Qualcomm inks CDMA pact with Chinese ministry

The latest chapter in the long-running saga of CDMA (code division multiple access) cellular network technology in China was written Monday when Qualcomm Inc. announced it has signed a memorandum of understanding (MoU) with China’s Ministry of Information Industry (MII) concerning the use of the system in the country.

“I, just on the first part of this trip, was in China and we signed an MoU with the Ministry of Information Industry,” said Irwin Jacobs, president and chief executive officer of Qualcomm at a press conference here Monday at the Telecom Asia 2000 conference and exhibition. “It is basically covering the support of the MII for the deployment by (China United Telecommunications Co.) of the (first generation CDMA) technology and evolution to higher data rate technology,” he added.

Qualcomm has been eager to get its CDMA technology adopted in China for years, but has suffered a series of setbacks after expected orders and rollouts failed to appear – and in June a newspaper report said China Unicom had put on hold plans to build a CDMA network. That report came just five months after Qualcomm had unveiled a framework agreement with the carrier on a CDMA rollout. .

The false starts have led Qualcomm and other CDMA network infrastructure builders to grow wary of agreements signed in China. This latest deal brightened the outlook, they said, although what Jacobs and executives from major manufacturers expressed was guarded optimism rather than cries of joy.

“I’ve been describing my outlook on China as cautiously optimistic, now I would say I am optimistic,” said Jacobs.

Almost mirroring Jacobs’ comments, Scott Erickson, vice-president of global wireless business marketing at Lucent Technologies Inc., said: “the signing of the agreement moves us from what we used to call cautiously optimistic to a more positive optimistic.”

A much more upbeat assessment was delivered by Robert Mao, president and CEO of Greater China operations at Nortel Networks Corp. “We (have been) looking and drooling about China CDMA for too many years,” he said. “This time it’s for real.”

The companies have been looking for signs of support for the format from China. Signs that Jacobs said were finally delivered with the signing of the pact. Given the size of the potential market that exists in the country, even a small slice of China’s future cellular industry could translate into big bucks.

“Over time there is a very large (revenue) opportunity obviously in China,” said Jacobs. “The penetration has been growing rapidly but it is still perhaps 70 or 80 million subscribers and we were just there at a meeting talking 200 to 300 million subscribers going ahead, so there is still a large amount of growth.”

But whether or when this agreement leads to more concrete deals is still uncertain. Jacobs said he hoped the first concrete agreements could be signed with China Unicom in the coming months. “I think it will be sooner rather than later. I hope that contracts are in place not too late into the (next) year.”

Qualcomm, in San Diego, can be reached at http://www.qualcomm.com/.