Uncle Frank: Re: Korea and royalty rates. A plus for the Q?
To: slacker711 who wrote (12430)
From: Benjamin Garrett Friday, Jun 16, 2000 10:57 AM ET
Respond to Post # 12442 of 12442
((("Qualcomm Senior VP in Korea....comments on royalty rates.")))
The royalty issue, one of the primary QCOM "liabilities" noted by its enemies, may well become a primary advantage as this story plays out.
The number of companies trying to get a piece of the (W)CDMA IP pie reminds me of fitting as many circus clowns as possible into a small car.
Bottom line - (W)CDMA will be more expensive and confusing to license. Leaving QCOM out of the picture for the moment, let's also expect litigation between remaining parties. DoMo and Europe will surly butt heads as concept grows closer to reality. Just think! 20-30 vested parties chewing at each other's ankles.
And no final move can be made without an accord with QCOM.
Love it.
regards,
blg
To: Art Bechhoefer who wrote (12429)
From: slacker711 Friday, Jun 16, 2000 9:29 AM ET
Reply # of 12442
Qualcomm Senior VP in Korea....comments on royalty rates.
hk.co.kr
Qualcomm Preaches Comparative IPR Rate of CDMA Standard for IMT-2000
By Yang Sung-jin
Staff Reporter
Qualcomm Inc., a San Diego-based CDMA (code division multiple access) solutions provider, yesterday urged the Korean government and mobile phone carriers to embrace CDMA for IMT-2000, citing the lower royalty rate.
At a press conference, Louis M. Lupin, senior vice president and proprietary rights counsel of Qualcomm, said the total royalty cost for multi-carrier IMT-2000, an upgrade from today's CDMA will be ``very reasonable.''
``Qualcomm expects the total royalty cost for multi-carrier should be lower, especially compared with direct spread,'' Lupin said.
Multi-carrier IMT-2000 is led by Qualcomm, while direct spread type of the third-generation (3G) mobile system is based on GSM mode which dominates the European mobile market.
Lupin emphasized that Qualcomm has in its power to protect Korean manufacturers and service providers in maintaining IPR (intellectual property right) fees for IMT-2000 while it cannot guarantee such favorable conditions for European direct spread mode.
He noted that Qualcomm is powered to control the overall IPR rate in concert with a few patent holders, which will benefit Korean players once they opt for multi-carrier type in choosing the forthcoming IMT-2000 license.
``The situation for direct spread is very different. At least 27 companies have already stated publicly that they have essential patent,'' Lupin said, suggesting that the ``chaotic'' situation will hike the royalty rate for Korean operators and manufacturers.
To streamline and create a unified voice for direct spread IMT-2000 IPR, the patent holders are in the process of forming ``patent platform.''
According to Lupin, however, the platform is not working largely because most of the important patent holders such as Ericsson, Nokia and Motorola do not join the group.
``As a consequence, the royalty rate for direct spread is likely to be very high,'' Lupin argued.
Asked on whether Qualcomm is willing to lower the royalty rate for Korean players, Lupin said it is still premature to discuss the issue.
Qualcomm has long been mired in the royalty dispute here since Korean manufacturers often complained Qualcomm did not reciprocate the huge revenues coming from Korea's fast-growing CDMA market by lowering the royalty rate.
Currently, Qualcomm is maintaining the royalty relations with 25 Korean licensees, many of which allegedly took issue with the unfairly high royalty.
Lupin stuck to NCND (neither confirm nor deny) policy when asked on the specific rate of CDMA royalties applied to Korean manufacturers but it's a sort of open secret that the rate is 5.25 percent.
``We haven't heard the royalty rate was unfair here. If it's unfair, how Korea's CDMA market is so successful? Without Qualcomm, Korea would not have developed the technology like this,'' he said, refuting the allegation that some Korean companies expressed displeasure with the royalty terms.
With the Korean government considering the procedure and criteria for 3G spectrum and services, the debate centers around which should be deployed: multi-carrier (cdma2000) or direct spread (w-cdma), or both.
Qualcomm's interest, of course, is to pull off another CDMA deal with Korean counterparts, emphasizing the comparative IPR cost and other key factors.
Interestingly enough, Lupin's stance was reminiscent of Ericsson, a chief player which espouses the virtue of the European 3G mode.
Earlier, a top Ericsson official visited Korea and noted that the company has essential patents for both American and European 3G standards.
Lupin also repeated the mantra, saying Qualcomm has developed both 3G standards and patents and it holds very extensive portfolios of patent.
``Ericsson has signed royal-bearing license with Qualcomm for w-cdma royalty. Qualcomm is actually mutual in choosing MC or DS, in terms of IPR,'' Lupin said.
However, he said such aspect does not apply to other areas, particularly technology and possible economic impact. All things considered, multi- carrier IMT-2000 standard should be favored in Korea, Lupin claimed.
Meantime, Qualcomm is in the midst of persuading China to adopt CDMA technology to crack the mobile market of the most populous nation in the world.
Regarding the ongoing negotiations with China Unicom, Lupin said Qualcomm will maintain the most favored royalty (MFR) provision for Korea.
If China secures MFR, Korea will be given the same status in terms of royalty provisions, Lupin said.
``In February, Qualcomm signed framework agreement with China's Unicom, the second largest mobile carrier in China. There's some confusion about the framework agreement, which would provide CDMA to Chinese domestic suppliers on favorable royalty terms,'' he noted.
Lupin stressed that the framework itself is not a license and no commercial licenses have been granted to any Chinese manufacturers under the framework agreement.
``If China is offered licenses, Qualcomm will offer the same conditions to Korean manufacturers,'' Lupin said.
Qualcomm has made R&D agreement with major manufacturers in China to create the support base for CDMA deployment and the Chinese government focuses on whether the domestic Chinese manufacturers could participate in the CDMA technology development and grab the technology transfer, he explained. |
