Blog Post

LTE Patent Framework Planned

A group of equipment vendors and handset makers have teamed up to craft a licensing framework for the fourth-generation LTE mobile standard. Essentially the group wants to prevent the pain and suffering caused by Qualcomm’s control of 3G patents related to CDMA.

Nokia, Nokia Siemens Networks, NextWave Wireless, Alcatel-Lucent, Sony Ericsson, NEC and Ericsson have all decided to push for “fair and reasonable” licensing terms for the patents related to LTE in next-generation wireless networks. The framework calls for LTE patents to represent a single-digit percentage of the sales price of mobile phones and a single-digit dollar figure for laptop computers.

While the participating companies have all committed to the LTE standard, it’s worth noting that the big wireless chip vendors have yet to get on board with this effort. Obviously, the handset and base station vendors would like to see IP licensing fees set to the lowest level possible, whereas the players providing silicon would prefer to let the fees be set by market forces (rather than an industry framework). Any type of licensing would have to represent a balance between getting the most money for innovation and setting a price that the market will bear, so we’ll see if this effort gains adherents from the chip side of the business.

4 Responses to “LTE Patent Framework Planned”

  1. Part of the problem with LTE or any OFDMA-based standard is the diffused nature of the IP. Many more companies have a stake in the IP pie now than for example, in WCDMA in which Qualcomm has close to 30% of essential IP. So, if there is no upper bound on the royalty rates, the costs can be more prohibitive than the existing CDMA standards and will have a direct impact on the handset ASP. The handset vendors and carriers want to make sure that no one company becomes an Achilles heel in the productization and large scale proliferation of these technologies. However, even if chipset vendors join the bandwagon, these standards will still run the risk of an outsider company staking its claim on essential IP. So, while the 3GPP has tried hard not to repeat the ‘Qualcomm effect’ again for LTE, it will be interesting to see how this strategy plays out in the long run.