Qualcomm, RCom bury hatchet

US-based Qualcomm, the dominant supplier of the chips that drive code division multiple access (CDMA) mobile phones, and Reliance Communications have agreed to expand the use of the technology in India.

RCom, which is the largest provider of CDMA-based mobile telephony in the country and also operates GSM-based services in some areas, will expand its CDMA 2000 network to 20,000 more towns.

Today's announcement, which came after Qualcomm chief executive Paul E Jacobs met RCom chairman Anil Ambani in Mumbai, scotches the widespread buzz that the two had been haggling for more than a year over the amount of royalty to be paid.

Jacobs is also slated to meet Ratan Tata, whose Tata Teleservices is another sizeable CDMA operator, and S Ramadorai, the chief executive of Tata Consultancy Services, the software arm of the group.

It had been alleged that Qualcomm was charging higher royalty in India than in other countries. However, neither party confirmed it and it is Qualcomm's policy not to reveal the royalty structure.

Jacobs was in India last July too, but, talks on the issue were said to have ended in a stalemate. Ambani was believed to be adamant on a transparent and upfront handset price reduction, while Qualcomm was only ready to concede a volume-led discount. The ministry of communications was said to have added its two bits by advising Qualcomm to remove the bottlenecks to a reduction in handset prices.

Speaking to Business Standard today, Jeffrey A Jacobs, Qualcomm Executive Vice President and President (global development), said there were no royalty issues between the two companies.

"We never had any royalty issues; the company's (Reliance's) issue was that of the price gap between GSM and CDMA handsets. We have successfully addressed this issue".

Over the last one year, CDMA handset prices have fallen sharply and become comparable to GSM handset prices. Royalty prices, according to Jacobs, are decided on the wholesale basis and should not be affecting the retail prices.

RCom's decision to push CDMA comes at a time when the government has been squatting over its request for additional spectrum to expand its GSM network to cover the entire country.

The quest has been opposed by the GSM lobby, which, through the Cellular Operators Association of India, is opposed to a company marrying the two technologies. The association wants operators to choose one.

"We are committed to the continued explosive growth of telecommunication services in India and, with Qualcomm, our leadership in the domestic market will be strengthened further," said Ambani.