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Nortel strengthens the case for deployment of LTE by publishing competitive patent royalty rates

Nortel Publishes LTE Rates

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5/5/2008
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TORONTO -- To help accelerate the global adoption of the 4G technology for high-speed, high-bandwidth mobile communications, Nortel* [NYSE/TSX: NT] has published a competitive handset royalty rate of about one percent subject to terms(1) for its portfolio of LTE standards-essential patents. Nortel’s competitive handset royalty rate for patent value is one of the first to be voluntarily published. Nortel is providing this information in order to help service providers and their handset vendors develop business plans for launching LTE, a wireless technology that can support hotly demanded mobile applications like social networking, multi-player gaming, and streaming video.

With initial LTE deployments expected to occur as early as next year, operators are exploring the business case for investment in the 4G wireless technology to meet demand for higher-bandwidth mobile services. Nortel is taking this exceptional step of publishing its competitive patent royalty rates in order to provide increased transparency and predictability of IPR costs that could help prevent uncertainties in handset costs from inhibiting the growth of the 4G market. Removing an unknown of LTE IPR handset licensing costs is expected to help foster LTE business cases and reduce the risks of early deployment. Nortel will make licenses available and is providing royalty information to help simplify the current guesswork while ensuring that its innovation is rewarded.

“Nortel believes pioneers and innovators should be entitled to a reasonable return on their investment in R&D and leading contributions to the next-generation standard, where not all patents are created equal,” said John Hoadley, vice president of 4G ecosystem and business development, Nortel.

It is Nortel's position that compensation provided through licensing standards-essential patent claims under fair, reasonable and non-discriminatory terms (FRAND) should be based on the significance of the patented technology in the standard and the value of the patented technology to the licensed implementation. That way, innovators that develop technological breakthroughs are appropriately rewarded for their IPR and their portfolio value while standardized technologies can remain accessible to anyone through licenses on reasonable terms.

For more than 10 years, Nortel has been at the forefront of the development of foundational technologies that enable 4G LTE. Nortel is a key innovator in Orthogonal Frequency Division Multiplexing (OFDM), Multiple Input Multiple Output (MIMO), Adaptive Modulation and Coding, Space Time Coding, Channel Coding, Automatic Retransmission Request, OFDM Sub-channel Mapping, Hand-off and Frame Structure, and MIMO Transmitter/Receive Architecture – the radio access technologies at the heart of 4G LTE and that provide significant spectral efficiency, performance and capacity. Nortel has developed fundamental and valuable patented and patent pending technologies in these fields, and its R&D efforts have allowed it to be an early, key contributor to LTE standard development. Nortel's innovative advancements will enable it to be a major provider of LTE solutions in the market.

"Nortel is focused on helping our customers put the power of 4G LTE wireless broadband into the hands of consumers as quickly and as cost-effectively as possible," said Scott Wickware, vice president of marketing and strategy for carrier networks, Nortel. "This is why we have published competitive handset royalty rates for our LTE standards-essential patent claims. Coupled with the cost benefits of next-generation LTE technologies, we think moves like this by patent holders could help provide handset suppliers with IPR cost predictability. That in turn will hopefully encourage early adoption of LTE and a healthy ecosystem from which service providers can build a strong business case for LTE deployment."

Nortel Networks Ltd.

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