All the phones contain Qualcomm IP so it's a variant of what Microsoft did. With FRAND licensing, you can challenge the royalty rates in arbitration or court.

All the phones contain Qualcomm IP so it's a variant of what Microsoft did. With FRAND licensing, you can challenge the royalty rates in arbitration or court. Let's say that a court would set the royalty rate at $5 and we somehow know that and let's rewind a couple years before Intel was seriously making modems. LG comes up to Qualcomm and says, "we need those Qualcomm modems for our $650 flagship phone, but we're happy using non-Qualcomm lower-end modems in our cheap phones." Qualcomm says, "Great! We'll sell you the chips for $N per chip and you agree that you'll pay patent royalties of $15/phone." LG could retort, "but the patents are only worth $5/phone and you agreed to FRAND licensing! We'll see you in court!" Qualcomm confidently says, "well, we might be required to FRAND license you our patents, but nothing requires us to sell you chips. If you challenge our preferred $15 royalty rate, good luck selling a $650 phone with a low-end modem in it. You'll be paying $5 royalties, but you won't have a flagship phone and those are the only phones you make money on." Because phone manufacturers had no other high-end modem option, they had to agree to Qualcomm's preferred royalty rate rather than a true FRAND rate that a neutral third party would say is fair. If they went without Qualcomm's modems, they could make low-end phones with low-end modems, but the money is in the flagship phones. At the same time, no company had enough incentive to invest in a high-end modem. It would take many years and many billions to get close to Qualcomm's modems and they might still stay one step ahead. Plus, all that royalty money could be poured into making sure their chips were always a step ahead. If you're thinking about competing, what's your business model? Pour billions into a few generations of LTE chips that no one buys in the hopes that you'll produce a generation close enough that customers will dump Qualcomm? Even if they buy your chips, unless they're willing to write-off Qualcomm, they're still on the hook for the higher-than-fair royalties. If Apple didn't force the issue with Intel, nothing would have happened. Apple made a big bet there that they could break Qualcomm's hold. It's different from Microsoft's case since the devices without Qualcomm chips would still have to pay Qualcomm a royalty, just a lower one that was either negotiated or set by a court/arbitrator. Imagine if Microsoft owned the BIOS and had committed to license it to anyone under fair, reasonable, and non-discriminatory terms of $1. Then they turned around and said, "if you want to run Windows on any of your computers, we'll only sell you Windows if you pay $20 for the BIOS on all the machines." If you cut Windows out of your company entirely, you'd still need to pay Microsoft the $1 for the BIOS. But you couldn't run a PC company without Windows - just as you couldn't be a phone company without Qualcomm modems. Technically, nothing requires them to sell you Windows or sell you modems. FRAND only requires the BIOS/IP portion. By tying the two together, they can make it so that you pay elevated rates because you can't forgo the Windows/modems on all your devices. To paraphrase Rick and Morty, that just sounds like what Microsoft did with an extra step.