Manufacturers agree on W-CDMA royalties

Mobile manufacturers NTT DoCoMo, Telefonaktiebolaget LM Ericsson, Nokia and Siemens AG have come to an agreement regarding intellectual property rights and the assessment of royalty rates on the use of W-CDMA [Wideband Code Division Multiple Access] technology, the companies announced Wednesday.

The companies are seeking to keep royalty rates at a low, single digit figure of around 5%, the companies said in a joint statement. Some 110 operators worldwide have already committed to W-CDMA standard, the companies said.

Referring to themselves as “the major IPR holders” of the W-CDMA technology, NTT DoCoMo, Ericsson, Nokia and Siemens said it is essential that the W-CDMA standard stays “an open and globally acceptable technology” with the cumulative royalty cost of W-CDMA being kept at a rate low enough to encourage “both greater growth and innovation in the industry.”

W-CDMA is seen as the version of CDMA that will prove to be the first step for allowing 3G technology to rival mobile system GSM technology.

According to the group, other essential patent holders, Fujitsu Ltd., Matsushita Communication Industrial Co. Ltd. (best known for its Panasonic consumer brand), Mitsubishi Electric, NEC and Sony have also expressed their willingness to cooperate with the arrangements for W-CDMA royalty rates. NTT DoCoMo, Ericsson, Nokia and Siemens have also discussed the proposals with the Third Generation Partnership Project (3GPP), which developed the W-CDMA technology and coordinates royalties for the technology. The 3GPP is a Chaveny, France, company established by the mobile phone industry to provide an evaluation service for W-CDMA patents.

In September, director general of 3G Patent Platform Partnership (3G3P), Brian Kearsey, expressed concern that too many companies were claiming to own too many patents essential to building next-generation W-CDMA handsets, base stations and radio network controllers in the hopes of generating large future profits. The 3G3P called for a royalty cap at 5% of the sales value of a product, a stance that NTT DoCoMo, Ericsson, Nokia and Siemens now appear to support.

The group believes that based on current conditions, the cumulative royalties will be even lower for W-CDMA than GSM, citing for example, “recent developments in China” that indicate the cumulative royalty rate remains “even under our earlier targeted cumulative 5% level.”

Whereas W-CDMA is being adopted as the standard in Europe and large parts of Asia, another standard, CDMA2000 is being adopted by CDMA operators in the U.S. and parts of Asia. Most of the essential patents to CDMA2000 are owned by Qualcomm Inc., which is said to be keeping royalties at about 5% to 6%.

NTT DoCoMo, Ericsson, Nokia and Siemens also weighed in on the issue of CDMA2000 royalties and appeared to take a swipe at Qualcomm. The group asserted that they too “own a significant number of the essential patents applicable to the CDMA2000 standard” and vowed “these patents will be licensed at fair and reasonable terms.”

While W-CDMA royalties rates are coordinated by the 3GPP, CDMA2000 goes through a separate body, the Third Generation Partnership Project 2 (3GPP2), whose members include NEC, Sony, Qualcomm and Motorola Inc.

Representatives from 3GPP and 3GPP2 could not immediately be reached for comment.