Will WiMAX Deliver on Its Royalty Promises?

(Top News, 2 Jan 2008)

One of the major advantages claimed by the WiMAX community over their cellular cousins is that WiMAX will come with a far lower average royalty rate than either LTE or UMB. A favorite phrase among the WiMAX OEM community is that WiMAX has effectively "democratized" the 4G space. Although ABI research applauds the move to a more widespread intellectual property holding in the 4G realm, it could be argued that this democratization of IP will result in more, not fewer, IP royalties.

"The diversification of IP holdings in 4G technologies and especially WiMAX is something of a double-edged sword. On one hand, the number of companies with vested interests in the technologies' success is far greater; on the other hand, the number of companies likely to succeed in any market is apt to be far smaller than the number of companies that hold IP. The only vehicle left for them to recoup R&D dollars is to look for revenue from licenses," ABI Research director Stuart Carlaw pointed out.

Considering that Ericsson and Qualcomm are not supporters of WiMAX and hold IP that is highly relevant to all 4G technologies, it is most likely that there will be little difference in the royalty rates experienced in all 4G standards. More importantly, 4G technologies are likely to see similar royalty rates to those for 3G devices no matter the efforts of NGMN (Next Generation Mobile Networks), EU legislation and similar initiatives. According to Carlaw, the industry should be braced to expect royalty rates for 4G technologies in the range of 4.8 percent to 7.7 percent, with the best position being somewhere around 3.2 percent.

Click here for more information on the study "4G Intellectual Property and Royalties" by ABI Research