Tech Talk: Fights Between OEMs & Chipset Makers Could Worsen

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5G standardization is rapidly approaching, bringing what could be a massive influx of innovation and implication for a huge array of technologies, but it is also pouring some fresh salt on some relatively old wounds across the industry. The technology will, of course, be used to support everything from the growing wealth of connected devices referred to as the Internet of Things (IoT). However, it will also be driving many products outside of mobile devices or other novel electronics. That includes autonomous or human-assisted, semi-autonomous vehicles. It also includes new enterprise or customer relations tools driven by A.I. and connectivity, as well as some wider government-owned systems pertaining to public safety and smart infrastructure. There are no guarantees that any or all of the technologies envisioned for use on 5G networks will eventually become a reality but there is a very real possibility that it will open up a new front in the legal system between component manufacturers, infrastructure creators, and companies making consumer-facing technology.

The problems, as mentioned above, are not new. Organizations and companies have been battling it out with regards to which companies pay which for years, resulting in legal battles between companies that manufacture the hardware components required for devices to operate on the networks and companies making the final products. Beyond that, some of those component and infrastructure makers have ended up in legal battles with the court systems themselves. The disputes primarily come down to how the costs associated with developing and implementing advanced solutions are spread out across the industry. As a point of reference, up until this point – and likely going into the future – companies that are responsible for creating the products that consumers actually buy have paid licensing fees for use of the technologies that make network connectivity possible. That means that Samsung, LG, HTC, and other manufacturers are paying companies like Qualcomm and others in order to get tablets, smartwatches, smartphones, and more online. Since the whole system comes down to licensing, they are paying for every individual unit they create.

Some would argue, as Apple has in the currently ongoing battle between the iPhone maker and Qualcomm, that state of affairs already puts entirely too much power into the hands of a few companies. In fact, the argument has been made that it already results in unreasonable and discriminatory actions on the part of Qualcomm. The company, which is responsible for the predominantly used Snapdragon SoC and associated networking technologies, has even been caught up in anti-trust disputes with court officials over its licensing practices. Companies like Qualcomm would prefer to recoup the costs of researching and creating their intellectual property (IP) through licensing fees that are based on the overall usage and cost of the products they are used in. The chipsets required for smartphones, they claim, need to be connected on a more constant basis and that leads to a more costly development process. As a result, the licensing cost is often based on the overall cost of the devices themselves, with less expensive items that require less connectivity costing less. That, in turn, has resulted in further disputes between the technology companies. Some have sought to avoid paying the bulk of the licensing fees as renegotiations between those involved continue.


Complicating matters further, there is a current divide among governing bodies as to how to handle the entire situation. The U.S. strongly favors supporting the patent laws and licensing, while many European agencies lean toward viewing the licensing practices as predatory. The opinions and rulings surrounding the various points of view could ultimately shift, but the divide means that every company or organization involved is forced to play by widely differing rules depending on the market in which the technology is being made, marketed, and sold. A continuation of that rift will almost certainly only serve to provide industry players on both sides of the argument with plenty of example cases to cite in their disagreements.

With that said, the wide range of possible technologies and, in particular, the increasingly large range of IoT-related products is likely to only make the scenario worse if a solution isn't found. One particularly poignant example of how that could be the case can be found in self-driving vehicles. They will, of course, already have access to a lot of data already from the various onboard sensors and machine-learning. However, there's a case to be made that because human lives and billions of dollars of product – in the case of autonomous shipping – will be involved, they will need to be far more connected. To begin with, they will ideally be connected to every other vehicle moving around them so that some form of communication can occur and the A.I. can effectively plan out driving routes. Moreover, they will be connected to the cloud to bolster computational power, receive necessary updates, and to access whatever other features manufacturers decide to include.

The advent of autonomous vehicles also shows a divide that could ultimately prove the point of those manufacturers responsible for the technology that makes up the networks themselves. The tech found in those vehicles will absolutely require a great deal more development, research, and testing than the chipsets used in something like a smartwatch or laptop. On the other hand, Qualcomm also recently released its new pricing tiers for licensing of its 5G IP and the figures represented by percentages under the pricing would and will equate to much higher costs for auto manufacturers. That's because the overall cost of a vehicle is already substantially higher than that of a smartphone. Hypothetically, a Samsung Galaxy S8 using Qualcomm's IP in order to connect to 3G, 4G, or 5G would cost around $23.56 per unit. Using the pricing of a current smart car, such as Tesla's Model 3, that same technology would cost the manufacturer well over $1,000 per unit sold. So it seems more likely than not that this is one issue that won't be going away or solved anytime soon.

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