InterDigital Inc (IDCC)

[slacker711]

2. Increase QCOM FRAND licensing rate by controlling larger % of LTE patent pool

You are absolutely right that an acquisition of IDCC would allow Qualcomm to raise their LTE rates, but that is only true for currently unlicensed companies. Qualcomm has already licensed Nokia, Samsung, and LG as well as at least nine other companies (up from 9 total last November). They likely have half of the market already licensed so the incremental rate gain would only apply to the other half of the market.

Moreover, the LTE rate is applicable only to LTE only handsets. A LTE/CDMA handset licensee pays the royalty based on the CDMA rate. That means the additional gains to buying IDCC would only apple to LTE handsets. I now expect LTE only handsets to start rolling out in the US in 2012, but we are far far ahead of the rest of the world. Most of the world still hasnt figured out their LTE spectrum policy and they dont have the advantage of rolling it out in virgin 700MHz bands.

LTE only handsets are only going to be a small part of handset sales until the 2nd half of the decade.

Add all of that up and the incremental revenue gain from Qualcomm buying Interdigital is going to be tough to justify. There should be other entities that are able to derive FAR more value from Interdigital's patents than Qualcomm.

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