Innovaon and Development: Licensing and an&trust 28 October 2016 Dina Kallay Director, Competition & IP Ericsson [email protected] views expressed are those of the author and do not necessarily represent the views of Ericsson WHAT DOES THE EVIDENCE SHOW? Compe&&on and Globalizaon | 28 October 2016 | Page 3 Where there is a competitive problem Typical Consequences include: Rising prices Stagnant innovaon Limited market entry / Fluctuaon Rising prices? § Average mobile subscriber cost per megabyte (2005 - 2013) : -99% § Smartphone: USD 40 (July 2016 → as low as USD 4) § Network infrastructure cost: - 95% Boston Consul*ng Group, The Mobile Revolu*on, 2015 Stagnant innovation? § Data-transmiYal speeds from 2G to 4G: 12,000 &mes faster § Health (remote surgery) § Economy (remote educaon, companies based on connec&vity) § Security (<interrup&ons, <latency) § Since 1992 (GSM) through end of 2015 market grew to 7.6 billion mobile connecons Exclusion? Limited market entry? § End of 1990s: 85% of GSM market: Ericsson, Nokia, Siemens, Motorola and Alcatel § 2016: if we look “only” at a par&al list of mobile phone manufacturers: Apple, Samsung, Huawei, BlackBerry, Google, Xiaomi, Blu, Foxconn (FIH Global), LG, Pantech, Acer, ZTE, BQ, GeeksPhone, Gradiente, Posi*vo, DataWind, Amoi, BBK, Coolpad, Cubot, Gfive, Gionee, Haier, Hisense, Konka, Letv, Meizu, Qihoo 360, Wasam, Technology Happy Life, Ningbo Bird, Smar*san, Zopo Mobile, Lenovo, Jablotron, Verzo, Jolla, Archos, Wiko, Videocon, Groupe Bull, MobiWire, AEG, Grundig Mobile, Telefunken, Tiptel, Celkon, IBall, Intex Technologies, Karbonn Mobiles, Lava Interna*onal, LYF, Micromax Informa*cs, Onida Electronics, Ringing Bells, Spice Digital, Xolo, YU Televentures, Nexian, Evercoss, MITO, Polytron, Advan, Brondi, NGM, Olive, Onda Mobile Communica*on, TelitKyocera Communica*ons, NEC, Panasonic, Sansui, Sharp Corpora*on, Sony Mobile Communica*ons, DoCoMo, Just5, M Dot, Ninetology, Kyoto Electronics, Lanix, Zonda, Fairphone, John's Phone, Philips, Koryolink, QMobile, Voice Mobile, Advance Telecom, TCT, Dell, Microsob, etc: Exploitation? Royalty stacking? Mobile SEP Licensing Fee Revenues and Royalty Yields on Global Handset Market Yields are total licensing fee revenues lump sums and running royal&es as a percentage of USD 410 billion in total global handset revenues Keith Mallinson, WiseHarbor, on cumulave mobile-SEP royal&es. For IP Finance, 19th August 2015 hYp://www.wiseharbor.com/pdfs/Mallinson%20on%20cumulave%20mobile%20SEP%20royal&es%20for%20IP%20Finance %202015Aug19.pdf Trends in highly compeve increasingly mulDnaDonal markets › Compe&&on complaints as a “hold out” strategy › Internaonal forum shopping amongst naonal an&trust agencies › Misrepresen&ng naonal compe&&on law to other jurisdicons › Solici&ng support from own naonal compe&&on agency that is not necessarily grounded in compe&&on evidence/analysis › Exploi&ng newer compe&&on agencies’ lack of intellectual property exper&se and industry prac&ce to spread misinformaon Top 10 MYTHS/misconcepDonS re patents & standards (1) T1 That F/RAND assurances are mandatory or aach automacally R F/RAND assurances are voluntary T2 That F/RAND assurances are in place only for the benefit of future technology-users implemen&ng the standard R They are equally in place to assure adequate compensaon for the contributors developing the standard [and they assure access between the original contributors] T3 That a F/RAND assurance is a commitment to license R F/RAND assures access (= prevents exclusion) Access ≠ license because of the exhaus&on doctrine Top 10 MYTHS/misconcepDons re patents & standards (2) T4 That technology inside standards always belongs to those ac&vely par&cipang in their development R No….. especially in SDOs that crib from other SDOs T5 That when a standard is developed, there are always similar solu&ons/technologies suggested that don’t make it into the standard R No… and some&mes similar technologies are proposed for parallel standards that fail in the marketplace T6 That companies are always willing to give F/ RAND assurances R They usually do, un&l the standardizaon eco- system begins to break down, e.g. when F/RAND is not defined by a consensus process. See for example…. DECLINES to provide F/RAND assurances Decline in non-duplicate RAND LeYers of Assurance for IEEE Standards Top 10 MYTHS/misconcepDonS re patents & standards (3) T7 That patents need to be individually declared to SDOSs as essen&al (i.e. declared by patent number) R Many SDO policies allow for “blanket declaraons” for all patent that may become essen&al to a standard T8 That contribu&on of cung-edge technologies into robust standards will con&nue R No… e.g. standard development at IEEE is slowing down Somebody has to be willing to invest/contribute T9 That standardized technology is valuable only because it is part of a standard R No… in ICT it is oren valuable because it’s amazing Top 10 MYTHS/misconcepDonS re patents & standards (4) T10 That standards are mostly about interoperability R ICT standards are typically performance standards See hYps://www.youtube.com/watch? v=3wczxzYMT-U QuesDons? Comments? Dina Kallay Director, Compe&&on & I.P Ericsson [email protected] .