The so-called “Smartphone Wars” were the defining buzzword for the IP industry in the first half of this decade. Like most “wars”, the smartphone wars resulted from an indirect but transformational change: 4G. The jury is still out whether Apple, Google or Samsung won the smartphone wars, but looking at the telecom industry in its entirety, a clear winner does emerge: Qualcomm. Qualcomm capitalized not only on its research but also on it influence in standardization to become a clear central force when 4G was rolled out. By the time, other players caught on, Qualcomm already owned the bulk of intellectual property that enabled 4G operating speeds, especially around baseband processors.
As the world now prepares for the next generation (5G) networks (rollouts are still 3-5 years away), companies like Apple, Samsung and Intel are working hard to ensure they stay ahead of the curve on 5G research and development.
The Next Generation Mobile Networks Alliance defines the following requirements for 5G networks:
- Data rates of several tens of megabits per second should be supported for tens of thousands of users
- 1 gigabit per second to be offered simultaneously to many workers on the same office floor
- Several hundreds of thousands of simultaneous connections to be supported for massive sensor deployments
- Spectral efficiency should be significantly enhanced compared to 4G
- Coverage should be improved
- Signaling efficiency should be enhanced
- Latency should be reduced significantly compared to LTE.
The estimated patent royalties are in excess of $120 on a hypothetical $400 smartphone—which is almost equal to the cost of device’s components. The royalty demands for 4G LTE cellular functionality approach $60 for a $400 smartphone but the average cost of the baseband processor that implements cellular functionality is as little as $10 to $13. This implies that the companies involved in 5G technology development need to have strong patent portfolio monetization strategies if they are to maximize profits from their R&D dollars. Being just a mobile component or technology service vendor offers limited revenue and profitability. Moreover, IP licensing is much more profitable as it doesn’t require excess manufacturing and operations costs needed for component design and mobile services.
5G is expected to generate even higher revenues from applications and services due to explosion on mobile application and services because of broadband-like speed, which are crucial for some of the emerging technologies like IoT, Wearables and Virtual/Augmented Reality. Revenues for 5G services will exceed $65 billion by 2025, according to a forecast from Juniper Research. 5G mobile technologies royalty revenues are expected to be more distributed among companies than 4G due to hybrid nature of technologies involved as well as a higher amount of expected commerce generated on 5G network. Due to the higher than predicted performance, 5G is expected to be a primary source of connectivity to the internet replacing in-home broadband services altogether in most cases. New services include high-definition 4K-8K video, self-driving cars, virtual/augmented reality, and myriad of IoT devices.
The early signs of increased 5G patent licensing activity are evident from inclusion of collaboration between Ericsson and Apple for the development 5G in patent dispute settlement. Clearly Apple is making a strategic move to minimize the licensing cost for 5G. Many handset makers will proactively do such deals over the next few years to prevent most of the licensing revenue from going to a single company like Qualcomm for 4G-LTE. This will allow the most profitable handset makers like Apple (Ax series) and Samsung (Exynos series) – who build their own smartphone application processors – to be integrated with 5G baseband processor for efficiency and cost.
The key feature of 5G network will be wireless gigabit throughput during normal use. The 5G network will be a mishmash of wireless data connectivity technologies providing seamless wireless gigabit connectivity through Network Function Virtualization Infrastructure. The 5G base station is expected to be comprised multi technology RAT (Radio Access Technology) acting as a virtualized wireless network that can seamlessly communicate with any device with any wireless technology. The next version of LTE-Advanced is going to act as a bridge between 4G and 5G. LTE-A is essentially a precursor of 5G radio access network (RAN) below 6 GHz. LTE-A already comprises of Carrier Aggregation, Increased MIMO, Coordinated Multipoint (CoMP), Relay Station and Heterogeneous Network. The carrier frequencies from 10 GHz to 100 GHz will be added on top to enable wireless gigabit connectivity to each mobile device.
Mobile networks comprised of a radio front end that incorporates an antenna coupled with transmitter with power amplifiers, receiver with low noise amplifier and carrier frequency generating elements. The radio front end connects to a modulator that either modulates or de-modulates the digital data to be sent/received over the carrier frequency by radio front end. The modulator connects to higher level of TCP/IP networking module. At this level the data is packetized to be used by applications or pushed to a wired network or cloud. Thus on a very broad level, patents related to 5G can be bucketed into the following 3 categories.
