No scope for royalty cut: Qualcomm
US-based innovator of CDMA mobile technology Qualcomm on Wednesday ruled out any cut in royalties from Indian operators, saying under the present low-cost scenario its revenues would be hurt.
By PTI |
NEW DELHI: US-based innovator of CDMA mobile technology Qualcomm on Wednesday ruled out any cut in royalties from Indian operators, saying under the present low-cost scenario its revenues would be hurt.
Company CEO Paul Jacob, who is on a visit here to persuade operators to adopt its technology in the fastest growing wireless market, said there was no scope for cutting royalty, which currently stands at 5 per cent of the handset price.
"We don't make 7 per cent royalty in India (as is believed by Indians)... in general they (royalty rates) are below 5 per cent... if you are talking about a $40 phone, the royalty is $2, if we cut that royalty, we have half a dollar left", Jacob, told reporters prior to his meeting with Telecom Minister Dayanidhi Maran on Wednesday.
He said if that is compared to what "we did in creating competition where we actually brought the handset prices down by 25 per cent at the low-end, the expectation if any, is unjust."
"So, the key issue is what's the handset price... that's what affects operator, consumer and the solution is fund R&D and competition to reduce the handset prices", he said.
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Paul was non-commital on if Qualcomm would do the same of funding the R&D in India to bring down the handset prices saying: "We have already our R&D centre in India"."We always reinvest in R&D and if you track the previous years royalties, we spend money which comes from the royalties in the R&D to reduce costs and improve functionality and we are very hopeful that in India we can replicate what's happening in other markets of the world such as South Korea and China, where the local manufacturers will be able become global telecom players", he said.
On his proposed discussions with Maran, with whom the royalty issue is likely to be raised, Jacob said, "We will have some discussions on what opportunities are there... we have our own group of people here... I think that's an ongoing discussion".
Jacob said worldwide CDMA handset prices are coming down and "from $40, we are going to look at a price of $30."
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"CDMA has made tremendous impact on India's wireless industry... it has created a competitive landscape and wireless affordable for more than 100 million subscribers. Within one and half years of mobile CDMA being introduced, tariffs dropped by 42 per cent and tele-density rose by an additional 1.7 per cent", Jacob asserted.To drive his point home more aggressively, he said the Tata Lifetime Incoming Free and Reliance OneIndia Plan, are the major drivers of innovative pricing and subscriber volumes.
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"CDMA2000 low-end handsets are approaching price parity with GSM in India. The price gap between GSM and CDMA2000 low-end handsets (sub $50) has narrowed to less than $4", he said.Jacob's visit comes at time when the most committed player Reliance Infocomm has decided to focus on GSM technology-based mobile services as well.
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