OnQ Blog

Repatriation: A Win for the US Economy

14. Jul. 2011

Qualcomm products mentioned within this post are offered by Qualcomm Technologies, Inc. and/or its subsidiaries.

The latest round of gloomy economic numbers should add greater urgency to bipartisan efforts to pass repatriation legislation. American businesses have an estimated $1 trillion sitting offshore, and many in Congress would like to bring that cash home with a lower tax rate as an incentive.

While many more Democrats have boarded the repatriation train, some critics are clinging to misguided arguments that repatriation legislation – which would subject offshore profits to a temporary tax rate of 5.25% as opposed to the current 35% - would somehow result in a loss to American taxpayers. My response? 5.25% of a trillion dollars is a lot better than 35% of nothing.

Repatriation has to be viewed in the context of profound changes that have altered the competitive landscape for global multinational companies such as Qualcomm. Decades ago American firms had to repatriate their cash, whatever the tax rate, because there weren’t as many good investments outside our borders. Companies brought their cash back to build production and distribution infrastructure to serve the most important market segment of all – America.

Today that’s no longer the case. Companies such as ours make an increasing percentage of their overall profits outside the US. Consider for a moment Qualcomm’s industry – wireless technology. The U.S. is a vibrant marketplace for 3G smart phones, tablets and connected laptops, and it’s forecast to grow by 20% from 2010-2015.

Compare that to India, where we recently invested hundreds of millions of dollars in a new broadband wireless venture. The Indian 3G wireless opportunity is forecast to grow by 233% between now and 2015. The number of 3G subscribers in China will grow by 396% during the same period. Latin America? 417%, led by the red-hot demand for mobile wireless in Brazil.

Now these countries, to be fair, are starting from smaller bases. But even with that caveat, it should be clear to policy makers that firms such as Qualcomm have ample opportunities to grow their businesses outside the US. This isn’t bad news at all, of course – international opportunities will result in American job creation, as we add to our engineering and development teams in San Diego, Texas, North Carolina, Colorado and other US locations. Qualcomm is and always will be a company that grows at home when it succeeds abroad.

The point is that repatriation is no longer an imperative for corporations such as ours. Without a dramatically reduced tax rate, such as the 5.25% rate specified in HR 1834, repatriation simply will not happen. Much of the nearly $1 trillion held by American companies will sit offshore, or be invested in foreign ventures. How is that scenario a win for American taxpayers?

William Bold

Senior Vice President, Government Affairs, Qualcomm Incorporated

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A new kind of spectrum for new opportunities

Last year, the FCC opened up 150 MHz of spectrum in the U.S. around 3.5 GHz that it named Citizens Broadband Radio Service (CBRS), not to be confused with the old CB radio. Hidden under that name is a novel approach of making more spectrum available when and where it can be used. As spectrum is the life blood of wireless communication, the FCC’s move has the potential to create new wireless opportunities, which for consumers means new and better services.

So what is the new approach in CBRS? First, it enables others to use the spectrum while it is still being used by existing incumbents, such as the military or satellite communication, see Figure 1. This in itself is not new. As a matter of fact, we helped to introduce this concept back in 2013 with Licensed Shared Access (LSA), where a license holder exclusively shares the spectrum with the incumbent. This is a powerful concept that unlocks more spectrum for wireless communication.

In addition to sharing with incumbents — CBRS adds a ‘third-tier’ of general usage. In this third-tier, anyone can use the spectrum when it is not used by the higher tiers (the incumbents or users that paid for a license), see Figure 2. Of course, if there are multiple third-tier users in the same area then they will share the available spectrum with each other in a fair manner. The complexity of managing three tiers will require some additional control. To this effect, the FCC has defined a Spectrum Access System (SAS) — a type of database, in effect — and the Wireless Innovation Forum is helping to specify the details to ensure that it all works in accordance with the FCC rules.

So what exciting things will this new kind of spectrum enable? Let’s look at some examples. First it can be used by existing mobile operators to offer Gigabit LTE speeds in more places by making more spectrum available. One can also use this spectrum for small-cell deployments to extend coverage and add capacity indoors. Another example is what we call neutral host, which is a LTE deployment that can be used by subscribers irrespective of their service provider. Such a solution makes sense in places where it is not feasible for each operator to deploy its own radio systems independently; for example, in public venues such as sports stadiums, or in places where it is not cost effective to do so, like indoor coverage in malls or hotels. This approach benefits the venue owner, the mobile operator and the end users. The three-tier approach also enables new entities to offer services by creating their own so-called private LTE networks without owning any spectrum. Such private LTE networks can be used for industrial IoT or enterprise use in general. But let’s not stop there. By enabling anyone to create a LTE-based network, the sky is the limit, literally.

We are not alone at being excited about this new spectrum. Together with five partners we started the CBRS Alliance, which was announced this week, and are working toward field trials later this year. The CBRS Alliance will focus on supporting the commercialization of LTE-based solutions in the CBRS band and is encouraging companies that want to help accomplish this goal to join — for more info see their webpage. From our end, we are getting ready for CBRS by making multiple LTE-based solutions available: LTE-TDD, Licensed Assisted Access (LAA) and MulteFire. Each of these offers different benefits and can co-exist together in the CBRS spectrum. As with CBRS, all good things come in threes!

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Qualcomm builds momentum in China with Oppo licensing agreement

When it comes to how we connect, Qualcomm is committed to bringing the future forward faster, particularly through wireless connectivity. On the heels of recent agreements with Chinese electronic giants like Lenovo, Xiaomi and Haier, we are pleased to have reached a new patent licensing agreement with Oppo.

The agreement enables Oppo to develop and manufacture mobile devices with 3G and 4G LTE capabilities in China. Currently, more than 100 Chinese companies have signed license agreements with Qualcomm that are consistent with terms of the rectification plan submitted by Qualcomm to, and accepted by the NDRC.

The new agreement provides another step forward for Qualcomm to expand its licensing business in China—and to continue developing the connectivity fabric of everything on a global scale.

“Qualcomm is very pleased to sign a license agreement with OPPO,” said Alex Rogers, senior vice president and general manager, Qualcomm Technology Licensing. “As an R&D engine for the industry, we are excited to see companies such as OPPO build on our patented technologies to drive further development and innovation and create compelling products."

According to IDC (July 2016), Oppo is the 2nd largest manufacturer of mobile electronic devices in China for the first half of 2016 and a top-10 global electronics player.

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