According to ABI Research, one of the major factors that has kept average royalty rates very high in WCDMA devices is the circumstance that 12 companies own 80% of the essential IP, with four of those holding nearly 60%. In order to access essential patents, device vendors not among that top four are subject to cumulative royalty rates that can climb to 28.5%. Based on its recent analysis ‘Mobile Handset Royalties’ ABI now asserts that the 4G royalty landscape will be far more diverse, and this alone will allow average royalty rates in 4G devices to be lower than in their 3G equivalents. Licence trading will be more commonplace, especially in the WiMAX environment, where over 350 companies own essential IP.

Wireless research director Stuart Carlaw observes: “A more diverse 4G IP landscape will allow more companies to trade licenses rather than be required to pay royalty fees to access others' IP. This will result in low average royalty rates.”

This reading of the 4G IPR runes sort of squares with that from the Maravedis research house. In the Canadian company’s view, expressed in its new ‘WiMAX/LTE 4G IPR Policy & Market Report’, IPR disputes for WiMAX/4G will be less onerous than those experienced in the cellular market due to the processes and policies developed, as well as the maturity and cross-discipline diversity of technologies comprised in emerging systems.

So, safe to go back into the water then? Well, maybe not.

Both companies, consciously or otherwise, add non-trivial caveats.

In ABI’s judgment, although the original motivation to choose OFDM-based technologies was to loosen Qualcomm's hold on the market, that company’s acquisitions of Flarion and Airgo give it essential IP in all 4G technologies. It adds that there could also be a case of ‘out of the frying pan and into the fire’ regarding WiMAX, where it is likely that Samsung will hold close to 30% of the essential IP, effectively replacing Qualcomm as the 800-pound gorilla in the market.

Meantime, this from the Maravedis report author. “We can’t underestimate the impact of IPR on WiMAX/LTE 4G technology. By the end of the decade, we expect that up to US$300mn will have been spent annually on IPR for WiMAX alone,” says Maravedis senior analyst Robert Syputa. “The most successful companies focus R&D where they can benefit the most and leverage IPR. Unfortunately, many companies become so technology centric that they fail to align R&D with commercial success.”
John Williamson