Monday 13 July 2009

More on Licensing in the Mobile Telecommunications Space

Eric Stasik of Avvika in Stockholm was kind enough to follow up my recent blog entry of licensing rates in the mobile telecommunications sector with the following additional comments:

On the matter of telecom royalty rates, even more interesting than the announcement by Nortel is the recent revelation by Qualcomm:

"Qualcomm COO, Len Lauer revealed on the occasion of a Merrill Lynch Global Technology Conference on June 03 that the company normally charges 4%-5 % as royalty for 3G shipments. The COO further revealed that the company had put royalty rate at 3.25 % when it was asked by European standards group to submit a rate for LTE."


The European standards group referred to is NGMN presently under the auspices of ITU.

In addition to Nortel's 1% we have Ericsson ( who earlier announced an LTE royalty rate of 1,5%.

If you take 3,25% + 1% +1,5% you're already at 5,75%.

Now add to this Nokia + Motorola + InterDigital + another score (or more) of essential patent holders and you arrive at a number much larger than the "single digit royalty" which Ericsson and Nokia are talking about with regard to LTE. I would be surprised - indeed stunnned - if any ex ante exercise on 4G/LTE produced a number less than 20-25%. A "single digit royalty" is simply not credible.

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