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Gang of Four set W-CDMA royalty cap

Squaring up to Qualcomm

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It's taken months around the negotiating table, but today four leading mobile phone firms agreed to reduce royalties for W-CDMA patents, ensuring that payments comprise no more than five per cent of equipment costs.

The Gang of Four - Nokia, Ericsson, Siemens and NTT Docomo - want mobile phone networks to choose W-CDMA technologies for their 3G networks, in preference to Qualcomm's competing cdma2000. Qualcomm is strong in North America and Korea, while the Gang of Four have Europe pretty much sewn up. The rest of the world is to play for.

Qualcomm is historically notorious for usurious royalty fees, but this does not appear to apply, so far as cdma2000 is concerned - with the company setting royalty rates at 5-6 per cent of equipment costs.

However, the W-CDMA standard, drawn from multiple patent holders, could have seen royalty payments account for up to 20 per cent of equipment costs, according to PA Consulting. So today's announcement should be seen more as a game of catch-up than of leapfrog. It can also be seen as a triumph of diplomacy for Nokia, which kicked off the move for flat-rate royalties in May this year.

The W-CDMA Gang of Four hold a 'significant number' of relevant patents, but it's unclear if it can bypass Qualcomm IP altogether. But they say that essential patent holders, Fujitsu, Matsushita Communication Industrial (Panasonic), Mitsubishi Electric, NEC and Sony have "also expressed their willingness to co-operate with ... arrangements" to keep collective royalty payments at five per cent of equipment costs.

Early indications are that the total royalty levy will come in under this target. ®

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