Nokia and Motorola Extend Licence Co-Operation to Cover LTE

Nokia and Motorola have announced they have extended their existing licensing agreement to cover 4G wireless technology, including Long Term Evolution (LTE), WiMAX, and LTE-Advanced.

Although neither of the handset giants has revealed any of the terms of the agreement, the vice-president of intellectual property for Nokia, Paul Melin, said in a statement that the agreement shows that the industry is making fast progress in resolving LTE licensing issues between the major patent holders, following many years of disputes and lawsuits.

Outlook and Implications

• A Vital Agreement in Moving Forward with LTE: The move to 4G technologies, in particular LTE, is crucial to handset vendors, as more and more network operators invest in the technology. Nokia believes the Motorola deal marks a significant step forward in resolving ongoing LTE licensing issues. Nokia's equipment joint venture, Nokia Siemens Networks (NSN), has recently revealed it has won a total of 17 orders for new LTE network equipment globally, while the Global Mobile Suppliers Association (GSA) revealed at the end of the second quarter of 2010 that there are 101 operator LTE network deployments in progress or planned in 41 countries across the globe. The same study also found the number of network commitments is 71% higher than the GSA reported in a similar survey six months earlier, as increasing demand for mobile broadband and data services drives operator investment (see World: 5 October 2010: Nokia Siemens Networks Claims 17 LTE Deals So Far). As operator investment in LTE gathers pace, the handset vendors must now move to meet the emerging demand for 4G-enabled phones.

• A Rare Agreement in a World of Patent Lawsuits: The licensing agreement marks a rare instance of compromise, as the mobile vendors have spent a great deal of the last 10 years locked in patent wrangles and lawsuits as they attempt to gain the upper hand in an increasingly competitive market. Motorola and Nokia have each filed lawsuits against iPhone maker Apple, while Microsoft has a lawsuit pending against Motorola (see United States: 7 October 2010: Motorola Sues Apple and World: 29 September 2010: Apple Brings Nokia Legal Wrangles to U.K.). However, the handset vendors risk allowing their legal wrangles to distract them from further technology development, and it is hoped this kind of agreement can be replicated elsewhere. Motorola believes the agreement will foster further innovation in the industry, as both vendors look to revive their falling shares of the lucrative smartphone market.

• Nokia Refreshes Its Assault on the United States: In its ongoing efforts to reverse its fortunes, Motorola has invested significantly in WiMAX and is now looking at LTE as an opportunity to bring its handsets to a new market segment. Likewise, Nokia is looking to 4G as an opportunity to re-establish its leadership in the smartphone business, which has suffered recently at the hands of the newer entrants Research In Motion (RIM), Apple, and Google's Android handsets. In the second quarter of 2010, Motorola shipped 2.7 million smartphones, up from 2.3 million in the first quarter and 2.0 million in fourth-quarter 2009. This puts Motorola well behind the world's leading smartphone vendors Nokia (24 million in second-quarter 2010), RIM (11.2 million), Apple (8.4 million), and HTC (5.4 million; see World: 30 July 2010: Revenues Still Fall for Motorola As Smartphones Sales and Profits Rise in Q2). Nokia would also gain a significant boost in the United States, where the Nordic giant has always been weak, generating just 4.2% of revenues there in 2009, despite the high value of the market. To this end, NSN has recently bought Motorola's wireless networks business, which will see it gain the majority of the struggling U.S. giant's infrastructure assets (see World: 20 July 2010: Nokia Siemens and Motorola Confirm US$1.2-Bil. Wireless Infrastructure Asset Deal).