Optical/IP Networks

Nokia & Huawei Ink Dull Deal

Nokia Corp. (NYSE: NOK) has signed a wideband-CDMA (WCDMA) patent cross-licensing deal with Chinese infrastructure manufacturer Huawei Technologies Co. Ltd.

The companies say the deal will give each firm access to the other's WCDMA intellectual property. "Both companies are doing R&D in the area of WCDMA," says Nokia spokeswoman Riitta Mard.

Huawei is a massive presence in the Chinese infrastructure market, both wireline and wireless, and a growing one on the global stage with $2.7 billion in worldwide sales in 2002. Major rivals include Cisco Systems Inc. (Nasdaq: CSCO), which is currently involved in a legal battle over alleged patent infringements with the Chinese company (see Cisco Wins Round 1 Against Huawei).

The deal should help bolster the prospects for the WCDMA standard in China, where it is still far from clear which standard will be adopted for third-generation networks. The Chinese have their own homegrown standard, TD-SCDMA (Time Division Synchronous Code Division Multiple Access) (see What's Up With Chinese 3G?), while Qualcomm Inc. (Nasdaq: QCOM) is pushing CDMA2000 technology (see Qualcomm Courts Chinese 3G).

Nokia isn't revealing the royalty rates for this deal, although Mard describes them as "reasonable." Last year, Nokia caused a commotion in the industry by calling for a cap on WCDMA intellectual property royalty rates to ensure that total IP licensing costs make up no more than 5 percent of the sale price of networking equipment. (see Nokia Throws Its Cap Into the Ring).

Some vendors agreed to the cap (see Royalties Deal on WCDMA ), but Qualcomm, which makes its living from patent royalties, balked at capping the rates.

"Qualcomm basically said no way," comments Seamus McAteer, principal analyst at the Zelos Group LLC — Dan Jones, Senior Editor, Unstrung
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