Qualcomm should find Welcome in India
UPDATE AS ON 04.01.12: Qualcomm has now offered to the government of India to clear Tulip Telecom's dues and requested for license.
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India needs Qualcomm
Qualcomm facing trouble from DoT
Inspite of getting a broadband licence, Qualcomm’s troubles are not over yet. When the company puts in its request for spectrum allocation, DoT (Department of Telecom) will examine whether Qualcomm submitted its application in time. Qualcomm should have applied within 90 days after the auctions were over, as per the prescribed rules. This issue is yet to be sorted out. DoT stated this in its response filed with the Telecom Dispute Settlement Appellate Tribunal. According to DoT, Qualcomm’s licence has been withheld because it has not fulfilled the necessary conditions. Qualcomm had applied for four different licences. This was not permitted under the existing rules and regulations. Moreover Qualcomm had applied the licences in the names of companies registered in India. But Qualcomm had not clarified within the stipulated three months time whether these companies were its subsidiaries.
Dot going back on its stand
DoT had sent communications to Qualcomm, rejecting its application. After this, Qualcomm came forward to a compromise by agreeing to merge all the four companies registered in India and obtaining a single licence in this merged company’s name. Qualcomm also filed an appeal with the Telecom Tribunal. The tribunal passed an interim order, restraining DoT from allocating the license earmarked for Qualcomm to any other party till the tribunal issues further orders. The tribunal also stayed the government from forfeiting the bid amount of Rs.4900 crore paid by Qualcomm to DoT. After this stay order was obtained by Qualcomm from the tribunal, DoT came down from its rigid stand and offered one licence to Qualcomm for broadband services. DoT sent a letter to Qualcomm asking it to furnish a bank guarantee and unconditional acceptance to its offer. Qualcomm sent its acceptance letter to DoT. Everything looked like settled issue. But now DoT has gone back to its rigid stand and the matter is back to square one again.
Tribunal is not bold
The tribunal has once again asked DoT to spell its stand clearly. The Tribunal has unequivocally told DoT to make its position clear in the next hearing scheduled to be held on December 2. DoT’s licensing department has sought the views of it’s another department called Wireless Planning & Coordination (WPC). Why is there so much delay in ascertaining whether Qualcomm applied for licence within the mandatory 90 days period or not? Examining the application of Qualcomm and arriving at a decision will take less than ten minutes. Then why is DoT not doing it? There should be something going on behind the scene. The tribunal is not bold enough to question DoT for this avoidable delay.
Why not the tribunal find out the truth instead of relying the Dot statement?
Moreover, after DoT committed itself in writing to grant a licence to Qualcomm, how can it go back on its words? Qualcomm maintains that it applied for licence on August 9 which was well within the three months period. But DoT says that Qualcomm had applied for the licence only on December 20. The tribunal could have called for the relevant applications and documents and verified the veracity of the statements being made by either side in this case. Why should the tribunal ask the DoT to clarify its stand again and again? Why not the tribunal call for the records and declare the truth?
Qualcomm, only company to win the auction
Moreover if the government or the DoT take steps to make Qualcomm forfeit the huge amount of Rs.4900 crore it deposited, it will be totally unfair. When Qualcomm is not granted any licence, it is only fair to refund the amount paid by it. It is not a small amount of ten rupees or twenty rupees. It is a huge amount of nearly $1 billion. Qualcomm, the US telecom chip maker, was the only technology firm to win wireless broadband airways (BWA) in the June 2010 auction. It spent Rs.4913 crore to secure permits for Mumbai, Delhi, Kerala and Haryana regions. In order to satisfy and comply with foreign investment norms prescribed by the government of India, Qualcomm took GTL group and Tulip Telecom as its partners and offered those 26% each in its company. Qualcomm was also negotiating with Bharti Airtel, India’s number one telecom operator, to sell its spectrum. At this stage, the bomb was dropped by DoT, informing Qualcomm that its application was invalid.
What do you mean by introducing a subsidiary?
DoT is questioning that Qualcomm had not introduced its four nominees as its subsidiaries within the prescribed time. But first of all was there any condition in the auction rules that Qualcomm should introduce its subsidiaries within a specific time? What is the meaning of introducing a subsidiary? You can introduce a friend or your family or relative to another person. How can you introduce a subsidiary to another person? Will the subsidiary shake hands and introduce itself? These are all foolish concepts invoked by DoT. In fact Qualcomm had stated clearly in is applications that the four companies were its nominees. DoT asked for proof that these four companies were indeed Qualcomm’s nominees. Qualcomm provided a proof in the form of a letter admitting that the four companies were its nominees. What else is required?
