Qualcomm sticks to its guns on lowering CDMA royalties

‘‘We talked about building the domestic handset market, but not just royalties, which seem to be getting a lot of the attention in India. We also spoke about measures to ensure that more in India can have the advantage of both voice and data connectivity,’’ Jacobs said after the meeting.

Jacobs was the most sought-after CEO in town on Wednesday because his talks with Maran were expected to centre around CDMA royalties, widely considered the reason why top CDMA operator Reliance recently adopted GSM for its future growth.

Since no such relaxations are being promised yet, there is some speculation on the outcome of Jacobs’ morning meeting with Reliance Communications chief Anil Ambani on Thursday. On Wednesday Jacobs, however, pointed out that telecom access and usage costs were driven down in India only because CDMA was introduced as a wireless in local loop (WLL) service some years ago.

‘‘The royalties are not high—they amount to $2 on a $40 phone—and the rate is not 7%, but nearer 5%. We actually brought handset prices down by 25% at the low-end, so the expectation for royalty cuts, if any, is unjust,’’ Jacobs said.

Among the possible steps the Qualcomm can take to help drive handset prices down is replicating South Korea’s trend, where small players have turned into large manufacturers on the back of CDMA technology licenced to them.

Qualcomm must also contend with another key loophole in its plans: India is not considered the hottest 3G market chiefly because of its spectrum allocation policy.

Spectrum rules were on the agenda, but the talks do not seem to made much headway. ‘‘On spectrum we did not have a 100% meeting of minds. India is still pursuing a steady growth in voice-based subscriptions, but I would rather like to see higher capability for data services.”