During the next dozen years, according to Informa, the mobile device industry could spend between $80 and $100 billion in royalties on patents held by companies such as Qualcomm, Nokia, Motorola and Ericsson. Qualcomm, a major holder of 3G mobile phone patents, has set its royalty rate between 4.65 percent and 6 percent. The report concluded that if other holders of essential intellectual property charge similar rates, the total royalty rate could be as much as 25 to 30 percent of the device vendor's selling price.

In January 2003, the independent 3G Patent Platform Partnership (3G3P) formed, and overcame the potential objections of antitrust authorities in all major countries, to suss out which patents are technologically essential for the manufacture and operation of third generation (3G) mobile communication systems. The purpose of 3G3P is to certify which patents are essential for manufacturers to license. Players with majors patent portfolios in the area, such as Nokia and Ericsson, opted out of joining 3G3P, so as to independently pursue licensing agreements, playing poker for a bigger share of the pot.

"Second-tier equipment and handset manufacturers will be severely impacted" by patent royalties, Informa said in a written statement. What defines manufacturers as second tier is lack of patents.

This 3G report provides further evidence of my long-standing theory relating to advanced economic societies of a natural trend towards oligopolization owing to economies of scale, whether in manufacturing, marketing (including the network effect), or intellectual property; this aside from political influence, which drives dominance in many lesser developed countries.

As to pointing the finger at patents, as Informa does, of being the culprit in stifling innovation, Informa needs a firmer grounding in patent economics. 3G phones are the most technologically advanced telecommunications devices, precisely because companies invested in research and development, knowing that the fruits of their efforts could be paid back through patent licensing. Thanks to patents, those who failed to pursue technological innovation cannot freeload off those who did.