The USA is very interested in 3G. The royalties Q! gets will be taxed by the USA government. This is effectively a worldwide tax on anyone who wants to use a WWeb device. Pretty cool and a very good reason why Q! can expect all the support they need from the USA government, judiciary and military if needs be. Charlene, Madeleine, Janet and co will all line up behind Bill and Al ready to do their duty and ensure the taxes are collected.
Now, I ranted about how Q! has hugely undercharged for CDMA royalties and the UK $35bn price for 3G spectrum was a direct measure of how much Q! undercharged. It has hugely undercharged! Q! has charged something like 5% and they should have charged 110% or maybe 130%. Even rotten GSM charges 15% and it's good for little other than spectrum-noisy talking.
The optimum price for royalties would see 3G spectrum sell for a few $million to the highest bidder, not $35bn!
But since royalties are universal, Q! couldn't charge a multitude of different rates for different companies in different countries. Well, maybe they could, but let's assume that's too hard. They need to charge each company an optimum rate at the time the agreement is entered into which Q! expects would maximize profits.
Maybe the UK auction was exceptional and 5% royalty in New Zealand will see low bids for spectrum and perhaps not all spectrum being sold.
Since New Zealand is economically backward compared with the UK and the population density is much lower and therefore spectrum crowding less of a problem, maybe 5% will be about right. The NZ government and Maoris are rubbing their hands with glee at the prospects of Q! donating maybe $1bn in foregone royalties to the local tribes and politicians.
The 3G auction is, at last, due to take place in a week or so. It will give a good guide to how much Q! has undercharged. Nokia had better hurry up and sign because when Q! figures out that they have grossly undercharged as shown by 3G auctions rolling like thunder around the world, Q! will inform Nokia that the new royalty requirement is maybe 30% or 70%. Heck, even a derisory 15% would be better than what we get now.
Meanwhile, back to the USA government.
The UK got the $35bn and the USA government missed out on that money!! Unfair! Q! should have charged the right royalty, then the auction would have raised only $2bn and Q! would bank the $33bn in royalty payments over the next few years. The USA government would have got $12bn or so in taxation, which they could use to enforce IPR around the world to protect their tax base.
Gee Ramsey, politics does seem to keep getting in the way.
Come on QUALCOMM, charge what the market will bear. We shareholders are sick of making donations to governments.
The whining from the W-CDMA crowd about 3G spectrum auctions is an attempt to hijack the market value of 3G, leaving the local spectrum seller, Q! and the USA government out in the cold. Giving away spectrum, holding beauty contests, being bribed etc are rip-offs.
All royalty agreements should be renegotiated based on the value of 3G spectrum as already demonstrated, with a view to raising royalties on future technology to 50% or so, depending on market conditions. $35bn for 35m people shows how much Q! gave away in the UK.
Mqurice
PS In case nobody notices, Globalstar has got worldwide spectrum and quite a bit of it. Didn't have to pay $35bn either. But sssshhhhhh, keep it to yourself. We don't want to pay the market rate, so G! is doing a great job of making things look bad, while they gather momentum. Iridium and ICO are out of business, so the coast is clear... |
