Sweden-headquartered vendor Ericsson revealed rates it plans to charge other providers to licence its 5G technology as it looks to fuel wider adoption and potentially avoid patent lawsuits in the future.
In an interview with Bloomberg, the company’s chief intellectual property officer Gustav Brismark said Ericsson will cap royalties at $5 per phone on higher-end handsets, and would go as low as $2.50 for the lower end.
With widespread commercial deployment of 5G expected in 2020, Ericsson is already working with a number of players across the mobile ecosystem to develop 5G standards.
Brismark said it was taking the unusual step of revealing the price it will charge to serve as a reference to other patent holders, and also to companies which need to take a licence.
Companies like Ericsson which are developing standards for the next-generation of mobile services hold an advantageous position in terms of ensuring their own technology is included, and they tend to commit to licensing patents in a fair way.
Bloomberg pointed out the rules have never been clearly defined, and companies are usually negotiating royalties without knowing what rivals are paying.
The move may also mean Ericsson could avoid potential legal battles over licensing, something the company had to deal with in the past.
Ericsson was embroiled in a battle with Apple for years before the companies reached an agreement in December 2016. It is also in the middle of a legal dispute with China’s TCL over royalty rates.
Of the vendor’s SEK222.6 billion ($25.2 billion) revenue in 2016, SEK10 billion came from intellectual property royalties.
Brismark said the royalty rate is only paid on standard essential patents and doesn’t include other inventions used to implement non-standardised services.
In total, Ericsson spends $5 billion a year on research and development Brismark said, and he believes the company is contributing more than its rivals on different generations of standards.
“If we are the company that has provided the most technology, no one should set a higher rate, but we can only control our price,” he added.