Vendors Agree on LTE Royalty Framework

In hopes of accelerating the take-up rate for wireless third- and fourth-generation networks, a new coalition of vendors have agreed to a standardized royalty rate structure for the use of each other’s Long-Term Evolution mobile technology. LTE, along with WiMax, is expected to be one of the standard platforms for the delivery of wireless broadband.

If the agreement eventually reaches reality, it would be a sharp reversal from the last five years that have been marked by costly and lengthy litigation over royalty rates. Qualcomm and Broadcom, for instance, have been suing and countersuing each other for years over a number of licensing issues.

Alcatel-Lucent, Ericsson, NEC, NextWave Wireless, Nokia, Nokia Siemens Networks and Sony Ericsson are among the signatories to the deal.

“The adoption of this initiative will reassure operators of the early widespread adoption of LTE technology throughout the consumer electronics industry,” Hakan Eriksson, Ericsson’s senior vice president, general manager and chief technology officer, said in a group statement.

The framework for the April 14 agreement includes royalty rates based on the value added to the end product and flexible licensing arrangements based on a licensor’s proportional share of all standard intellectual property rights for the relevant product category. Specifically, the companies support that a maximum aggregate royalty level for LTE-essential IPR in handsets is a single-digit percentage of the sales price.

For notebooks embedded with LTE capabilities, the companies support a single-digit dollar amount as the maximum aggregate royalty level. The companies believe market forces will drive the licensing regime. “As our respective companies have now launched R&D efforts and trials for LTE technology, we hope that this initiative will help for a wide adoption of this technology across devices and applications,” said Alcatel-Lucent CTO Olivier Baujard.

Nokia Vice President for Intellectual Property Rights Ilkka Rahnasto said the current patent licensing market requires some basic rules of the road in order to properly develop and function.

“Today’s announcement is a step towards establishing more predictable and transparent licensing costs in a manner that enables faster adoption of new technologies,” Rahnasto said.