LTE patents could lead to Nortel's resurgence

The realization that Nortel held on to the majority of its patents in the sale of its CDMA wireless business to Ericsson has heightened speculation the company could emerge from bankruptcy as a licensee of its valuable LTE patent portfolio.

Providing some worth to the IPR assets, analysts at JP Morgan have estimated Nortel could receive ongoing royalty payments valued at around €2 billion by licensing its patents to other LTE technology developers, albeit that the number of patents presently seems unclear --ranging from 1,300 to over 5,000.

The idea of a resurgent Nortel was given further impetus when the company announced last week an extension of protection from Canadian creditors, and that it would continue to “assess other restructuring alternatives”. These comments have triggered supporters to campaign for a smaller, but profitable mini-Nortel to emerge from Chapter 11 with its respected name intact -- assuming that sufficient funds from the sale of its other businesses pays off creditors to the satisfaction of the US and Canadian bankruptcy courts.

Those wanting to believe in the resurrection of Nortel also point to the increasing interest by RIM to acquire the LTE assets -- few could believe that the BlackBerry maker wanted to diversify into infrastructure, or that its protestations of patriotism and a Canadian solution would be best for Nortel. What RIM clearly wants are the LTE patents that could create a strong expansion of RIM's existing licensing and patent activities, boosting its position in the LTE value chain.

This model of building a hugely successful business based upon wireless IPR has been aptly demonstrated by Qualcomm -- a company that came close to failure until it recognized the intrinsic value of its engineering discoveries.