Eric Stasik of Avvika in Stockholm was kind enough to follow up my recent blog entry of licensing rates in the mobile telecommunications sector with the following additional comments:
On the matter of telecom royalty rates, even more interesting than the announcement by Nortel is the recent revelation by Qualcomm:
"Qualcomm COO, Len Lauer revealed on the occasion of a Merrill Lynch Global Technology Conference on June 03 that the company normally charges 4%-5 % as royalty for 3G shipments. The COO further revealed that the company had put royalty rate at 3.25 % when it was asked by European standards group to submit a rate for LTE."
(http://www.telecomtiger.com/Corporate_fullstory.aspx?storyid=6478&flag=1&passfrom=topstory§ion=S162)
The European standards group referred to is NGMN presently under the auspices of ITU.
In addition to Nortel's 1% we have Ericsson (http://www.ericsson.com/technology/licensing_programs/index.shtml) who earlier announced an LTE royalty rate of 1,5%.
If you take 3,25% + 1% +1,5% you're already at 5,75%.
Now add to this Nokia + Motorola + InterDigital + another score (or more) of essential patent holders and you arrive at a number much larger than the "single digit royalty" which Ericsson and Nokia are talking about with regard to LTE. I would be surprised - indeed stunnned - if any ex ante exercise on 4G/LTE produced a number less than 20-25%. A "single digit royalty" is simply not credible.
