August 12, 2010
The Open Patent Alliance (OPA)'s two-year effort to create a patent pool for WiMax is nearly complete, which means it will soon be moving on to Long Term Evolution (LTE), but still without the support of one significant patent holder, Qualcomm Inc. (Nasdaq: QCOM).
The OPA was founded in 2008 to support the 4G movement to prevent legal battles and to keep 4G costs down for end users. It is now emerging from a year-long quiet period to promote its WiMax patent pool, set to be complete by the end of the year.
The group includes more than 20 members that span the wireless industry, including 4G service provider Clearwire LLC (Nasdaq: CLWR), hardware makers Acer Inc. and Samsung Corp. , networking giant Cisco Systems Inc. (Nasdaq: CSCO), and chipmaker Beceem Communications Inc.
Noticeably absent is Qualcomm, an important patent holder that remains disinterested in joining. One reason is that the networking giant is already looking toward LTE; however, it isn't supporting LTE patent pools either. In 2008, Qualcomm even joined forces with Nortel Networks Ltd. to oppose an LTE patent pool that formed around the same time as the OPA, saying that individual companies should be allowed to patent the technology on their own. (See Nortel's LTE Patent Goldmine.)
According to the European Telecommunications Standards Institute (ETSI) , as of April, Qualcomm owned 22 percent of the market for LTE patents. Qualcomm also holds a good majority of WiMax patents through its acquisition of orthogonal frequency division multiplexing (OFDM) vendor Flarion Technologies.
The EBQ (Everybody But Qualcomm) group thinks that's unfair.
More importantly, it means Qualcomm's conspicuous absence could lead to the very courtroom showdowns that the OPA was created to avoid.
"Our concern was that as these ecosystems came together to compete on 4G, the legacies would cause conflict or misunderstanding and lead to litigation," Hahn says. "These things take time to resolve."
Hahn's reasoning goes on to say the cost of the litigation might ultimately be passed along to the end user, thus relegating 4G to the elite, often business users, not the mass market as intended. CE makers could be cut out of the equation if they couldn't absorb the rising costs. Competition wouldn't flourish and the whole ecosystem from the operators to equipment makers to consumers would suffer.
The OPA gives vendors one place for WiMax licenses, rather than contacting 20 companies individually, and it serves as a reference for prices. If a company tries to charge an inflated price for a patent -- something Qualcomm has been accused of -- the pool can put them in their place.
"Other than transactional efficiency, establishing this reference is the most important," Hahn says.
Looking toward LTE
The OPA started with WiMax because it was already two years in the making. When that pool is complete, Hahn says the OPA will move on to LTE -- but it won't be the only one.
In addition to the big LTE patent holders, which also include Ericsson AB (Nasdaq: ERIC), Huawei Technologies Co. Ltd. and Nokia Corp. (NYSE: NOK), three independent facilitators have already launched their own initiatives for LTE patents. In the interest of supporting one large reference point, rather than four disparate ones, Hahn says the OPA is working on merging the smaller efforts together. The OPA doesn't have to lead the charge, he says, as long as the pool is created. (See Who's Really Sitting on an LTE Goldmine? , The LTE Scraps From Nortel's Table, and Huawei Touts LTE Patents.)
"We are convinced that the three-horse race gets to two in the next few months, then down to one," he says. The other groups, Via Licensing, MPEG LA, and Sisvel, are in discussions to merge, but only Via Licensing is already working with the OPA on a licensing pool. The other two skipped WiMax and went straight to LTE on their own, Hahn says. (See Sisvel Likes LTE Patent Pool Proposal and LTE Group Seeks Patent Pool Info.)
— Sarah Reedy, Senior Reporter, Light Reading Mobile
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