Next generation standards
Qualcomm appointed Avneesh Agrawal as the new President of Qualcomm India and South Asia. The former President Kanwalinder Singh was appointed Senior Vice President of Business Development in the newly formed New Markets Group within Qualcomm CDMA Technologies. Even as 3G technology is taking roots in India, some telecom players like Qualcomm are looking ahead with 4G technology. The next revolution in telecom is going to be the introduction of wireless broadband. This will revolutionise the concept of accessing the internet. It is here that the services and technology of Qualcomm assumes importance. Qualcomm’s chipsets are equipped and powered to meet the next generation requirements. Qualcomm has already started negotiating with multinational and Indian telecom operators to equip their future products and handsets with the chips the company manufactures.
Son succeeds father
Reliance and Qualcomm have proved LTE (Longer Term Evolution) mobility in India. Aircel stated that it was conducting technology trials with many vendors like ZTE Corp, Huawei Technologies, Ericsson and Nokia Siemens Networks. Aircel formed a competency centre in Hyderabad for the effective rollout of this new technology. Paul E Jacobs took over as the Chief Executive of Qualcomm from his father in 2005. It is very rare phenomenon that a son succeeds father in a big company like Qualcomm in USA. In India it is quite common as most of the companies are family run enterprises. One cannot imagine Bill Gates’ daughter succeeding Bill Gates in Microsoft. Irwin Jacobs founded Qualcomm in 1985. He was a MIT Professor and electronics wizard.
61% market share in Android powered devices
In the last six years, Paul Jacobs has steered Qualcomm remarkably. Qualcomm manufactures mobile phone and particularly smartphone chips that power the tiny handheld sets to do computations and calculations. Qualcomm had an easy time till now in the absence of Intel which was concentrating on producing chips for desktops and laptops. But now Intel is also going to enter the fray in smartphones and tablets in a big way. This will pose challenges to Qualcomm in the coming months. See my article about Intel’s ventures in the link section at the bottom. According to the marketing research company Strategy Analytics, Qualcomm secured a market share of 41% in terms of revenue in smartphone chips. It had a 61% share in Android powered handsets.
But it will not be easy for Qualcomm to even retain its market share, let alone to improve on it in the coming days with touch challenge coming from players like NVidia, Intel, Texas Instruments and Samsung. Qualcomm’s success was because of its technology of providing low-powered chips with high functionality for the tablets and smartphones. Paul Jacobs has not been appointed by his father merely because he was his son. Paul has completed a PhD in Electrical Engineering in University of California, Berkeley, and is a brilliant engineer. Under his leadership, Qualcomm produced a new technology called FlashLinq. Qualcomm plans to launch powerful Snapdragon processors that produce enhanced capabilities such as stereoscopic 3D, console quality gaming and augmented reality. Qualcomm agreed to buy the chipmaker Atheros Communication for $3.1 billion at $45 a share. This was Qualcomm’s largest acquisition ever in its chequered history. This acquisition propelled Qualcomm to provide chips for smartphones and tablets. Earlier it was content with providing chips for wireless voice technology. After this acquisition, the aim of Qualcomm changed to integrate all available technologies into the small mobile phones to make them the primary source of computation, communication and content (CCC).
40 million mobile internet users
There are 28 million Facebook users and 40 million mobile Internet users; the mobile phone has assumed lot of importance in the development of individuals, corporate entities and even nations. Snapdragon processors promise lower system costs, greater power efficiency and faster time to market. In the year 2010, six smart phones powered by Qualcomm’s Snapdragons were launched in India. These include Sony Ericsson Experia, Acer Liquid, Dell Streak and HTC Desire. In 2011, already 13 devices have been launched so far with Qualcomm’s Snapdragon processors.
Welcome Qualcomm into India
Considering all aspects, DoT should come down from is foolish stand and allow Qualcomm to enter India for the following reasons:
- Qualcomm is a reputed established American company
- Qualcomm has high level technology in 4G which will be useful to India
- Qualcomm’s smartphone and tablet chips are of outstanding quality. India is already using them
- The CEO of the company is an outstanding technocrat
Many of the arguments of DoT look childish. It should show maturity and sense and welcome a company like Qualcomm into India
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