Nokia-Siemens Networks' acquisition of Motorola network assets should allow them to gain strong position in North America and improves their position in Japan and China.
The initial stage of merging the two companies, which although announced has yet to be consummated through all government approvals, was said to be working together in sales. The more difficult part will be combining the infrastructure platforms to eventually arrive at a common platform that takes advantage of volume efficiencies and presents a simplified and unified offering to operators. Maravedis estimates that this will take 3-6 years to accomplish, as the Motorola's product line may need to be maintained to support current and expanded deployments.
There is some redundancy between the product lines and employee groups. Their lines of business are expanding and talented people in R&D and marketing of MIMO-OFDM 4G products are becoming more difficult to come by; even the Chinese companies are finding it difficult to hire top talent despite having large numbers of engineers.
Maravedis expects that Nokia will retain most of the MOTO employees as will be needed to support growing efforts in general and North American growth in particular. However, we may see the overlaps in R&D and product lines reduce over a period of time. If individuals or product lines cannot be absorbed including necessary relocation, a few people will probably exit to find more convenient employment.
A significant point came up during a briefing Maravedis had with NSN about the distinction between FDD and TDD versions of LTE:
- Tech trends include the use of more adaptive modulation schemes: devices that can operate in various modes - 2G, 4G, WiMAX and LTE, various frequencies and channel allocations, and both TDD and FDD spectrum access methods. Nokia concurs that base stations and devices will increasingly support both FDD and TDD including advanced antenna technologies. Patents and commercial design and standards activity suggest that TDD and FDD can be supported within LTE and WiMAX to the extent that both FDD and TDD are used within the same spectrum band by sub-channel allocations or using distinct channels in a multi-carrier system.
- The most likely scenario for this evolution to take place is that devices will first be able to use multiple LTE frequency bands, ie. 800 or 700 MHz, 1800, or 2.5-2.6GHz on a best connect/use basis. As operators gain access to and re-farm spectrum to LTE in 4-6 years time, base stations and devices (chips) will have evolved to multi-radio/multi-channel to operate on two or more channels simultaneously. Perhaps one channel being the conduit for viewing a video while another channel is used for voice and other traffic with requisite QoS.
Regardless, the outcome is that the division between FDD and TDD spectrum will increasingly be handled by base stations and devices to the extent that they become much less a dividing line in operation of networks and may become practically irrelevant: instead of requiring deployment of separate infrastructure and use of devices that connect to only one at a time, both will be sported 'off the shelf.'
The issue of IPR has come up as well: the major suppliers will end up controlling the bulk of the market and thus will have the largest influence over how IPR licensing is structured. This is working out as should have been expected: the majors are following along the pathway of prior generations to extend and engage in new cross-licensing agreements. This will most likely lead to an overall lower burden of IPR as there will be less of the 'Qualcomm tariff' factor. Most likely Nokia, Samsung, Huawei, ZTE, AL-LU, Ericsson, and Qualcomm will not be required to exchange royalties between themselves or net royalty rates will be very low, considerably less than 5% Maravedis estimates for simple cross-licenses. However, just how this works out with Qualcomm is not entirely clear as they have wrapped 3G and LTE IPR license portfolios together and do not disclose the details of their agreements.
The majors have largely come to 'gentleman's agreements' between themselves that reduce royalties and legal confrontation as the industry sets out on the new path of technology. However, their expectations for the not-haves who must license technology in order to make 2G-3G-LTE plus device interface, etc. IPR that are used in equipment and devices is a whole different story. While the goal of NGMN LTE licensing group has been to provide a common framework for negotiating royalties that will reduce confusion, keep overall rates within reasonable bounds (goal of being capped at 10%), and provide a flatter structure that prevents royalty stacking to occur, there remains a motivation on the part of the majors to eliminate contention amongst themselves while maintaining an advantage against the have-nots who attempt to compete.
While Nokia and others have worked out agreements with major players, the question remains open about what second and third string players will have to pay. Will Alvarion or Airspan have to pay and how much? Will the newer chip companies like Beceem, Sequans, GCT, and Altair have a bite taken out of their apple?
For now we remain in the posturing phase: Nokia said they have 49% of IPR used in LTE. Ericsson says 25%, AL-LU claims around 20-25%, remnant of Nortel claims 5%, Huawei claims 17%, ZTE 1,300 patents, Interdigital several essential patents (undisclosed percentage), Intel legitimately 100-250, WiLAN wants 1-5%, and a large number of other suppliers, holding companies, patent pools claim IPR. In other words, the industry claims over 100% IPR and that does not count others such as Broadcom, Apple, Microsoft who have already laid claims to IPR used in networking, graphics, display, and software used in data and social networking, mobile devices and software interfaces to networks.
At best, the wireless connectivity portion of ICT IPR is a good way to being resolved among key industry participants while contention looms around the combined enterprise of delivering the entire converged environment.
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