Skip, Re: 3G in China, and
“What's your take on the Chinese consolidation announcements? who will likely benefit in what tme frame? Which standards will be adopted. Will China agree to pay Qualcomm royalties on TDSCDMA, WCDMA, or will there be endless litigation?”
1) Updated article below suggests China’s move to 3G / industry consolidation is imminent (but we’ve heard that before, right?)
2) From the article (Netcom- largest fixed line carrier- to get the CDMA piece) suggests all three standards will be licensed.
3) See old post below re: China coughing up royalties to QCOM-
….+ A number of Chinese companies are licensed for CDMA / WCDMA, and are increasingly expanding their revenues in these expanding worldwide markets. I doubt they would risk their partnership with the Q by taking a hard line on TDS CDMA royalties when TDS CDMA revenue for quite a while should be significantly dominated by 3GSM.
…+ One would think there should be dual (tri) mode 3GSM handsets incorporating both GSM /WCDMA + TDS-CDMA at least initially (several years) in order to provide for ubiquitous coverage for the new “TDS-CDMA subs as the TDS-CDMA network gets deployed.
>>>>> Old Post >>>>>>>>>>>
Manalagi, Re: “Will QCOM get payment for TDSCDMA?”
No doubt its part of their negotiation strategy and a deep down part of the culture. My son-in-law’s father visits China several times a year on business and says one doesn’t buy anything over there without an intense negotiation process.
Qualcomm has a lot of negotiating experience in China and elsewhere, and the head negotiating honcho is now their new President (Steve Altman). The Q gave some ground to China several years ago when they “negotiated” different domestic and foreign royalty rates in order to gain acceptance of CDMA in China. CDMA was basically still in its infancy and fighting for survival then and signing China was an imperative. The Q took a lot of flack from the Koreans on that issue and won’t forget such.
IMO, things are much different now as CDMA2000 has blossomed and more importantly 3GSM (WCDMA/ UMTS/ etc) is rapidly being employed in Europe and elsewhere throughout the world. In fact, China has actually blinked as 4 or 5 Chinese handset manufactures have signed WCDMA licenses at the “standard world rate”, not the old Chinese CDMA rates. Additionally, Qualcomm has “ over “60 license agreements today with major non-Chinese manufacturers” including Siemens who is one on the major supporters of TD-SCDMA.
IMO, if China wants TD-SCDMA to flourish and sell those handsets to the rest of the world it will get a license on Q’s terms. Additionally, any TD-SCDMA handsets sold in China by these 60 licensed companies will be royalty bearing to the Q (at standard world rates). Also, I imagine Qualcomm would pull their WCDMA licenses from Chinese handset manufacturers and take China to the WTO if it attempts to circumvent the Q’s patents. A game of hardball is definitely being played out, and so far China has been the first to blink, not the Q.
Qualcomm’s on TD-SCDMA >>>>>>>>>>>>>>>
May 5, 2005 Spring Analyst Meeting
Q&A with Steve Altman, President
qualcomm.com
Q: Will QUALCOMM successfully sign royalty bearing TD-SCDMA license agreements with the Chinese manufacturers for sales in China?
A: We have signed four WCDMA license agreements at our standard worldwide royalty rates with major Chinese manufacturers. For TD-SCDMA, we have over 60 license agreements today with major non-Chinese manufacturers, and those agreements work exactly like they do for WCDMA and for CDMA2000. In any of our existing license agreements, including with respect to TD-SCDMA products, if the licensee uses one claim of one patent in a TD-SCDMA product, they pay the same royalty as if they use one claim of one patent for CDMA2000 or for WCDMA products.TD-SCDMA has not been commercially deployed yet; it looks like it is moving in that direction in China. If, in fact, TD-SCDMA is commercially deployed, licenses to QUALCOMM patents will be required since our patents are essential to the TD-SCDMA standard.
Q: Is each licensee's subscriber unit royalty rate for WCDMA and TD-SCDMA the same or greater than its rate for CDMA2000?
