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News Release from: Informa Telecoms and Media
Edited by the Electronicstalk Editorial Team on 2 May 2005
IP-royalty levels block handset innovation
The mobile industry could spend US $80-100 billion on WCDMA IP-royalty payments up to 2017, sparking fears about the future of second-tier vendors and the level of innovation entering the 3G market
Mounting concern that royalty payments will soon approach 25-30% of the vendor's average selling price has prompted operators to approach the GSM Association for support in a bid to limit payments to a single-digit figure. Joint research by leading industry publications 3G Mobile and Mobile Handset Analyst - published by Informa Telecoms and Media - found the cost of so-called 'essential' IPRs could skyrocket if leading vendors do not agree to the single-digit cap.
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The GSM Association has been forced to defend the viability of its low-cost-WCDMA-handset program, 3G for All, after leading vendor Motorola announced that it is not taking part
The issue is compounded by Nokia-backed research that states Qualcomm - which has already agreed a royalty rate of between 4.65 and 6% with some handset vendors - does not hold as many essential IPRs as it claims to.
If the other main IPR holders - Nokia, Motorola, and Ericsson - license their patents at a similar level to Qualcomm, it will lead to a rise in the cost of the basic technologies required to produce 3G mobile devices.
In this case, second-tier equipment and handset manufacturers and ODMs - which hold little or no IPRs of their own to use as bargaining chips - will be severely impacted.
Further reading
Smartphones to lead handset market
Report predicts that the smartphone segment will be the fastest growing part of the mobile handset market in 2006, showing a year-on-year volume increase of over 40%
3G Mobile and Mobile Handset Analyst claim that the withdrawal of the smaller, pioneering manufacturers will lead to concerns that innovation in the 3G device market and next-generation services is stifled.
According to Mobile Handset Analyst, with fewer vendors to choose from, operators could find their range of 3G terminals shrinking, as cheaper mass-market devices fail to materialise.
Worse still, operators could find their ability to sell own-brand/specification devices limited due to the reduction in vendors.
The latest issues of 3G Mobile and Mobile Handset Analyst examine the impact high royalty rates could have on the industry and discuss what can be done to ensure the 3G market remains alive and kicking.
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