Tax Man Chasing Qualcomm In India

Qualcomm is not having a good time in India lately. First there was the whole furor over its talks with Indian CDMA mobile operator Reliance Communications breaking down as it refused to lower royalty charges. Then Reliance Communications, which operates India’s second-largest private mobile service, said it would focus on enhancing GSM services, which analysts see as a not so subtle threat to Qualcomm. Now, India’s tax department has sent the Indian unit of Qualcomm a notice seeking details on royalty collection in India, The Hindu Business Line newspaper reports.

The department has also approached Reliance and Tata Teleservices, both major clients of Qualcomm. According to local tax rules, if the patent holder has an office in India it must pay a certain percentage as service tax on royalties collected, the newspaper reports. If the patent holder is a foreign company with no office in India, the recipient Indian company, that is the user, has to pay service tax on royalty paid. “The financial statements of these companies have not shown any separate allocations for royalties paid to the US-based company,” a tax official told the newspaper.

If royalty is collected on the basis of Intellectual Property Rights, Qualcomm, which has offices in India, will have to pay 12.24 per cent on every invoice, a senior service tax consultant at Ernst and Young told the newspaper. “But if royalty is collected on the basis of a technical transfer agreement, the company will have to pay only about 5 per cent on every invoice,” the consultant said.

But a Qualcomm corporate communications official told the newspaper via email that only handset device makers, not operators, have to pay “associated royalty” to Qualcomm. “Average royalty paid on devices sold in India over the past 12 months is around 15 per cent lower than royalties that have been paid to Qualcomm in markets like Korea, Japan and the US,” the email said, adding that India accounts for only about 2.2 percent of our handset royalties.

Written by Shailaja Neelakantan on August 5th, 2006 with no comments.
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Sprint’ Super Fast EVDO This Fall

Sprint Nextel, which announced tepid earnings yesterday is looking to wireless broadband to add a little sizzle to its bottomline. In conference call with analysts, Sprint-Nextel CEO Gary Forsee said that the company is moving the deployment schedule up by a quarter - from first quarter of 2007 to the fourth quarter of 2006.

“The success of our lab testing for EV-DO Rev A drove our decision to advance the deployment timeline, and I am pleased to report that we will make this exciting new service available to 40 million persons by the end of 2006,” he said. Sprint says it will have have 200 million EVDO POPs by end of the year.

Sprint, perhaps is feeling the pressure from AT&T/Cingular’s 3G services launch, and Verizon which is planning to aggressively rollout its own EVDO-Rev A service. EVDO Rev A is much faster version of the current EVDO Rev 0 technology and is capable of providing 3.1 megabits/s down, and 1.8 megabits/s upstream service. This opens up many possibilities, including high quality VoIP calling and better video streaming.

This quarter, our engineers demonstrated the first EV-DO Rev A over-the-air transmission, featuring average download speeds of 450 to 800 kilobits per second, and average upload speeds of 300 to 400 kilobits per second. We are successfully demonstrating applications, such as all-IP video telephony, high-performance push-to-talk, multi-user video conferencing, real-time gaming and video streaming — new applications which are expected to unlock tremendous new growth opportunities for our company.

Wireless data can help Sprint help blunt some of the pain caused by cheaper voice minutes. In the most recent quarter, the company had wireless data ARPU of $7.25, which is about 12% of the total ARPU. Wireless data revenue was nearly $850 million, an increase of nearly 70% year over year. The company said that Aircard business is posting robust growth, with Aircard revenue increasing 77% year over year and it has nearly 1.2 million Sprint Power Vision subscribers, up 57% sequentially. These are good indicators that wireless broadband can be a savior for the company.

Written by Om Malik on August 4th, 2006 with no comments.
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Qualcomm Takes MediaFLO To Japan

Qualcomm was able to convince another carrier to start testing its MediaFLO technology for broadcasting content to cell phones — SoftBank of Japan. SoftBank entered the wireless business when it acquired Vodafone’s Japanese operations (Vodafone KK) in March 2006. While there are several competing standards for broadcast mobile TV, Qualcomm’s MediaFLO is the wild card of the bunch.

In the U.S. Qualcomm has said it will spend $800 million to build a broadcast network and already has an agreement with Verizon to use the service. But outside the U.S. the company is pushing its broadcast technology, but doesn’t plan to build networks or buy spectrum, (for now.)

