If the OFDM 4G standards are based on free markets and freely negotiated exchange of value, that's fine by me. But you'll find that the free-loader want to get hold of Qualcomm's patents for no or negligible charge.
Their reasoning throughout that article you gave is faulty Kremlin Central Planning type thinking. Message 24526517 They wrote things like:
"A reasonable royalty" - I say the most reasonable rate to charge is what the market will bear, meaning the royalty rate to maximize the profits to the patent holder. Anything less lacks logic and is inherently not reasonable. Of course the other parties want to get hold of the patents for a lower cost, but that doesn't make their idea reasonable.
They went on about getting the technology to market faster, as though Qualcomm's royalty rate for 3G had an effect on the rate of development. It did, but the effect was insignificantly trivial compared with all the other costs and charges loaded onto 3G over the two or three year life of a subscriber's use of a 3G device.
For a $200 device wholesale price, Qualcomm's Nokia royalty rate was something like 4%, which is $8. The handset buyer pays about $400 for said device, then signs up to a "plan" in which they pay perhaps $100 a month. They use the device for 3 years say. That's $4000 total cost over 3 years to the subscriber. Let's suppose Qualcomm halved their royalty rate. That would save the subscriber $4 out of $4,000. I consider that trivially insignificant.
Let's take a look at spectrum cost as a component of getting 3G to market quickly. In Europe, $100bn was bid for 2GHz 3G spectrum. Suppose they thought 100 million Europeans would spring for 3G in some "reasonable" time period. That's $1000 per device just for the right to deliver CDMA phragmented photons in a little piece of spectrum in high frequency where propagation distance is poor compared with 450MHz to 800MHz. Suppose Qualcomm had helped "accelerate" 3G to subscribers by halving their royalty rate. The royalty would be $4 cheaper per average device. Do you think a $4 saving would make a big difference compared with $1000?
But there's a more fundamental point. If Qualcomm had charged 400% royalty instead of 4% royalty, then the royalty on the average 3G phone would have been $800. That is cheaper than the $1000 per subscriber for the spectrum. So, the service providers could have added up their costs including the $800 to Qualcomm, bid $100 instead of $1000 for spectrum per person and enjoyed a saving of $100 in the overall cost of royalty and spectrum combined.
So, you can see that Qualcomm's royalty rate had nothing whatsoever to do with the uptake of 3G. Whether Qualcomm had halved or quadrupled their royalty, wouldn't have made a tinker's damn difference to what the subscribers ended up paying, though it would have made a tiny difference to what would have been bid for spectrum.
All through that article, it was full of "how can we get money away from Qualcomm"? They came up with a load of marlarkey.
Did you see them calculate what the royalty rate should be based on bits delivered per megahertz of bandwidth per second and compare it with bits/sec/MHz achieved by GSM? Of course not. That would suggest that OFDM patents are far more valuable than GSM patents for which a total of 16% and more was charged. So the STARTING price for OFDM royalties would be ten times that of GSM, since OFDM is at the very least that much better than GSM. But to make OFDM more attractive, a lower rate would be needed to maximize royalties by getting adoption by subscribers quickly. OFDM is also more efficient than CDMA by a good amount, so OFDM royalties could be higher than for CDMA, especially since bids for spectrum could be a LOT lower, using those savings to pay the inventors of the technology which delivers the goods. The spectrum sellers invent nothing. They just block the road and demand payment.
If people want savings to accelerate OFDM 4G technology buying, then they should look at spectrum costs rather than Qualcomm's royalty, of which nearly all has been used to run the company and develop a lot more technology even better than before.
Money that goes to spectrum owners [governments] is poured down the drain of the kleptocrats with nothing to show for it except dopey, counterproductive, economically destructive ideas, like "Let's subsidize growing crops to make them into ethanol to burn in vehicles". Now they have figured out that their ridiculous anti-Greenhouse Effect ideas are causing starvation. Meanwhile, sunspot cycle 23 is stumbling in the starting gates and we are freezing up! If we are lucky, the CO2 already in the air might prevent an ice age return, but that's unlikely because water is the big greenhouse gas and it will be dumped as snow in the high latitudes, such as London, Ottawa, Beijing, Moscow, being stripped from the air as the Earth cools.
Lowering royalty rates will not make the world a better place, or save subscribers a single brass razoo.
I prefer to charge what the market will bear for my technology and do something even better with the profits.
Mqurice
PS Rumour has it that NextWave announced that they will be selling some spectrum to cash in on the bonanza as paid in the 700MHz auction. I rest my case; ipso facto, casus belli, infra vide, ultra vires, caveat emptor, habeas corpus, inter alia. NextWave can use that cash to pay Qualcomm for use of Qualcomm inventions required to deliver OFDM using said spectrum. Judging by the reaction of NextWave shareholders bidding WAVE up 40% in response, they think THEY should get that money, for having been squatting on the spectrum. No they shouldn't. I should, for inventing the technology which makes the spectrum valuable. Watch everyone whine like a fleet of Koreans when they see the royalty rate I request and they realize that spectrum has been over priced.
Spectrum isn't valuable. The technology invented by NextWave, Qualcomm and others which enables that spectrum to be used for something really great is what is valuable. |