1. Wireless Radio Front End/Radio Access Network
The wireless network technology of 2G,3G and 4G have been primarily used sub 6GHz carrier frequency but 5G is expected to use centimeter wave (10GHz-30GHz) and millimeter wave (30GHz-300GHz) radio front ends. The high frequency operation allows for very high bandwidth, hence multi gigabit wireless data communication. The disadvantage of high frequency carriers is that they are susceptible to high path loss and require line-of-sight radios. To overcome this beam steering solutions will be required in dense urban deployments. Google (Project Loon) and Facebook are already using mmW radio front-ends to test next generation gigabit internet network deployments. Massive MIMO is another technique used to improve data throughout and spectral efficiency by using multiple antennas at the transmitter and receiver. MIMO uses complex digital signal processing to set up multiple data streams on the same channel. LTE networks and 802.11ac support MIMO but 5G will use more scaled up massive MIMO.
As expected, telecom networking equipment suppliers, Nokia and Ericsson, are in the top 5 along with 4G leader, Qualcomm. The presence of NPE Interdigital is expected to generate licensing activity. Chinese entities have a significant presence in top assignees indicating that it may have a similar 5G deployment timeline to the USA.
Modulation resides in the baseband processor of a mobile system. LTE-A which is a bridge between 4G and 5G allows for spectrum sharing and improved spectral efficiency through use of OFDM (Orthogonal frequency division multiplex) modulation. OFDM is a transmission technique that uses a large number of closely-spaced carriers that are modulated with low data rates. The 5G will require non-orthogonal transmission schemes. Several modified multi-carrier modulation schemes are also under consideration for 5G radio access such as, Filter-Bank Multi-Carrier (FBMC) transmission, Universal Filtered Multi-Carrier (UFMC) transmission and Generalized Frequency-Division Multiplexing (GFDM.
Qualcomm is the top assignee in this category and appears to be carrying its leadership position in baseband technology from 4G to 5G. The entire 4G baseband processor market was dominated by Qualcomm in the USA. Intel, which is developing its own 4G-LTE baseband processor, is among the top 5 assignees. Nokia, Interdigital and Fujitsu round up the top 5 list of assignees. It is also interesting to note that Apple does have an IP presence in 5G baseband/modulation technology. It certainly has the resources to design its own baseband processors to pair them with mobile application processors in order to improve performance and cost, especially if Samsung does so first. Samsung has already switched to its own internal Exynos application processor starting from Galaxy S6. However, based on IP strength, Qualcomm is best suited to design the first 5G baseband processor.
3. Core Packet Networking Technologies
The higher layers of 5G networking will require network function virtualization and will involve several smart networking technologies. These smart networking technologies include higher Inter-Node Coordination and backhaul as well as access Link Integration to improve network data throughout and efficiency. The network control will require Self-Organizing-Network, Context Aware Networking and Information Centric Networking. There will be increased Cellular and Wi-Fi network interworking and device-to-device communication to provide gigabit connectivity for very short distances.
Nokia, Qualcomm, Cisco and Intel are in top 5 along with NPE Headwater Partners in this category.
The number of patents and key underlying technologies for 5G mobile networks will evolve significantly within next 5 years. However, early analysis shows that Qualcomm will still be the IP leader but may be not as dominant as in 4G-LTE. The device makers like Apple, Samsung, and Lenovo are also working on 5G IP development in order to minimize IP licensing costs.
Intel is the only mobile chip vendor other than Qualcomm to be in the top 5 across three technology domains. This indicates that Intel is committed to compete in providing chips for 5G devices and networks. However, despite its commitment to do so for 4G, Intel has not been able to land any handset design wins within the US.
There is also noticeable presence of NPEs in top assignees in all three categories indicating there would be a high degree of licensing and litigation activity in this space in the 2018-2024 timeframe. As the judicial pendulum continues to swing between for and against the NPE business model, it remains to be seen whether NPEs are able and are allowed to capitulate on this huge opportunity once the actual 5G rollouts begin.