3G Market Could Be Stifled By High IPR Costs

“The mobile industry could spend USD 80-100 billion on WCDMA-IP-royalty payments up to 2017, sparking fears about the future of second-tier vendors and the level of innovation entering the 3G market. Mounting concern that royalty payments will soon approach 25-30 percent of the vendor’s average selling price has prompted operators to approach the GSM Association for support in a bid to limit payments to a single-digit figure.”

The article states that there are four main holders of intellectual property concerning 3G — Nokia, Motorola, Ericsson and Qualcomm. Qualcomm has already agreed to licensing rates between 4.65 and 6 percent with some vendors, and the operators are concerned that if the other IP holders follow suit “it will lead to a rise in the cost of the basic technologies required to produce 3G mobile devices. In this case, second-tier equipment and handset manufacturers and ODMs — which hold little or no IPRs of their own to use as bargaining chips — will be severely impacted.”

I’m not sure the big guys care…the operators are also predicted to find their range of cheaper mass-market 3G terminals shrinking and the “their ability to sell own- brand/specification devices limited due to the reduction in vendors”. Once again, the big handset manufacturers would not shed a tear over 3G handsets being manufacturer branded rather than operator branded.

This doesn’t mean the manufacturers won’t be reasonable, of course…they know it’s in their benefit to grow the 3G market… and how does all this effect content providers? Pretty strongly — most of the content being touted as the next wave requires 3G technology. Content providers are dependent on manufacturers creating cheap 3G handsets that are within the price range of the majority of the population (and also on operators pricing 3G services reasonably and marketing the benefits of the new technology). Unfortunately there’s not much the content providers can do about this situation, as far as I can tell, except maybe ensure they have enough content that runs on 2.5G networks to cover their bases…

Comments have been disabled for this post