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China Network Maker Enters Mainstream Mobile Market

Mon Mar 22, 2004 01:25 PM ET
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By Eric Auchard
ATLANTA (Reuters) - UTStarcom Inc., a maker of a low-cost mobile phone alternative that is popular in China, on Monday said it struck patent licensing deals that will help it enter the mainstream wireless business around the world.

The Alameda, California-based company said it reached deals with Hyundai Syscomm, developer of the first commercial digital mobile systems in South Korea and with IPWireless for its high-speed data technology based on European UMTS standards.

The company founded by Chinese entrepreneurs said it had expanded its licensing agreement with Qualcomm Inc., allowing UTStarcom to develop wireless equipment based on the CDMA standard that is popular in the United States and Asia.

UTStarcom said that the new deals, together with its own research and development, gives it a broad-based product strategy for advanced wireless networks that works on European, American and Chinese-led technology standards.

UTStarcom said it believed the deals would allow it offer wireless operators around the world the most cost-competitive set of Internet-based wireless technologies and these would work on frequencies used from Scandinavia to Africa to China.

The company is the leading maker of so-called PAS telephone networks and handsets. PAS is a low-cost alternative wireless system that hooks up to traditional fixed line networks and provides citywide wireless telephone calling. UTStarcom phones are popular with urban immigrants in cities across China and are used in Taiwan, Vietnam, Thailand, Africa and Latin America.

VIDEO PHONES FOR DEVELOPING WORLD

The Qualcomm CDMA license will allow UTStarcom to develop dual-use networks and phones that bring together PAS and the latest WCDMA and CDMA technologies for transmitting not just phone calls but video, graphics and hefty e-mail files.

These dual-use networks can provide citywide wireless access in emerging markets where wireless access is unaffordable for large segments of the population, such as in China, UTStarcom said.

The company agreed to acquire Code Division Multiple Access (CDMA) patent portfolio from Hyundai Syscomm for a price between $12 million and $15 million in cash, with the exact price depending on meeting some unspecified milestones.

The Hyundai Syscomm deal calls for UTStarcom to acquire about 2,900 patents, mostly from South Korea, but also 357 CDMA patents in countries outside of South Korea. Hyundai Syscomm shipped the first commercial CDMA network systems in South Korea in 1995.

UTStarcom said it was the first company to license IPWireless's technology for transmitting data at high-speeds over next-generation networks running on the European technology standard known as UMTS.
IPWireless technology, which goes by the technical nickname TD-CDMA, is used in nine countries from Germany to South Africa to Australia to the United States. TD-CDMA offers high-speed wireless Internet access for laptops and personal computers.

TD-CDMA can be used to provide behind-the-scenes access for local Wi-Fi networks and for applications such as Voice over Internet Protocol (VoIP). In effect, it provides both high-speed data and voice calling, a UTStarcom spokesman said.

The latest agreements build on a partnership with Matsushita Electric Industrial Co Ltd.'s Panasonic to build mobile radio equipment that work on next-generation networks known as W-CDMA, a standard popular in Europe and TD-CDMA, a home-grown wireless technology standard in China.

Amid a sharp decline in broader U.S. markets, shares of UTStarcom fell 73 cents $30.08 during midday trading on the Nasdaq market on Monday.

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