Wireless Providers Agree To Hold Down LTE Patent Royalty Costs

Following up on the GSM Association's endorsement of the long-term evolution wireless mobile standard, seven mobile industry powerhouses have agreed to an "industry principle of fair, reasonable, and non-discriminatory licensing terms for essential patents."

Conspicuous by its absence from the group was Qualcomm, which often dominated patents issues in 2.5G and 3G network deployments.

The signers of the new mutual commitment were Alcatel-Lucent, Ericsson, NEC, NextWave Wireless, Nokia, Nokia Siemens Networks, and Sony Ericsson. Essentially they agreed to license their respective patents at prices low enough to spur LTE deployments. Their framework agreement calls for keeping patent royalties under 10% of handset and laptop sales prices.

"The patent licensing market requires basic rules in order to properly develop and function," said Ilkka Rahnasto, Nokia's VP of intellectual property rights, in a statement. "Today's announcement is a step towards establishing more predictable and transparent licensing costs in a manner that enables faster adoption of new technologies."

Nokia and Qualcomm have been locked in bitter patent litigation in recent years. Nokia has won some recent cases with Qualcomm, and the two companies are slated to meet again this summer in Delaware Chancery Court to battle further over intellectual property issues.

When the GSM Association, which represents the European-developed GSM mobile standard, endorsed LTE last November, it did so at the expense of the Qualcomm-backed ultra-mobile broadband standard. Since then Qualcomm has moved to beef up its development of LTE and HSPA, but its dominance over those technologies won't match its reign over some portions of 3G.

"In order to connect 5 billion people and deal with 100-fold traffic at lowest cost of ownership we need to create economies of scale," said Stephan Scholz, chief technology officer of Nokia Siemens Networks. "Mobile broadband implementation using technologies with predictable, transparent maximum aggregate costs for licensing intellectual property rights will drive global adoption and foster social and economical growth."

The GSM standard is used by an estimated 85% of the world's mobile phone service providers and LTE represents a likely common denominator standard that could be used by nearly all providers.