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Summary:

As the world moves to fourth generation wireless networks, lawyers for chip firms, handset makers and other technology firms are moving into their bargaining positions.

adc2-wtag_logo1As the world moves to fourth generation wireless networks, lawyers for chip firms, handset makers and other technology firms are moving into their bargaining positions on patents related to the technology that enables the WiMAX and LTE networks. When deploying an in-depth technology protocol, such as WiAMX and LTE, many firms will own the intellectual property needed to create a network, from the silicon to the handsets. Those IP owners want to get paid, but the more patent holders charge, the more expensive the end devices and network components can become.

Over at Fierce Broadband Wireless, they have a story noting that in-building wireless firm ADC thinks it has a several key patents related to deploying LTE and WiMAX. ADC says it’s willing to license those patents at a “fair and reasonable rate,” which is basically an invite to bring people to the negotiating table. Is ADC trying to be the next Qualcomm, which has aggravated the industry by controlling key patents and charging high royalty rates?

A group of handset makers has banded together to create a patent framework for LTE, but other key players, notably the silicon vendors are absent. ADC adds another player to that mix. Because ADC doesn’t make hardware such as handsets, it doesn’t have an incentive to trade its patents for the use of other patents needed for an LTE device to work. It also isn’t a member of a standards organization, which WOULD limit the royalties ADC could charge. We’ll see if the industry players attempt to deal with ADC or move straight to litigation. The results could mean pricier LTE handsets or even the halt of LTE- and WiMAX-enabled devices, should litigation go poorly.

  1. @Stacey,

    I think the points that you raise are valid, however I don’t think there is market resistance due to patent concerns. I think most industry players would agree that the US needs to move forward with Wimax and LTE, as such ADC may be simply trying to expedite market adoption. I’d add that the carriers, chip vendors, and laptop manufacturers are all facing market maturity, so I would therefore expect the spirit of cooperation to be high.

    Best,

    Curtis

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  2. Stacey Higginbotham Thursday, November 13, 2008

    Curtis, I think you are right. This won’t derail anything, but I do think we could seem some jockeying for position that may cost a little time or some extra money.

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  3. @Curtis

    It’s difficult for me to believe a company would make a public statement about their ‘key’ patents in order to ‘expedite market adoption.’ Certainly they’re hoping to get something for their patents.

    Generally, I’d say that if the WiMax or LTE industries don’t figure out an overall patent licensing scheme ahead of time that eliminates most or all of the licensing risk by including the key IP holders, they’re going to find the going slower and more difficult than they hoped. No one on the operator side wants to make another Qualcomm mistake by licensing a technology that locks them into an ever increasing and onerous licensing revenue stream with the added downside and lack of scale from of a sole-source provider.

    Qualcomm, while having been extremely successful, in my opinion actually ultimately limited their extraction of value from the wireless marketplace by licensing CDMA on terms far too onerous. Proof is that their technology lost in the end and some operators (Telstra) are biting the bullet and completely ripping out their CDMA networks and switching to 3 or 4G GSM based technologies. Those with any sense that haven’t yet done so are choosing the point at which they jump out of the Qualcomm straight-jacket.

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  4. @ Tom,

    I agree with you 100% that ADC would want value from their IP, rightly so. My point is simply that ADC may be “signaling” their intent so as not to repeat the mistakes of Qualcomm. This isn’t unprecedented in past markets as competing standards emerged, we saw similiar types of signaling in the betamax/vhs wars, and the blu-ray/hddvd wars as these markets evolved from their previous market state. What may be different in the Qualcomm case was the emergence of the wireless telecom market, and not its’ evolution. This parallels the previous examples of signaling.

    Best,

    Curtis

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  5. [...] Over at GigaOm, a post that combines technology, innovation and regulation and offers a strategic puzzle: Will 4G networks get sidetracked by patent problems? [...]

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