Count, while you are right about everyone focusing on the arbitration, I believe(hope) your conclusions are not accurate. My belief is that 3g licensing is hopelessly deadlocked pending the outcome of this very important 2g battle.
Think about the roadblock IDCC faces when they try to negotiate a licensing deal with some manufacturer. Even if the manufacturer believes IDCC has technology they need to license for 3g, the IDCC licensing team tells them first we need to settle up on 2g. These manufactures then say, we wont pay until the others including Nokia pay.
When the Nokia arbitration is over, whether we win or lose, this roadblock to 3g will be removed. The Nokia arbitration will settle once and for all the amounts owed for the past. IDCC will have a huge warchest to go after everyone, although I believe they will not go after Motorola until after 2006, more on that later.
I am disappointed that the Ericy 2g settlement didn't contain a 3g rate but I understand why management did what they did. The settlement, although very small when compared to what we were expecting, triggered a windfall of over a HALF BILLION DOLLARS if management is correct. A settlement with Nokia at this point, unless it quantifies a rate for 3g has no such potential. I don't see IDCC settling with Nokia until after the hearing, if ever. They don't get the same bang for the buck they did with the Ericy settlement unless a settlement for past monies includes a lucrative 3g rate.
As far as Ericy's 2g settlement and lack of 3g rate, I believe Ericy did not want to pay for 3g unless and until Nokia pays for 2g. If IDCC is successful with the arbitration then I believe most of the current infringers for 3g will fall in line and that includes Ericy.
Earlier I stated I don't believe IDCC will go after Motorola until after 2006 for 2g because that is when the 2g payments from Ericy and by extension, with Nokia & Samsung will end. If they were to sign a rate with Motorola now, it could trigger negative MFL clause with many of their licensees. Motorola won in court and it will be a very long road to get them to pay for 2g. By ignoring them for now, they don't have to worry about forgoing royalties on their current licensees, which include Nokia & Samsung.
Due to the fact that most 3g handsets will include 2g inside, IDCC needs to get manufacturers to understand they owe for the 2g technology in order to get the best and highest rate for 3g enabled phones. If the manufacturers believe they don't owe IDCC for 2g, they will say that X percent (the portion related to 2g) of the technology in the phone is not subject to royalties so therefore since the phones contain 2g, we are only willing to pay a rate equal to X percent of what you are asking for. Once Nokia & Samsung resolve the issue of 2g, one way or the other, the 3g licenses will come easier. Obviously if we lose to Nokia & Samsung, the rates going forward will be much smaller, but if we win, then it is off to the races.
I just hope the Nokia arbitration is resolved as early in the year as possible in order to give IDCC additional time to sign license agreements with some of the infringers before my Jan '06 leaps expire. I hope my biggest concern a year from now is how many of these options do I exercise and how many do I just sell outright. If we can announce a license a month after the Nokia arbitration is done, it will bring all the non believing analysts on board and a TASR like ride will be ours to enjoy IMO.
Sorry for the long rambling post but after this week's decent gain, it has me thinking of the possibilities for a very happy and wealthy 2005. I hope our ship is finally pulling in to port. It may very well be.
AI
