High Royalties May Impede WiMax Adoption

So-called "4G" WiMax technology has held the promise of mobile broadband server - and Sprint's Xohm service is betting on it. But will tech royalties impede its adoption.

Supporters of so-called "4G" WiMax technology—which promises to make truly mobile broadband a reality—and which is the basis for Sprint’s forthcoming Xohm mobile broadband service—have long maintained that the more "democratized" nature of the intellectual property behind WiMax means manufacturers impementing WiMax will bear lower royalty payments than competing technologies built on intellectual property from fewer corporations. In other words, manufactuers won’t have to pay as much to use WiMax technology, and that should give it an edge on the competition. But a new report from ABI Research turns that idea on its head, suggesting that WiMax royalties will fall in the same range as other 4G technologies—and maybe even higher.

Overall, ABI estimates the best-case royalty rate for WiMax technology will be around 3.2 percent, but could land in a range anywhere from 4.8 to 7.7 percent.

"The diversification of IP holdings in 4G technologies and especially WiMAX is something of a double-edged sword," said ABI Research director Stuart Carlaw, in a statement. "On one hand, the number of companies with vested interests in the technologies’ success is far greater; on the other hand, the number of companies likely to succeed in any market is apt to be far smaller than the number of companies that hold IP. The only vehicle left for them to recoup R&D dollars is to look for revenue from licenses."

Furthermore, Ericsson and Qualcomm hold the rights to components of WiMax technology but don’t actually support WiMax itself, instead preferring competing technologies (like LTE and Qualcomm-backed UMB) in which they have deeper interests. Therefore, these company’s royalty rates for using their intellectual property in WiMax are unlikely to change over time.

High royalty rates may add to the cost of deploying WiMax technology, the costs of which already have Sprint re-evaluating its WiMax rollout; in November, the company severed its relationship with wireless broadband provider Clearwire and said it was rethinking it’s planned $10+ billion WiMax roll-out.