Qualcomm Plans to Build Wireless Media Network

Wireless chip maker Qualcomm Inc. said Monday that it planned to build a nationwide high-speed network to deliver video and audio programming to mobile phones at a cost of $800 million over about five years.

San Diego-based Qualcomm hopes to boost demand for high-speed mobile phones -- and the chips it makes to power them -- by transmitting content such as live news and sports clips and selling it through existing mobile service providers.

Paul Jacobs, president of Qualcomm’s wireless Internet group, said the network would allow wireless operators to deliver video services without using up capacity needed for mobile phone calls.

“It’s a very low-risk strategy to complement their network,” said Jacobs, who added that Qualcomm is talking to several service providers, handset makers and media companies.

The network will be built by Qualcomm’s MediaFlo USA Inc. subsidiary, with service scheduled to begin in 2006. Qualcomm, which eventually plans to spin off the MediaFlo subsidiary, has had a number of inquiries from potential outside investors but has not decided whether it will take third-party investments, Jacobs said.

U.S. mobile providers are spending billions of dollars upgrading their networks for the delivery of advanced services such as mobile Internet and video to help offset falling phone call prices.

Such services have seen some success in Asia but remain in their infancy in the United States.

Sprint Corp., which already provides an early-stage video service to its customers, had no comment on the Qualcomm service. Verizon Wireless spokesman Jeff Nelson said Verizon would look at the service.

Deutsche Bank analyst Brian Modoff said Qualcomm’s investment would amount to a “drop in the ocean” for the company, which had about $2 billion cash at the end of July. But it still poses some risks.

“Mobile data is the next big thing in wireless, but its success is still unproven,” Modoff said.

Qualcomm’s shares fell $1.04 to $40.56 on Nasdaq.