Updated: Nokia says it is owed up to $3.50 for every 5G smartphone

Nokia announced its patent-licensing rate for 5G smartphones, pegging the value of its 5G patents at up to $3.50 per smartphone. That is noteworthy considering that rate appears to be less than what Qualcomm and Ericsson are charging for their own 5G patents. 

"Nokia innovation combined with our commitment to open standardization has helped build the networks of today and lay the foundations for 5G/NR," said Ilkka Rahnasto, head of patent business at Nokia, in a statement. The company noted that the figure is a cap and not necessarily the amount that every licensee would pay. "This announcement is an important step in helping companies plan for the introduction of 5G/NR capable mobile phones, with the first commercial launches expected in 2019." 

Interestingly, for other categories of devices, Nokia said it will determine its licensing rates separately “and seeks to engage in constructive dialogue with relevant industry participants to define the licensing models best suited for those industries.” 

Nokia’s announcement underscores what will be a major element in the growth of the 5G industry. As the 3GPP and other standards organizations finalize the patents involved in the final 5G standard, the companies that have contributed this technology are all likely looking to cash in on patent-licensing agreements. The same scenario played out in 3G and in 4G—indeed, some players argued that the patent-licensing situation for 4G was so onerous that it did not support the entry of new players into the market. 

Already some of the global wireless industry’s biggest players have staked out their patent-licensing position on 5G, even though the initial standard it is only months old. For example, Qualcomm late last year said that it could charge smartphone manufacturers up to $16.25 in royalties for every 5G phone they sell. However, $16.25 per 5G phone is not necessarily the exact price that 5G handset makers would pay; the company said its rates would vary depending on exactly what kinds of technologies were included in the license, as well as what types of devices manufacturers would sell. 

Further, Qualcomm indicated in April the company will adjust its patent-licensing terms, which some analysts said could result in a reduction in licensing fees paid by some of Qualcomm’s bigger customers, like Samsung. 

Similarly, in March of last year, Ericsson said it would charge $5 per 5G phone, though Ericsson said it might reduce that rate to $2.50 per phone under “exceptional circumstances.” 

Of course, Nokia, Qualcomm and Ericsson are all working to increase the revenues that they derive from patent licensing. Indeed, during the company's second-quarter earnings conference call with analysts, Nokia's Rajeev Suri said that “we expect our current portfolio strength both to continue for many years to come and to give us considerable monetization opportunities. ... We've always had clear and ambitious targets for new patent creation and we are constantly adding new patents to our portfolio while still maintaining a high-quality threshold.”

Article updated Aug. 22 to correct the amount and details of Nokia's fee.