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Nokia: Qualcomm row may hurt 3G adoption

With worldwide emphasis on bringing 3G to market, Nokia says patent dispute could yield ground to competing high-speed services.

Nokia, the world's biggest mobile phone maker, said on Tuesday the ongoing patent battle with Qualcomm may work against the adoption of "third-generation" mobile technology.

Nokia is putting its focus for 3G mobile phones on higher-end models, Chief Technology Officer Tero Ojanpera said, despite moves by smaller rivals to lower device costs for the high-speed wireless service.

Nokia, which makes more than one in three of the cell phones sold globally, is mired in a legal dispute over patents with U.S. mobile phone chipmaker Qualcomm after part of a major cross-licensing agreement expired last month.

The legal dispute centers on Nokia's use of Qualcomm patents for 3G, but it also has a bearing on Qualcomm's chips business, which according to Nokia uses many Nokia-patented technologies.

"We are in negotiations but there's no agreement," Ojanpera told a news conference at Seoul Digital Forum, an industry event held this week in Seoul, South Korea.

Nokia last week filed its first patent countersuit against Qualcomm, seeking damages and an injunction against Qualcomm chips. Analysts estimate Nokia has paid Qualcomm around $500 million per year and now aims to get a better deal.

"This whole discussion might have an impact on 3G technology," Ojanpera said, adding that alternative technologies such as mobile WiMax were gaining momentum due to uncertainties surrounding the licenses.

Mobile operators are shifting from voice-centric 2G services to 3G or its alternatives to offer more-lucrative services such as video calls, music downloads and Internet over cell phones.

LG Electronics, the world's No. 5 mobile phone maker, won a contest in February organized by a consortium of mobile operators to produce affordable 3G handsets, expected to cost around $100, to speed up the change.

"3G is not about cheap price but about new capabilities," said Ojanpera, when asked by Reuters about its 3G phone pricing policy on the sidelines of the Seoul event. "It's not the first priority to have a cheap phone."

Ojanpera said that Nokia's stronghold emerging markets were less likely to consume many sophisticated phones.

"We are addressing the emerging markets and that's where the next billion users is coming, but those are lower-priced phones with maybe not that many capabilities at the beginning."

In China, the world's biggest mobile market, Nokia expects to start selling phones for China's own 3G service in the first half of next year, when the network is up and running.

Nokia, also competing against Motorola and Samsung Electronics, expects to keep a comfortable lead for the rest of 2007 with a market share of more than 36 percent.