Qualcomm is targeting Japan, and already created a joint venture with Japan’s KDDI to explore the technology. SoftBank and KDDI are also trialling mobile WiMAX, which offers enough bandwidth for mobile video services. Qualcomm has said it plans to target Europe with MediaFLO as well, but could find more trouble there, given the dominance of the competing technology DVB-H.

Qualcomm’s best bet in other countries will be to find partners willing to take on network construction costs. In the U.S. Qualcomm might need a partner of another kind to bring the content, and MobiTV could be a good buy. We’re not sure if MediaFLO will end up being another Qualcomm cash cow, given outside of the U.S. the business model looks difficult, but Qualcomm has pioneered this against-the-grain model before.

Written by Katie Fehrenbacher on August 2nd, 2006 with no comments.
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A-IMS aims to improve or fracture the IMS standard?

Verizon, Cisco, Lucent Technologies, Motorola, Nortel and Qualcomm along with key telecom industry suppliers, today announced a vision for the advancement of next-generation network architecture for wireless mobile telecommunications networks. Their goal has been to develop enhancements to a well known, emerging architecture, known as IMS (IP Multi-media Subsystem). 

The multi-vendor team has generically termed this architecture A-IMS – for Advances to IMS -- in order to reflect its evolution from work done earlier in technology standards bodies.   The A-IMS architecture developed by the task force provides solutions to implement next-generation services in current networks, as well as creates a foundation for the efficient roll-out of both SIP- and non-SIP-based services in future networks. 

When I first heard about A-IMS and the taskforces "extensions" to the IMS standard, I couldn't help but be reminded of Microsoft making extensions to their browser that broke industry standards and fractured the browser market.  IMS is accepted as a core component of virtually all next-generation, IP-based communications networks for SIP-based applications, and is designed to assure standardization of multi-media services across all of these interconnected networks. So it is critical that any improvements made by the A-IMS initiative is rolled into the IMS standard.

I listened to the conference call and they claim that these "extensions" to the IMS standard will be put forth to the appropriate standards bodies. They pointed out that the response from the market has been positive and that the goal is not to cause a schism in the standard but instead to help bring more security, interoperability and stronger features.

Additionally, on the conference call Dick Lynch, Executive Vice President and CTO of Verizon Wireless pointed out that Verizon has been in discussion with other carriers and the goal is to make this a standard implemented wordwide and not just something for Verizon. He added that the years worth of work on enhancing IMS goal is to help move IMS forward.

Dick Lynch said, “We applaud the visionaries who have done a great job developing IMS over the last few years.  But as we approached implementation planning, it became apparent that there are some practical, real-world issues that need to be addressed if we are to transparently and completely deploy and maximize the use of this new architecture.  To us, it is also important that it be built to support the bridging of the present non-IP reality as we transition to the future.  As people look at what our task force has accomplished, I expect that they will see significant benefits, including embedding VoIP hooks into the lower levels of the stack and addressing security issues in a more systemic way.  These are exciting advancements that are headed rapidly into our mainstream technology roadmap.”

The current outputs of the task force are a concept document and an architecture document that are being provided to industry leaders.  From these documents, the task force companies plan to make necessary standards contributions in the immediate future. 

“The promise of IMS is extraordinary, for wireless service providers, as well as for all network providers.  A-IMS enhances the opportunity for success for not only the network providers but also for companies in technology, infrastructure, handset manufacturing and service design and, most importantly, for the consumer,” said Charlie Giancarlo, Chief Development Officer, Cisco. 

“Having been at the forefront of creating IMS-based next-generation multi-media solutions for mobile networks, we recognize the benefits of this collaboration, particularly in terms of multi-vendor interoperability, as we move into an all-IP mobility world,” said Paul Mankiewich, Chief Technology Officer, Lucent Technologies Network Systems Group.  “This effort continues to enable the delivery of blended voice, video, data and multi-media applications, what we call Blended Lifestyle services, to mobile end users.”

“This joint task force has defined the missing transition step from today to pure IP architecture, and knowledge learned from this effort will help us in development of seamless mobility solutions using this new architecture.  We see operators adopting A-IMS to deploy a unified platform for the rapid deployment of new services, including SIP-based interactive applications and non-SIP applications, all of which run on top of IP,” said Fred Wright, Senior Vice President, North America Region, Networks & Enterprise, Motorola.

