This was a big breakthrough, both for the consumers who quickly embraced the technology and for Qualcomm, which held a patent on the technology and consequently established an immense revenue stream from the growing cellular market.
But, as often happens when control over a powerful technology is vested in a single entity, Qualcomm has wielded its baseband processor patent in anticompetitive ways to protect its revenue stream.
Though Qualcomm’s baseband processor is still a part of cellular phones, it’s a small component relative to the massive computing power and additional features of today’s smartphones.
Nevertheless, Qualcomm is leveraging this essential patent to distort the market for new smartphones by forcing companies that need to license the technology into paying unfair licensing fees and blocking competitors from any size from getting into the business.
As new technologies develop, industry-wide organizations often create standards that manufacturers can follow to ensure interoperability and promote efficiency.
When a standard includes a patented technology that is deemed essential for conforming to the standard (an SEP), the patent holder must license the patent under terms that are fair, reasonable and non-discriminatory (aka “FRAND”).