The number of requisite patents rises sharply with LTE. A 3G handset requires about 400 to 500 patents, but the addition of LTE communication functions will boost this to around 1,000. NGMN Ltd of the UK, created jointly by mobile communication service operators, is inviting corporations holding patents required for LTE to join, and querying them on desired fees. A simple sum works out to no less than 30% of terminal cost, and that is far too much to allow any widespread adoption of LTE. This is another factor that spurred the seven firms to call for fees of under 10%.
Another probable objective of the proposed licensing framework is to restrain Qualcomm Inc of the US. Qualcomm, which claims to hold the basic patents for the CDMA technology used in 3G mobile phones, is demanding that handset manufacturers pay no more than 5% of handset price in licensing fees. Qualcomm's annual income from licensing fees reached US$3.106 billion (October 2006 to September 2007), representing about one third of total revenues.
Qualcomm has also acquired firms like Flarion Technologies Inc of the US and Airgo Networks Inc of the US, picking up a variety of patents utilized in LTE, including orthogonal frequency-division multiple access (OFDMA) and multiple-input, multiple-output (MIMO) technologies. The seven firms announcing the agreement on a licensing framework are also active in LTE discussions within 3GPP, but thus far Qualcomm has not announced any intention to go along with the proposed framework.
The group of seven suggests the following scenario: first, increase the number of companies willing to go along with the "under 10%" framework. Patents would then be collected into a patent pool or similar mechanism, and a "fair" license fee would be set. As the IP specialist mentioned above explained, "Even if Qualcomm continues to demand 5% for LTE-compliant handsets, our group would be superior in terms of patent count, price and other factors; and if we offer a lower fee rate, it is quite possible that we can force Qualcomm to drop its rate under the anti-monopoly and other laws."
"We have reason to believe that companies like Samsung Electronics Co Ltd of Korea, LG Electronics Inc of Korea and Huawei Technologies Co Ltd of China will agree to the proposal," said one of the seven originators of the proposal. The group is making contact with mobile phone operators as well, and as one manufacturer commented, "A lot of them didn't put their names on the announcement because we haven't reached agreement on the fine print yet, but many operators agree with what we've proposed." NTT DoCoMo, Inc of Japan, a frontrunner in LTE technology development, for example, hasn't decided whether it should support the framework yet or not, but (according to the company's public relations group) "...agrees with the basic objectives."
by Tomohisa Takei
Websites:
3GPP: www.3gpp.org
Airgo Networks: www.airgonet.com
Alcatel-Lucent: www.alcatel-lucent.com
Clearwire: www.clearwire.com
Ericsson: www.ericsson.com
Google: www.google.com
Huawei: www.huawei.com
Intel: www.intel.com
LG Electronics: www.lge.com
NEC: www.nec.com
NextWave Wireless: www.nextwave.com
NGMN: www.ngmn.org
Nokia Siemens: www.nokiasiemensnetworks.com
Nokia: www.nokia.com
NTT DoCoMo: www.nttdocomo.com
Qualcomm: www.qualcomm.com
Samsung Electronics: www.samsung.com
Sony Ericsson: www.sonyericsson.com
Sprint Nextel: www.sprint.com