“With our extensive experience deploying VoIP networks and SIP-based applications worldwide, we have a unique understanding of the system requirements and design and configuration enhancements necessary for successfully implementing VoIP in a wireless environment.  With the augmentations to the current standards we envision coming from A-IMS, wireless VoIP can efficiently arrive in the mainstream a lot sooner than anticipated,” predicted Richard Lowe, President, Mobility and Converged Core Networks, Nortel.

“With A-IMS, Qualcomm will be able to provide a consistent client environment that will drive the faster deployment of new and innovative IP-based applications,” said Roberto Padovani, Chief Technology Officer, Qualcomm.  “By deploying an access-agnostic A-IMS- based core network, operators will benefit from seamless integration of a rich array of services delivered across access technologies. A-IMS also provides operators flexibility in configuring and controlling services, and allows the device client to implement consistent policies for dealing with air interfaces, security, signaling and multi-media capabilities, while freeing the application developer to focus on providing compelling functionality to the user.”

The A-IMS standard is based on several key architectural principles, including:

Comprehensive Security: Security is more than authentication, and involves all components in the network, including the devices. Indeed, security agents run on the network devices, providing reverse-firewalls to protect the network from the device and to aid in posture assessment during logon. Comprehensive security also requires the Security Manager to monitor the network at all times, determine baseline traffic patterns, and then use those to detect and respond to anomalies. To respond, the Security Manager can change server configurations, install firewall rules or modify Intrusion Detection Services (IDS) behaviors.

Uniform Treatment of SIP and non-SIP Applications: To the greatest degree possible, A-IMS allows the service provider to manage and control both SIP and non-SIP applications in a uniform way. This is done primarily by usage of the Policy Manager (PM), which allows the service provider to manage the usage of network resources on behalf of both types of applications. Key network functions, including mobility, roaming and packet accounting are also defined in ways that allow them to support both types uniformly.
 
Dual Anchoring: A-IMS provides a mobile terminal with two IP addresses – one anchored in a Bearer Manager (BM) in the visited network, and one in a BM in the home network. Service provider policy controls which address is used for which applications. This allows for latency sensitive applications to use the visited anchor, whereas applications that require greater levels of service provider control can use the home anchor.

Three-Layer Peering: When connecting to roaming partners, peering occurs at three layers: security peering, used for access authentication, IP peering, used for transport of bearer traffic, and policy peering, used for control of bearer services. Policy server peering involves the usage of a policy server in both the home and visited networks. Usage of two allows for the home provider policies to apply even while roaming, yet allows them to be tempered by visited network policies on usage of the network.
 
Multi-Tiered Service Interaction Management: Feature interaction management across SIP-based applications, and between SIP and non-SIP applications is provided. Feature interaction management is linked with network policies, allowing for application interaction decisions to take into account the state of the network. The architecture also allows for extensibility to new interaction resolution mechanisms through the addition of service interaction application servers.

Highlights of the A-IMS plan clearly define several “pillars” as essential to the architecture:              

Bearer Manager (BM): Allocates resources and manages bearer traffic to meet customers’ service quality requirements. The primary functions include policy enforcement, mobility management, security, accounting, and access control.

Policy Manager (PM): A primary policy decision point for network policies, deciding the ways that the underlying network supports applications on behalf of subscribers and visitors to the network.
 
Application Manager (AM): The SIP services platform in the network that authorizes access to SIP services, provides SIP registration and authentication functions, and is responsible for the invocation and management of SIP-based features.
 
Security Manager (SM): Responsible for monitoring the network for security threats and responding to them in real time, making decisions on what devices are allowed access to the network based on their posture – a measure of the safety of the device based on the freshness of its software patches and security features.

Services Data Manager (SDM): The main repository of subscriber and network control data and collects and stores charging data for the network.

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Written by VoIP & Gadgets Blog on July 27th, 2006 with no comments.
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GSM Ganging Up On Qualcomm?

Qualcomm’s (QCOM) cell phone tax has been clashing with carriers in developing markets recently. The San Diego giant has a patent portfolio that lets it take a percentage of every CDMA handset sold, including patents for 3G.

Over the past few weeks, three carriers with large CDMA networks — China Unicom in China, Reliance in India, and Vivo in Brazil — have been reported to be investing in GSM networks in part to avoid the Qualcomm toll system.

While the carriers and cell phone makers will all upgrade to 3G eventually, delivering Qualcomm their payoffs soon enough, in the short term, possible losses on CDMA in developing markets could be a real concern to the San Diego giant–those carriers are estimated to make up as much as 5% of Qualcomm’s sales for 2006!