A: The answer to this question is "yes." We have framed this question a little bit differently this year by adding the words "or greater than" because in the case of our Chinese WCDMA licensees our standard worldwide royalty rates applicable to their WCDMA products are actually greater than some of the more favorable rates we provided them for CDMA2000 deployment
>>>>>>>>>>> Updated article >>>>>>>>>>>>>
RPT-UPDATE 2-China to issue 3G licences, merge telecoms majors
Sun May 25, 2008 11:47pm EDT
(Repeats story sent on Saturday with no changes to text)
(Adds analysts' comment, details)
By Vinicy Chan and Edmund Klamann
HONG KONG/SHANGHAI, May 24 (Reuters) - China will issue three licences for high-speed third-generation mobile phone services and called for a merger of China Unicom (0762.HK> and Netcom (0906.HK: Quote, Profile, Research), two of its four biggest telecoms providers, in a long-awaited industry revamp.
The government said on Saturday it would also call on China Telecom (0728.HK: Quote, Profile, Research), the country's biggest fixed-line telecoms carrier, to purchase wireless telecoms company Unicom's CDMA network, fleshing out details of the restructuring following an initial announcement on Friday.
ABN AMRO has valued the Unicom network at HK$40 billion ($5.1 billion).
China's 1.3 billion people can now look forward to joining others in advanced economies who already enjoy blazing-fast Internet access, games and a host of multimedia content from maps to music on their cellphones.
The 3G licences and the industry revamp are also set to unleash billions of dollars in spending for network gearmakers such as Ericsson (ERICb.ST: Quote, Profile, Research), Motorola (MOT.N: Quote, Profile, Research), Nokia (NOK1V.HE: Quote, Profile, Research), Nortel (NT.TO: Quote, Profile, Research) and Siemens (SIEGn.DE: Quote, Profile, Research), as newly merged firms expand to compete.
Although analysts are quick to point out that a full launch of 3G services is years away, allowing three nationwide providers increases choice and promises to hold down user fees.
On a corporate level, it will also help address the perennial complaints of fixed-line firms at being left out of the world's largest and fastest-growing major telecoms market. Analysts say "The move will help foster a more balanced competition landscape for the industry, create a fairer playing ground." said Michael Meng, an analyst with Citigroup.
The government's Saturday statement (http://www.gov.cn) gave no time frame for implementation and did not specify whether the restructuring would involve the state-owned companies or their 536870913 543975795 parent firms.
The move is also expected to foster competition in China's mobile sector, where the parent of China Mobile (0941.HK: Quote, Profile, Research), the world's largest mobile service provider by subscribers, has long overshadowed Unicom, the smaller of China's mobile duopoly and hobbled by a split between two different networks: CDMA and GSM.
COMPETITION FOR CHINA MOBILE
"The move aims to address China Mobile's dominance and Unicom can finally focus on developing a single network, which will boost efficiency, and GSM is traditionally a stronger network," said Sandy Shen, research director at Gartner IT, a consultancy.
China announced an initial series of moves on Friday, including leadership changes and a directive for China Mobile to take over a small fixed-line operator, China Railway Communication Co Ltd, which has assets of 42.4 billion yuan ($6.1 billion) and employs 72,000 staff across China.
(For profiles of telecoms executives, please click ID:nHKG269178)
The news sent many telecoms stocks soaring in both Hong Kong and on the mainland.
Hong Kong-listed shares in Unicom and Netcom jumped 11 to 12 percent before they were suspended from trade. China Telecom rose 7 percent while the Shanghai-listed shares of China United Telecommunications, part of the Unicom group, rose 5.1 percent.
China Mobile fell 3.8 percent as competition fears weighed.
Analysts said news of the restructuring, a subject of much debate and speculation over the past several years, would remove some of the uncertainty over shares in the sector, although many key details had yet to emerge, including a timeframe.
"It's a long-anticipated move which is finally taking place, and it also means the end of a restructuring trade," said Wendy Liu, telecoms analyst at ABN AMRO.
"I'll expect China Telecom, Unicom and Netcom shares to be suspended for a longer while as they will have to work out the details. But when all the stocks resume trading, investors will be looking at the fundamentals again, and whoever's the most capable to execute will win." ($1=7.801 Hong Kong Dollar) ($1=6.941 Yuan) (Additional reporting by Edwin Chan; Editing by Jean Yoon)
reuters.com |
