June 25, 2006, 4:15 PM — Qualcomm Inc. will not cut the royalty rate it charges on CDMA mobile handsets sold in India, it said in response to reports that it was going to enable service providers to offer them at lower cost.
The Indian media had reported that the company was under pressure from key Indian CDMA (Code Division Multiple Access) mobile service providers to lower its royalty rate in India to enable CDMA handsets to be offered at lower costs in the country.
Earlier this month Reliance Communications Ltd., a large CDMA service provider in Mumbai indicated that it will also be offering mobile services using the GSM (Global System for Mobile Communications) standard. Another large CDMA operator, Tata Teleservices Ltd. of Mumbai, said it would negotiate a lower royalty rate with Qualcomm.
Qualcomm, of San Diego, does not collect royalty from operators but from equipment makers, said Mike Hartogs, vice president and division counsel of Qualcomm Technology Licensing. Qualomm did not disclose the precise royalty rate it charges in India, but said it did not have a significant impact on the cost of CDMA handsets in the country.
Qualcomm has worked with handset makers and operators to lower the wholesale average selling price of handsets from manufacturers to operators to close to US$40, said Kanwalinder Singh, president of Qualcomm India. The initiative to further lower handset costs to help increase adoption rates in India will continue, he added.
A later entrant into the Indian market than GSM, CDMA already has a 30 percent share of the mobile subscribers in India, Singh said. Of the 107 million mobile subscribers in India, about 32 million are using services using CDMA technology, he added.