Qualcomm’s senior director of corporate communications Jeremy James had a pretty strong statement on the situtation. He said that the companies that are making the most money off of GSM, like Nokia (NOK), and Ericsson (ERICY) are creating “fear, uncertainty, and doubt” over a “false notion” of how Qualcomm’s royalties effect the availability of low-cost handsets.

He also said that GSM network companies like Ericsson are making CDMA carriers in developing markets “very attractive” offers to build and run GSM networks as “a last ditch effort” to try to maintain their traditional GSM shares as long as possible before the 3G future.

There might be some truth to Qualcomm’s complaint, but with a grain of salt. Analysts like Aman Kapoor from Packetology say that Reliance is probably building a GSM network just to better negotiate with Qualcomm over current royalties for CDMA when it expands that network. Since Qualcomm doesn’t disclose its fees beyond a range, it’s hard to tell exactly how much the royalty fee affects the total cost of the handset.

Nokia’s VP of external affairs, Bill Plummer, responded to Qualcomm’s statement by saying “that is certainly one way to look at the evolution of the wireless market. Another way would be to acknowledge that this is a highly competitive market where operators recognize the inherent benefits associated with open, non-proprietary, globally scalable networks like GSM.”

The real truth is that as all the carriers move to 3G, Qualcomm can quadruple its addressable market in the long term. As 3G handsets start to become more popular, Qualcomm is already growing sales and profits — last week the company reported $1.95 billion in revenues, with $643 million in net income for the third quarter, up 44% and 15% respetively.

But when it comes to its relationships with competitors and vendors the company seems to have few friends out there. Jupiter analyst Sharon Armbrust points out some of the data behind the complaints by the Nokia camp. But with complaints in various countries about its aggressive practices, the company can’t afford to alienate the world’s fastest growing markets India, China and Brazil.

Written by Katie Fehrenbacher on July 26th, 2006 with no comments.
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Qualcomm: No Negotiations in India

Our India correspondent Shai Neelakantan sent over this look at Qualcomm’s moves in India. More about Qualcomm later this afternoon!

Qualcomm has denied reports that it is negotiating with Indian CDMA players, including Reliance Communications, on lowering royalty charges or chipset costs, The Hindu reports quoting the Press Trust of India news agency. “Qualcomm is committed to help the industry drive handset prices down and it involves multiple players and has nothing to do with negotiations on royalties with operators as they do not pay it,” the company is quoted as saying. The company said royalties on devices sold in India as well prices of the devices in the country are the lowest in the world. “Qualcomm is working aggressively to enable even lower-cost devices,” the company said.

Last month Qualcomm Chief Executive Paul Jacobs’s talks with Reliance Communications officials in India broke down on the former’s refusal to negotiate on the royalties issue. After that meeting Reliance Communications said it might migrate to GSM technology.

CDMA subscribers’ share in the Indian market will fall to seven per cent by 2010 while GSM subscribers’ share will grow from the current 75 per cent to 93 per cent, according to consultant Credit Suisse. Nokia, the world’s largest handset maker, has already shelved its CDMA handset manufacturing plants.

Written by Katie Fehrenbacher on July 26th, 2006 with no comments.
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Q&A with Phillip Alvelda, MobiTV’s CEO

Phillip Alvelda, MobiTV’s CEO, is having a great day, and you could hear it in his voice. His mobile TV company just received a $70 million fund to grow the company.

Phillip discussed a few interesting moves with me, including a plan to push the company’s service on PC’s (it’s already available over WiFi), which will be announced in August. That service could possibly challenge place-shifting in the wireless domain. And with all those content deals, well maybe Qualcomm can step-up and buy them for some premium dollars!

Q. We heard a bit about the company’s plans to work on PCs, is part of the fund going toward this?

A. The WiFi deal with AT&T is commercial today, at the company’s some 20,000 hotspots. A bigger deal will be announced in August with PC products, but we’re not giving details on that right now. Our goal is not just to work over cell phones. The real issue is that there has been overwhelming demand for our product. When we look out, we see a huge greenfield.

Q. What are your mobile broadcast plans. You’re already testing DVB-H. What about MediaFLO and WiMAX? What else?

A. Our mantra from the early days is to be network technology agnostic. We have trials in the U.S., U.K., Europe with various technologies. WiMAX is really taking off. We are also guided by our partners and what they think will show a strong demand.

