China's telecom industry will undergo a reshuffle in the near future as the government is expected to release the long-awaited license for third generation (3G) technology and restructure the major wireless and fixed-line carriers later this year or next year.

As one of the world's major providers of code division multiple access (CDMA) technology, Qualcomm Inc's earnings have grown steadily in recent years as a result of the rise of Chinese telecom manufacturers like ZTE and Huawei. This has made China Qualcomm's second largest market after South Korea. The company expects to see significant growth in coming years as China kicks off its 3G market.

Sanjay Jha, Qualcomm's chief operating officer, shares his views in an interview with China Daily reporter Wang Xing.

Q: What's your perspective on China's upcoming 3G market and when do you expect an explosive growth of Chinese 3G users?

A: I think it has very good growth potential and that it will be good for the consumers, carriers, infrastructure and handset manufacturers. I also think it will be good for the software ecosystem here to develop new applications and services.

China will see explosive 3G user growth when there is very good network coverage, very good applications and when device prices come down. One of the advantages of China being a little late on 3G is that these problems are being addressed quite well, so there are lots of applications already being developed and handset prices are already coming down. New services and applications are almost always the driver for new technologies.

Q: ZTE and Huawei have seen rapid growth over the last few years and it's understood that Qualcomm has had a role in their success. But many also say that Qualcomm's high royalty fees have become a hindrance to their further development. Is that so?

A: I'll give you an example. When we first started working with Samsung and LG in Korea, they were not into wireless communication at all. Samsung was making radios and LG was making white goods, but now they are No 2 and No 4 handset manufacturers.

As a result of working closely with Huawei and ZTE, I actually see faster growth in these two than I remember seeing in Samsung and LG. Samsung and LG have done extremely well, and Huawei and ZTE, in my opinion, can do better once the Chinese market enables 3G.

So we're very excited about it. There will always be an argument about royalty. I recognize that there is a view that the royalty is too high. But we use that money to enable new technologies and enable our partners to be at the leading edge so they can compete effectively against more established players.

Q: ZTE and Huawei have aggressively increased their investment in R&D in recent years. Do you think that will impact Qualcomm's business and future cooperation with these companies?

A: Not at all, I think it'll help. As people generate their own IP, they'll begin to understand how hard it is to generate innovative ideas and start recognizing the value of IP. I believe it will actually help in our interaction. As the expertise grows in these companies, our cooperation will enhance.

Q: What's your opinion on China's TD-SCDMA standard? Do you think it will be successful on the international market?

A: TD-SCDMA is obviously one of the three ITU 3G standards. It's a CDMA-based 3G standard. We are very supportive of all 3G standards. I think that perhaps it's too early to say (whether it will be successful), but it's very clear that a tremendous amount of resources is being plowed into TD-SCDMA, so I have no doubt that it can be made to be successful.

Q: After the telecom restructuring in the country is completed, China may have three 3G networks - WCDMA, CDMA2000 and TD-SCDMA. What do you think the competition will be like?

A: I think they bring different capabilities to the table. China mobile will probably get TD-SCDMA but it's not clear who will get CDMA2000 and who will get wideband CDMA. All carriers will have the tools to compete effectively and I think the Chinese government has made a very clever decision to enable an equal system for all three technologies to exist so that whichever technology comes out successful, Chinese companies will have experience in all three and can successfully export it. So Chinese consumers, carriers and OEMs stand to gain a lot as 3G is deployed.

Q: With so many companies such as Microsoft or Amazon joining the telecom ecosystem in recent years, how do you see Qualcomm's position in the industry changing?

A: What it means for us is that a whole new set of players is coming to wireless communication. Who would have thought that Amazon would become a wireless device manufacturer? I think Google has become very interested in wireless as well. They have the wireless platform, wireless search and wireless Google Earth.

So we have to enable and work with a whole new set of partners. I would think consumer device manufacturers like Sony will want to make their devices wirelessly enabled. So we will need to participate and work with a whole new set of people.

(China Daily April 8, 2008)