LONDON —The companies that hold a major portfolio of patents on W-CDMA third generation technology for handheld devices within the 3G Licensing group have agreed to revised royalty rates for a further 5 years beginning January 2009.

3G Licensing (Stamford, England), the administrator of the licensing programme, said the revised rates, agreed between the companies within PlatformWCDMA Ltd, would be between $1.00 and $2.00 for each WCDMA terminal product for new licensees and only $1.00 for licensees that have been licensed for two years or more.

"This is a substantial and enormous reduction, about 33 percent for first time licensers and 66 percent for longer term users. It sets the benchmark for the rest of the companies holding essential IPR for W-CDMA terminals," 3G Licensing director Brian Kearsey told EE Times Europe .

Companies within the PlatformWCDMA group include Siemens, NTT, NTT DoCoMo, KPN, NEC, SK Telecom, France Telecom, Mitsubishi, Sharp, Detecon Consulting and Fujitsu, with Panasonic in discussions to join the group.

The three other key patent holders for the technology, Qualcomm Inc, Nokia and Ericsson charge significantly more for use of their patents, typically 5 percent of the net selling price of a terminal. "I cannot say whether they will reduce the royalty fees as well, but our move will definitely put a great deal of pressure on them to follow suit," Kearsey added.

He said the new levels of royalty for the WCDMA technology (and its evolutions such as HSDPA, HSPA and HSUPA) will further catalyze the development of the UMTS market worldwide. The patent flow will change when Long Term Evolution (LTE) technology handsets and data cards kick in since, although a member of the 3GPP family of standards, LTE uses different radio specifications.

Earlier this week, some of the world's biggest hitters in the mobile communications equipment sector joined forces to establish rules for licensing patents related to Long Term Evolution (LTE) technology.

The aim was to avoid the bitter patent and Intellectual Property Rights (IPR) rows that broke out during the development of third generation mobile equipment.

"One of the reasons we could reach our agreement is because of the market forecasts for 3G and its evolutions", said Kearsey. It is predicted the number of terminals will increase from about 85 million units now to perhaps 800 million by 2013, which includes data cards for PCs and embedded devices in computers for accessing wireless broadband.

"With those sorts of volumes, the licensors can afford to take something of a hit on royalties, particularly as the price of terminals and chips will reduce substantially and thus volumes increase."

In a statement, PlatformWCDMA Director & Chairman, Hisashi Kato commented :"As recent 3G mobile terminals are increasingly developing in embedding music, moving pictures and even broadcast features in addition to voice communication, terminal manufacturers must comply with various standards, not merely WCDMA, but also video, speech, broadcast, and others. The royalties payable to numerous patentees under these standards are expensively accumulating so that the competition in this market is intensifying to meet the demand of multi-functionalities of WCDMA terminals while manufacturers have to bear accumulative royalties."

Kato added the reduced royalty scheme agreed with 3G Licensing would provide a "satisfactory solution" for the mobile terminal industry's dilemma.