ABI: Will WiMAX Deliver on Royalty Promises?
January 14, 2008 // Published as a news service by IHS
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One of the major advantages claimed by the worldwide interoperability for microwave access (WiMAX) community over their cellular cousins is that WiMAX will come with a far lower average royalty rate than either long-term evolution (LTE) or ultra mobile broadband (UMB), according to ABI Research.
A favorite phrase among the WiMAX original equipment manufacturer (OEM) community is that WiMAX has effectively "democratized" the fourth generation (4G) space.
Analysts said although the move to a more widespread intellectual property (IP) holding in the 4G realm is applaudable, it could be argued that this democratization of IP will result in more, not fewer, IP royalties.
"The diversification of IP holdings in 4G technologies, and especially WiMAX, is something of a double-edged sword," said ABI Research director Stuart Carlaw.
"On one hand, the number of companies with vested interests in the technologies' success is far greater; on the other hand, the number of companies likely to succeed in any market is apt to be far smaller than the number of companies that hold IP.
"The only vehicle left for them to recoup R&D dollars is to look for revenue from licenses."
Considering that Ericsson and Qualcomm are not supporters of WiMAX and hold IP that is highly relevant to all 4G technologies, it is most likely that there will be little difference in the royalty rates experienced in all 4G standards.
Analysts said 4G technologies are likely to see similar royalty rates to those for third generation (3G) devices, no matter the efforts of next generation mobile networks (NGMN), EU legislation or similar initiatives.
"The industry should be braced to expect royalty rates for 4G technologies in the range of 4.8% to 7.7%, with the best position being somewhere around 3.2%," Carlaw said.
Source: ABI Research.