Creative, Huawei in court over failed project

Creative Technology's headquarters in Singapore.
Creative Technology's headquarters in Singapore.PHOTO: BLOOMBERG

S'pore tech firm seeking over $30m for wireless network plan it had to abort

Singapore-based Creative Technology, which pumped around $30 million into a nationwide wireless broadband network before abandoning it, has laid the blame on the vendor, Chinese telecommunications giant Huawei.

In a High Court suit which began yesterday, Creative is seeking to recover the "wasted" payments it has made - US$9.4 million (S$12.7 million) to Huawei and S$19.5 million to various third parties for installation, leases and other operating costs.

The video and sound card maker has accused Huawei of misrepresentation and breach of contract.

In 2009, Creative explored the possibility of building a wireless broadband network using WiMax technology after acquiring broadband infrastructure firm QMax Communications.

WiMax is a fourth-generation (4G) technology for high-speed mobile communications. At the time, the competing LTE (Long Term Evolution) technology was still in its infancy.

In response to Creative's tender, Huawei submitted a proposal to design, build and operate a WiMax network to cover Singapore.

After several rounds of negotiations, Creative told Huawei that it had a budget of US$20 million.

Huawei said it could meet the budget by providing nationwide coverage with 225 base stations.

After the contract was signed in June 2010, Huawei identified suitable locations for base stations and Creative acquired leases from building owners for equipment to be installed. In the course of the project, Creative observed gaps in coverage and the number of sites was increased to 237, which was within the acceptable margin.

But concerns were raised about connectivity problems.

In October 2011, Huawei's new radio planner said another 619 sites were needed.

Huawei then offered to upgrade the existing sites to LTE for a discount, and also included a buy-one-get-one-free offer for subsequent base stations.

Creative rejected the proposals and, in December 2011, pulled the plug on the project. By then, 175 base stations had been built.

Creative, represented by Senior Counsel Jimmy Yim and Mr Andrew Lee, said it would have to cough up a huge sum far in excess of its budget, making the project commercially unviable.

In 2012, Creative and QMax sued Huawei to recover the money spent on the project, contending that Huawei had miscalculated and misrepresented the cost of the network.

Huawei, represented by Senior Counsel Andre Maniam, has counter-sued Creative's subsidiary, Ziimax, for outstanding payments for services and equipment.

Creative contends that Huawei was negligent and had simply chosen a number to fit into its budget to induce it into signing the deal.

Huawei says the figure of 225 was a mere expression of opinion and that its representative had warned Creative that while Huawei could meet its budget, it would translate into a lower-quality network.

Huawei says it arrived at the new calculations based on different requirements from Creative.

Two experts are testifying for Creative and one for Huawei on the issue of whether 225 sites are sufficient for nationwide coverage.

Creative's experts have estimated that more than 700 additional sites were needed.

A version of this article appeared in the print edition of The Straits Times on July 08, 2015, with the headline 'Creative, Huawei in court over failed project'. Print Edition | Subscribe