Q. What is your relationship with Qualcomm?

A. With Qualcomm we’ve been working on BREW for a long time. We’re like a gold or platinum BREW developer. We’ve had a great relationship on that front. MediaFLO is a different beast–they are taking a go-it-alone approach for that.

Q. A Qualcomm acquisition might make a nice exit and partnership for you guys?

A. Agreed, everyone would all love something like that. Though, this is obviously just speculation.

Written by Katie Fehrenbacher on July 12th, 2006 with no comments.
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Nobody Loves Qualcomm

It’s no secret that Qualcomm is the wireless company everyone loves to hate. For the mobile world, its the Microsoft of the industry, angering competitors in many markets it dominates through its aggressive–or many would say monopolistic–business practices. So it wasn’t so suprising that Texas Instruments and Broadcom joined the ranks of the anti-Qualcomm league, accusing the company of abusing its stranglehold on the South Korean wireless market. TI and Broadcom were two of the six companies that filed similar complaints against Qualcomm in Europe as well.

It is important to note, that the San Diego giant has a patent portfolio which is pretty far reaching and protects the chip maker from its rivals. Still, the company’s stock has taken a turn for the worse, because of all the negative news.

And that wasn’t the first time Qualcomm has angered competitors in Korea. At the CTIA show in Las Vegas this April, Qualcomm CEO Paul Jacobs spoke to a room of reporters on its great relationships with local parters in international markets, while his PR team left a stack of papers at the door trying to explain why that week Qualcomm’s South Korean offices had been raided by the Korean Fair Trade Commission.

With royalty rates like 5.25% on local Korean CDMA handsets and 5.75% on exports by South Korean manufacturers, according to the AFP article, its not hard to see why companies are disgruntled. [Qualcomm doesn’t reveal its exact royalty rates.] Others are concerned that Qualcomm will try to assert those high royalty rates through other wireless technologies beyond CDMA in South Korea, through its Flarion’s tech–though WiBro is getting touted pretty aggressively.

In India, Qualcomm is finding problems too. Media reports says Reliance is focusing on its GSM network, and not its CDMA network, in part due to Qualcomm’s high royalties.

Qualcomm has said it will try to work with partners to lower the cost of handsets, not the royalties. Guess the idea is that if you can strong arm others to take the cut, then you don’t have to. The plan makes money in the short term, but in the long run, pissed off partners isn’t a good business model.

Written by Katie Fehrenbacher on July 4th, 2006 with no comments.
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MediaFLO: Let’s Get It On

Amid all of the large broadcast equipment at last week's NAB Convention, Qualcomm had a large booth, but small equipment, to demonstrate its new MediaFLO System.

Called a comprehensive, end-to-end solution designed specifically to address the inherent challenges of efficiently and cost-effectively distributing mass volumes of high-quality mobile multimedia to wireless subscribers, the NAB demo has surprisingly simple. Touch an icon on your mobile phone to launch the application, view the 20-channel guide (much like the one provided by your cable TV company) and then select a channel. We watched ABC News live on the small phone screen just like we would have watched it on any larger screen. Looked good, worked fine -- what more could you want?

There's a lot of technology behind all of this to make it look so simple; the MediaFLO System is comprised of the MediaFLO Media Distribution System and FLO Technology to address the usability, network capacity, and device constraints typical of video delivery to a mobile handset. 

www.qualcomm.com/mediaflo

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Written by VoIP & Gadgets Blog on May 2nd, 2006 with no comments.
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TV on the Go Go

Love to watch TV -- so why not on my mobile phone?

In just a month from now (March 1 or so) Verizon Wireless, the second largest U.S. mobile carrier (time for the "We Try Harder" slogan popularized by Avis?) is reportedly planning to launch an eight-channel live television service for its mobile phone subscribers using Qualcomm’s MediaFLO technology. Expect to see full-length programs from MTV, CBS, Fox and NBC.

Company isn't saying how much the new "Vcast TV with MediaFLO" will cost each month (why oh why does $15/month come to mind?)

According to reports, the new service will initially be available on two new handsets, one from LG Electronics, the other from Samsung.

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Tags: cbs, fox, lg electronics, mediaflo, Mtv, nbc, qualcomm, samsung, vcast tv with mediaflo, verizon wireless
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Written by VoIP & Gadgets Blog on January 1st, 1970 with no comments.
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