Wireless Peace in Our Time?

A decision by Nokia and Qualcomm to settle their long-running intellectual property dispute over wireless technologies comes as welcome news for the mobile industry.

It’s unclear whether the agreement was triggered by a German court case on Wednesday (which ruled that Qualcomm’s patent claims against Nokia were invalid) or the looming court battle in Delaware in the US, but things were certainly intensifying. It’s an unexpectedly early resolution. I’d anticipated litigation to drag on for some time longer.

The ongoing dispute between the two companies has cast a shadow over the mobile industry for the last few years and been a major cause of uncertainty, especially about 3G WCDMA technology and its future direction. Nokia and Qualcomm will be relieved the battle is over, and the length of the agreement (15 years) ensures that further disputes between them will not rear their heads for quite a while. I’m pleased to see the agreement also includes future technologies such as orthogonal frequency-division multiplexing (OFDM), WiMAX and Long Term Evolution (LTE). Hopefully this will support efforts to find a harmonised solution for next-generation mobile and wireless technology.

The agreement has wide-ranging implications for both companies. Nokia will be hoping the deal can help it in the North American market, where it’s struggled to make headway when compared with its market-leading performance elsewhere. A settlement should clear the way for better commercial discussions with major US mobile network operators and should make it easier to deal with carriers with CDMA networks.

The dispute has dented Nokia’s efforts to broaden adoption of S60, its smartphone platform. S60 was effectively locked out of the growing number of phones using Qualcomm chips and the agreement paves the way for Nokia-led technologies (notably the fruits of the Symbian Foundation) to be more widely supported.

The main focus on this deal will now come from other mobile phone manufacturers. They will all be scrutinising the exact terms of the deal. If they come to the conclusion that Nokia has reduced its royalty payments to Qualcomm significantly — Nokia has already stated it is paying lower royalty rates than under an earlier agreement — they may seek to renegotiate their own terms with Qualcomm, triggering further battles for the chipset company.