Will Qualcomm go for a W-CDMA royalty cap?

The companies that control most of the patents for what may become the dominant mobile phone standard have agreed on what they say is a relatively modest licensing fee. But one big patent owner is so far holding out.

San Diego-based chip-maker Qualcomm, which owns about 20 per cent of the patents on the wideband-CDMA standard, hasn't yet indicated whether it will endorse a fee plan floated by rival Nokia and a group of other companies.

Handset makers Nokia, Ericsson and Siemens, along with Japanese mobile communications company NTT DoCoMo, own at least 60 per cent of W-CDMA patents. The companies all agreed not to charge makers of mobile phones and mobile phone network equipment more than 5 per cent royalties to use any of the various patented W-CDMA techniques.

Wideband-CDMA doubles the calling capacity of any cell phone network and creates a wireless web with download speeds of up to 364Kbps. It's expected to dominate the world's cellular stage, eventually.

NTT DoCoMo has the world's only working commercial W-CDMA network but most other carriers are expected to finish upgrading by 2005.

Bill Plummer, Nokia's vice president of strategic and external affairs, said equipment makers Fujitsu, Matsushita Communication Industrial, Mitsubishi Electric, NEC and Sony have "expressed their willingness to cooperate" with the 5 per cent fee cap.

"We are supporting what we think are modest rates on a global basis," Plummer said.

A Qualcomm representative did not immediately return a phone call seeking comment on whether the company plans to endorse the cap. Qualcomm owns about 20 per cent of the W-CDMA patents, according to Shiv Bakhshi, a wireless analyst with IDC.

Qualcomm has a tough decision to make. On the one hand, the 5 per cent cap could help keep down costs for phone and network makers, ensuring attractively low prices on W-CDMA handset and infrastructure equipment.

On the other hand, Qualcomm makes nearly all its revenues from licensing intellectual property to equipment makers. It might not want to set a limit on how much it can charge for its products, Bakhshi said.

By comparison, other W-CDMA patent holders, including those agreeing to the cap, also get revenue by manufacturing and selling phones and phone networking gear. That makes them less hesitant to set a cap, Bakhshi said.

"If patents is all you have, why would you cap it?" Bakhshi said.

Ben Charny writes for CNET News.com.