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12/31/2007
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WiMax Royalties Could Exceed Cellular Options

WiMax supporters may be incorrect in claims that the technology will have lower royalty rates than LTE or UMB cellular options, says a market researcher.

WiMax proponents claim royalty payments for the Internet protocol-based broadband wireless technology will be less than future high-speed cellular options, but at least one market researcher on Monday said the opposite could prove true.

According to supporters, a major advantage of WiMax is a far lower average royalty rate than with LTE or UMB cellular technologies, according to ABI Research. But while many companies have jumped on the WiMax bandwagon, the number of companies likely to succeed in the market is apt to be far smaller than the number of firms holding intellectual property. "The only vehicle left for them to recoup R&D dollars is to look for revenue from licenses," ABI analyst Stuart Carlaw said in a statement.

Also, the holders of technology used in WiMax are Ericsson and Qualcomm, which do not support the broadband standard. Therefore, it's unlikely that royalty rates for their technology would change, ABI said. "It is most likely that there will be little difference in the royalty rates experienced in all 4G standards."

Put it all together, and the best possible royalty rate for WiMax and other 4G technologies would be around 3.2%, ABI said. Rates, however, could run even higher, from 4.8% to 7.7%.

LTE, UMB, and WiMax are 4G, or fourth generation, technologies that are expected to improve the performance of today's high-speed wireless technologies.

LTE is a high-speed cellular technology developed by the 3rd Generation Partnership Project standards organization, known as 3GPP. The technology is capable of global roaming and reaching peak data rates of up to 100 Mbps. LTE is an upgrade to high speed downlink packet access, a GSM implementation of a 3G cellular technology.

UMB, also developed by 3GPP and backed by Qualcomm, is a successor to evolution data optimized, a CDMA implementation of a 3G cellular technology. It promises peak data rates of up to 280 Mbps.

LTE is expected to be commercially deployed in about four years and UMB by mid-2009. WiMax has more than 50 commercial deployments underway and is expected to take off commercially within the next year or two.

The article was modified on January 8 to clarify that WiMax royalties may not be lower than other 4G options, according to ABI's research.

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