Qualcomm sticks to royalty stand

Qualcomm Inc, rebutting charges of discrimination, said it charges a uniform 5 per cent royalty for its code division multiple access (CDMA) technology across the globe and even a 50 per cent reduction in it will only benefit the Indian consumer by about $1 for every connection.

Qualcomm has come under scrutiny after reports that Reliance Communications - the country's largest CDMA operator "" was contemplating a shift to GSM because it had to pay a higher royalty than South Korean and Chinese operators.

Qualcomm president for India & Saarc Kanwalinder Singh said: "We charge a standard royalty from handset vendors across the globe of around 5 per cent. It is factually incorrect to say that there is discrimination against Indian telcos and that the Koreans, US and Chinese pay less."

Singh said the royalty payout on low-end CDMA handsets priced at about $40 came to only $2. Even if this was reduced to half the benefit to the customer would be $1.

The company is looking at ways to reduce the overall price of the handset and expects that with the launch of the new chip sets it would go down to first to $35 and then to $30.

Singh clarified that as part of an agreement a few years ago only Chinese domestic handset manufacturers "" not multinationals setting shop in China "" were offered a lower royalty rate if they sold within the country.

However, that agreement had lapsed and most Chinese handset manufacturers now paid the standard royalty.

Last fortnight, Qualcomm CEO Paul Jacobs chairman flew into India for detailed meetings with the government and Anil Ambani on the contentious issue.

Attacking Nokia, which recently announced that it would withdraw from manufacturing CDMA2000 handsets, Singh said: "The real story is that we have an entrenched incumbent in Nokia which commands 80 per cent of Indian GSM handset market and charges high prices. That position is being challenged by CDMA handset manufacturers which are driving down prices. "