Verizon Wireless does U-turn and pays Broadcom to import EV-DO mobile devices

The unending patent saga between Broadcom and Qualcomm takes yet another twist as Verizon Wireless has agreed to pay Broadcom $6 per handset, up to a maximum $40 million per quarter and a lifetime maximum of $200 million in order to be able to import EV-DO handsets into the USA.

Verizon Wireless had previously supported Qualcomm in seeking a reversal of the ban, arguing it would prevent the latest handsets from getting to U.S. consumers. Qualcomm is pursuing a stay of the import ban and if that doesn’t work, a Presidential veto. As part of the deal, Verizon also will drop this effort to overturn the ruling.

I did a quick back of the envelope calculation: at $6 per device, $40 million covers 6.6 million mobile phones. That’s 27 million mobile phones for the year. Verizon Wireless has about 60 million subscribers, and lets say that a typical subscriber changes phones every 2 years. Thus Verizon sells about 30 million mobile devices per year.

The move is a blow to Qualcomm, but it looks like a pretty even deal for both Verizon and Broadcom, with some upside protection for Verizon Wireless. The $200 million maximum should be covered in 5-6 quarters, long enough time for Qualcomm to develop a workaround.