Monday, 6 July 2009

Royalty Rates in the telecommunications industry

The issue of royalty rates in the telecoms industry has always been one surrounded in mystery. My attention has been drawn to a contribution on a industry newsletter Light Reading (of which I had never heard). It dates from May 2008 and suggests that Nortel is (was) looking at a royalty rate of 1% per handset for access to its portfolio of patents essential to the LTE standard. This seems about right from my knowledge of the industry. Nortel has not got any handsets to sell and so there seems to be little to be gained from cross-licensing in the industry.

Nortel is, of course, bankrupt and has just sold much of its business to Nokia Siemens Networks, but according to Light Reading not the rights to its patents (see here). Light Reading reports that ChaseMorgan have calculated that the rights to the patents could end up being up to $2.9 billion, although a more reasonable value might be $950 million.

1 comment:

Michael F. Martin said...

But only if they get there before the DOJ. ;-)