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High IPR Costs Affecting 3G Market

The mobile industry could spend $80-100 billion on WCDMA-IP-royalty payments up to 2017, sparking fears about the future of second-tier vendors and the level of innovation entering the 3G market. Mounting concern that royalty payments will soon approach 25-30 percent of the vendor's average selling price has prompted operators to approach the GSM Association for support in a bid to limit payments to a
single-digit figure. According to Informa Telecoms and Media, "the cost of so-called essential IPRs could skyrocket if leading vendors do not agree to the single-digit cap. The issue is compounded by Nokia-backed research that states Qualcomm �- which has already agreed a royalty rate of between 4.65 and 6 percent with some handset vendors �- does not hold as many essential IPRs as it claims to." If the other main IPR holders �- Nokia, Motorola, and Ericsson -� license their patents at a similar level to Qualcomm, it will lead to a rise in the cost of the basic technologies required to produce 3G mobile devices.

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