Will Patent Pooling and the NGMN Expose Qualcomm's 4G Royalty Position?

(Business News & Technology News, 17 Mar 2008)

One of the frustrating issues that has plagued cellular technology licensing is that the average cumulative royalty rate is shrouded in secrecy. This makes it very difficult for new entrants to gauge costs for entering a market or for carriers to identify specifically which companies are responsible for the majority of royalty rates associated with products.

The recent creation of the Next Generation Mobile Networks (NGMN) initiative on intellectual property rights and the move—led by Intel and Samsung—to create a patent pool for 4G could lead to some significant changes.

ABI Research Vice President and Research Director Stuart Carlaw notes that the key concepts here revolve around the independent reporting of royalty rates to the NGMN and also the ability of a patent pool to report en masse. "The combined effect of NGMN reporting and a 4G patent pool will create a situation where there will be an evident divide between the patent pool rates reported, and royalty rates reported from the rest. This will expose Qualcomm's position (and those of any others not in the pool) to the public gaze," says Carlaw.

This level of exposure depends critically on the ability to provide a sizeable pool of patents. There seems little doubt that the smaller vendors in the more diffuse 4G IP space will be keen to join those like Intel and Samsung that have much to gain, but the real question is how many of the major IP holders will be attracted to the pool. Whether this situation comes to pass or not, Qualcomm especially should be worried, because this development spells a continued drive towards marginalizing its position.

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