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ABI Research’s recent study “4G Intellectual Property and Royalties” provides in-depth analysis of the IP landscape for 4G technologies with particular focus on LTE, WiMAX and UMB, along with an analysis of the foundation technologies such as beam forming, fast power control, hybrid ARQ, MIMO, OFDM, OFDMA, SC-FDMA and SDMA. The report includes an analysis of the potential royalty scenarios associated with 4G terminals.

One of the major advantages claimed by the WiMAX community over their cellular cousins is that WiMAX will come with a far lower average royalty rate than either LTE or UMB. A favorite phrase among the WiMAX OEM community is that WiMAX has effectively “democratized” the 4G space. Although ABI research applauds the move to a more widespread intellectual property holding in the 4G realm, it could be argued that this democratization of IP will result in more, not fewer, IP royalties.

As ABI Research director Stuart Carlaw pointed out, “The diversification of IP holdings in 4G technologies and especially WiMAX is something of a double-edged sword. 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. More important, 4G technologies are likely to see similar royalty rates to those for 3G devices no matter the efforts of Next Generation Mobile Networks (NGMN), EU legislation and similar initiatives. According to Carlaw, “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%.”