Nortel Networks Ltd. isn't selling quite as much to Nokia Networks as might have first appeared, as the Canadian vendor is holding on to some key patents related to LTE (Long Term Evolution), the all-important proto-4G technology that's set to power the world's next-generation mobile networks. (See NSN Picks at Nortel's Mobile Bones .)

A Light Reading probe into the details of the proposed $650 million acquisition of CDMA and LTE assets finds that, although Nortel's official announcement stated it provided "Details of Sale Process for CDMA Business and LTE Access Intellectual Property Rights [IPR]," Nokia Siemens Networks (NSN) isn't buying any key LTE-related IPR from Nortel as part of the current proposed deal. (See How NSN Is Funding Its Nortel Bid.)

The issue is significant because Nortel holds a number of patents related to OFDMA (Orthogonal Frequency-Division Multiple Access) and MIMO (multiple input, multiple output), both of which are significant to LTE access infrastructure. And those patents have a tangible value, as they generate income from licensing activities.

Indeed, only this week another vendor that owns LTE-related IPR, Ericsson AB (Nasdaq: ERIC), announced it has recently signed "license agreements for LTE essential patents" with unidentified third parties. (See Ericsson Licenses LTE IPR.)

For the time being, at least, Nortel appears to be hanging on to its LTE intellectual property.

"Nortel has always thought of its OFDMA/MIMO IPR as among its crown jewels," says Heavy Reading senior analyst and wireless network technology specialist Patrick Donegan. "As I understand it, it isn’t included in the current terms of the proposed sale to NSN. In the absence of other information, I can only assume that Nortel still owns it."

Nortel isn't keen to discuss the issue, though.

When asked about exactly which patents would be involved in the proposed asset sale (which is still subject to regulatory clearance and an auction process), Nortel declined to comment, saying it couldn't comment beyond what was in the official press release. (See Will Others Bid for Nortel's Wireless Assets? )

NSN, meanwhile, responded to Light Reading's questions by stating that, if the acquisition is completed, it "will be in a position to use the technologies you refer to [OFDMA and MIMO], but [NSN] can't comment more in detail."

In other words, NSN is set to license, but not acquire, the LTE-related IPR from Nortel. Indeed, documents filed with the U.S. Bankruptcy Court for the District of Delaware, where Nortel was earlier this year granted protection from its creditors, show that the preliminary agreement between Nortel and NSN includes the license of "certain intellectual property necessary for the manufacture of the products and the provision of services."

Industry sources confirmed this refers to the OFDMA and MIMO patents.

So why is Nortel hanging on to this IPR?

There are a number of potential reasons:

But could The Zed Man and his remaining crew possibly repeat Nortel's flawed approach to LTE, which saw it sell its UMTS (3G) access assets to concentrate on LTE developments? (See Zafirovski: We'll Get 4G Right.)

Heavy Reading's Donegan believes such a scenario shouldn't be ruled out.

"Looks to me like they may have some kind of play in mind that’s specific to the OFDMA/MIMO IPR," says the analyst. "That could entail whatever’s left of Nortel, some third party, or some kind of management buyout arrangement, leveraging the IPR either to productize it or make a purely IPR-related play of some kind."

So here's a thought to consider: Nortel could sell all its current business lines and then emerge from bankruptcy protection with some IPR and a new next-generation wireless business plan.

What odds on the emergence of Phoenix 5G Wireless? Anyone?

— Ray Le Maistre, International News Editor, Light Reading