Qualcomm signs first CDMA deal in China

Qualcomm plans to work closely with ZTE to bring commercial CDMA products to China's vast market

In this story: Access to China's vast market But more challenges in store RELATED STORIES, SITES

By CNN's Kristie Lu Stout

HONG KONG, China (CNN) -- Qualcomm has signed its first CDMA license agreement in China with telecom equipment maker, ZTE Corp.

ZTE is one of a handful of companies contracted by China Unicom last week to build a CDMA (code division multiple access) network throughout the country.

The deal boosts Qualcomm's fortunes, since it would earn royalties each time the standard is used by ZTE. The deal also gives Qualcomm immediate entry to the lucrative China mobile market.

Access to China's vast market

"ZTE was the first manufacturer in the People's Republic of China to enter into a research and development license with Qualcomm for CDMA, and has now become the first commercial licensee there," said Steven Altman, president of Qualcomm Technology Alliances, in a company statement.

"Qualcomm will now work even more closely with ZTE to bring commercial CDMA products to the vast market in China for wireless equipment."

The licensing deal follows an agreement struck between Qualcomm and China's number-two mobile operator China Unicom that allowed the licensing of Qualcomm's CDMA technology to Chinese manufacturers.

Under the terms of the royalty-bearing agreement, Qualcomm has granted ZTE a license to development, manufacture and sell cdmaOne and third-generation CDMA 2000 network equipment.

CdmaOne is a second-generation wireless technology that boasts more capacity and faster data transmission than GSM, the standard currently used in Europe and Asia, and TDMA, the standard used in the United States.

CDMA 2000 is the third-generation CDMA technology that promises even greater capacity and faster data transmission including Internet access.

China Unicom plans to invest $1.2 billion in a CDMA network to service its 10 million subscribers.

But more challenges in store

News of Unicom going forward with the CDMA roll out and the ZTE deal marks a coup for Qualcomm, after years of wooing bureaucrats and business to bring its technology to China.

But Qualcomm must face an intensifying battle of CDMA standards within China's borders as it sows the seeds of expansion in the country's 85.3 million user strong mobile market.

Three competing standards -- WCDMA, TDSCDMA, and Qualcomm's CDMA 2000 -- are being considered for rollout in China, whose mobile infrastructure is already dominated by the GSM standard.

TDSCDMA is China's variant of Qualcomm's CDMA technology developed a few years ago by a Chinese research institute.

"I suspect given some of the country's interests, each of the technologies will be used," Qualcomm chief executive Dr Irwin Jacobs told reporters in Hong Kong two weeks ago.

But Jacobs is confident Qualcomm's CDMA 2000 will be the first to be deployed.

"The first one in use will probably be CDMA 2000. The standard is stable and the equipment is available. CDMA 2000 phone equipment is available in Korea. And we're talking to Chinese manufacturers in making CDMA phones in China."

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