WiMAX Vendors Must Think About Qualcomm Royalties

ABI: WiMAX equipment vendors should begin now to factor royalties into their planning and pricing activities. Qualcomm has long been collecting royalties for its CDMA technology, and more recently for WCDMA as well. The company's pricing structure has led to a perception among some licensees that Qualcomm is focused on making royalties its primary revenue stream. That is not the case, citing figures showing that IPR currently accounts for less than one third of the company's revenues. Qualcomm will certainly continue to man the toll-booth, however. By acquiring Flarion Technologies recently, Qualcomm added significantly to its stable of OFDM-related patents, and the company will enforce them vigorously. That has a direct bearing on the plans of WiMAX vendors, who must factor these royalties into their business models. One WiMAX-oriented company, Soma Networks, has clearly been paying attention. Soma licensed Qualcomm's CDMA IPR in 2001, and announced last month that it had signed Worldwide subscriber and infrastructure license agreements with the company, allowing it to develop, manufacture and sell OFDM/OFDMA subscriber units, modem cards and infrastructure equipment. This was the first such WiMAX-related royalty agreement concluded by Qualcomm. Soma wants to remove uncertainties from its discussions with carriers, Solis concludes, so it is clearing the air by paying royalties to Qualcomm. Soma has called the decision ‘future-proofing our solution,' and it is a smart move. But its further impact is that Qualcomm will look to all WiMAX companies for royalties, using its agreement with Soma as a precedent. Industry-wide, this issue is being widely ignored. WiMAX vendors may think that they don't have to worry about Qualcomm's OFDM patents but they are mistaken: Qualcomm will enforce them. Mobile Broadband Research Service

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