Samsung Electronics Co. has committed $25.8 million to manufacture prototype Code Division Multiple Access equipment for PCS, illustrating confidence that its PCS partnership will win a license for personal communications services spectrum.
The Korean government is expected to award three PCS licenses in mid-June. One is reserved for state operator Korea Telecommunications, another will go to an equipment manufacturer and the third award reportedly is reserved for a non-manufacturer.
Seoul-based Samsung recently supplied infrastructure equipment for the CDMA cellular system of Shinsegi Telecom Inc., which launched service on April 1.
Samsung also has allied with Hyundai Group to form the Evernet Corp. Evernet is scheduled to be established by July, pending Korean government approval, with initial paid-in capital of $258 million. Total investment is expected to reach $646 million by 1998 and $2 billion by 2000. Annual sales by 2002 could reach $1.7 billion.
Samsung and Hyundai each will hold 16 percent of Evernet; the remaining 68 percent will be offered to small- and mid-sized Korean companies, Samsung said.
The Korean government will allow Samsung and Hyundai to sell equipment to Evernet, Samsung said. Samsung hopes to complete testing and win government approval for the equipment by October. The company plans to begin mass producing PCS system equipment and terminals in March 1997 at its plant in Kumi, Korea. Evernet is scheduled to offer full commercial service beginning in January 1998.
Evernet won’t be the only company awaiting Samsung’s equipment. Samsung has a contract with U.S. operator Sprint Spectrum L.P. to supply 300,000 terminals in 1997 and a million units in 1998. The Samsung-Sprint agreement includes joint development of a dual-mode PCS terminal for analog/CDMA compatibility.
Samsung’s primary competitor for the Korean CDMA equipment market is the telecom manufacturing arm of the LG Group, formerly The Lucky-Goldstar Group, also based in Seoul.
LG is the country’s major telecom equipment maker and supplied the CDMA digital cellular system for Korea Mobile Telecommunications Corp. KMT launched service on Jan. 1 in Inchon and is expanding to Pusan and Seoul.
Competition between Samsung and LG is fierce. Both companies bought their CDMA technology rights from San Diego-based Qualcomm Inc. Both companies manufacture infrastructure and handsets. And both companies want into a PCS market that researchers say will be worth about $2.8 billion by 2002 with about 6.5 million Korean subscribers.
Samsung, Hyundai and LG all have invested in U.S. PCS companies that recently won C-block PCS licenses.
The ambitions of Samsung don’t end with PCS. The company is in a comprehensive alliance with U.S.-based InterDigital Communications Corp. and Siemens AG of Germany to develop and engineer InterDigital’s Broadband CDMA. The objective of the alliance is to use B-CDMA for wireless local loop in Korea and worldwide. King of Prussia, Pa.-based InterDigital holds the patent for B-CDMA technology.
Under a combined B-CDMA patent, know-how and trademark license, Samsung will pay InterDigital a running royalty based on a percentage of the selling price of products sold by Samsung that incorporate B-CDMA technology, InterDigital said.
InterDigital’s UltraPhone technology also has been transferred to Samsung under a royalty-bearing license. The UltraPhone is a WLL product. InterDigital hopes that Samsung will become a significant UltraPhone supplier.
Samsung also has a contract to supply a CDMA cellular phone system to Russia, through a contract with IV Telecom, a Russian telecom company. Samsung said Russia is looking at CDMA as part of its 10-year telecom modernization program.
