-related royalties, said Representative Seo Hye-seok, a lawmaker of the ruling Uri Party, in a report last month, citing figures of the Ministry of Information and Communication.
Seo said Qualcomm collects 5.25% of local sales of handsets in royalties and 5.75% of exports by South Korean manufacturers.
Qualcomm has been criticized by South Korean government officials and handset vendors over what they called its excessive royalty fees.
"Concerns are mounting over Qualcomm's potential move to collect more royalty fees, exploiting its market dominance," Seo said in the statement.
The lawmaker advised South Korean companies to develop patented technologies, given the bulk of royalty payments to Qualcomm.
An official of the intellectual property right department of the Ministry of Information and Communication, speaking on condition of anonymity, said the government will have no way to intervene if Qualcomm signs a royalty agreement on the "WiBro" technology because it would be a corporate concern.
More than 39 million of South Korea's 48 million population have a mobile phone, giving it one of the highest mobile penetration rates in the world.
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