Introduction
Cellular connectivity is transforming the automotive industry in ways in ways once thought impossible. This year, an estimated 403 million connected vehicles will reach our roads, a number expected to rise to 645 million by 2030.[1] These smart vehicles do more than just drive: they communicate with their surroundings, improving safety, efficiency, and convenience. By exchanging information about speed, direction, and location, connected cars help to improve traffic and prevent accidents. Similarly, features enabled by fast and reliable connectivity are now part of modern cars. Some examples are advanced navigation systems, music streaming, parking assistance, hands-free calls, remote repair and diagnostics, and safety systems.[2]
These advanced capabilities are directly attributable to cellular standards, like 4G and 5G. 5G, like previous cellular standard generations, creates entirely new possibilities for mobility. For instance, 5G enhances real-time traffic updates, improves navigation accuracy, and offers more advanced driver-assistance systems, including complex safety features required for autonomous driving. Moreover, 5G positioning accuracy is one hundred times greater than its predecessor.[3] Such accuracy is vital for safe lane keeping, automated parking, and vehicle-to-everything (V2X) communication. Additionally, 5G provides ultra-low latency, with data travelling across networks nearly instantaneously. This permits car manufacturers to monitor vehicle health in almost real time and, if an issue arises, contact the driver to arrange maintenance proactively.
These crucial features for car communication, entertainment, safety, and maintenance are all made possible by standardisation. By enabling global functionality, cellular standards ensure seamless information exchange between devices, regardless of their origin or manufacturer.[4] Standardisation also enables interoperability and compatibility, ensuring that connected cars can function efficiently across different networks.[5]
To encourage wide dissemination of the standard, members commonly commit to making their patents essential to the standards available for licensing on Fair, Reasonable, and Non-Discriminatory (FRAND) terms and conditions.[6] One way to obtain a licence for essential patents is through a patent pool, such as Avanci.[7]
Avanci is the leading patent pool for licensing SEPs in the automotive sector. Its 5G licence covers a portfolio of SEPs from 72 licensors, and includes not only 5G, but also 4G, 3G, 2G, and Cellular Vehicle-to-Everything (C-V2X) technology. Licensees can access this licence through a one-time payment of 32 USD (approximately 30 EUR) per vehicle.[8] By providing a one-stop-shop platform, Avanci enables implementers to license thousands of patents from multiple owners through a single agreement. [9] This simplifies the licensing process and offers cost predictability, with fees remaining stable over the term of the agreement. To date, 30 automotive companies have taken a licence through Avanci. Despite its clear success, some companies have expressed concerns that the royalty rates may exceed what is considered FRAND. [10]
To assess whether these concerns are justified, it is first necessary to determine what constitutes FRAND. In other words, what is the economic value that SEPs covered by the Avanci licence bring to vehicles? FRAND licensing assessments are inherently complex. Further, as in many business transactions, key information exchanged during negotiations remains confidential. Therefore, this paper focuses exclusively on publicly available data related to the value consumers place on connected cars. This data is intended to serve as one of the factors that can inform the broader assessment of FRAND.
Section 2 explains the role of SEPs and FRAND in standardisation. It also highlights how patent pools offer an efficient way to license essential technologies in the automotive sector. Section 3 outlines the methodology and key concepts such as ‘cost-benefit analysis’. By comparing overall subscription revenue to one-time licensing costs, the data illustrates the value captured when connectivity is integrated into automotive products. The findings, as discussed in Section 4, will showcase the positive impact of connectivity services through the substantial revenue generated from automotive connectivity subscriptions. Finally, Section 5 concludes with an analysis and discussion on the role of FRAND and the current balanced patent system in maintaining a functional ecosystem.
[1] Placek, Martin, ‘Projected Number of Autonomous Cars Worldwide’ (Statista, 3 May 2021) https://www.statista.com/statistics/1230664/projected-number-autonomous-cars-worldwide/
[2] Sureh, Gotham.R, ‘Connected Cars: Testing the Vehicles of the Future’ (Eviden, 18 January 2024) https://eviden.com/insights/blogs/connected-cars-the-vehicles-of-the-future/ ; Automotive Technology, ‘Connected Car Technology: The Future of Automotive Connectivity’ (12 October 2023) https://www.automotive-technology.com/articles/connected-car-technology-the-future-of-automotive-connectivity
[3] Ericsson, ‘5G - the 5G Switch Made Easy’ (Ericsson, 2 October 2019) <https://www.ericsson.com/en/5g>.
[4] Bradshaw Jamie, ‘Telecommunication Standards and Protocols | Zeus Cloud’ (2023) https://www.zeuscloud.co.uk/blog/telecommunication-standards-and-protocols
[5] 4iP Council, ‘What Are IoT and Cellular Standards?’ (4iP Council, 2024) https://www.4ipcouncil.com/iot-standards/what-are-iot-and-cellular-standards
[6]Méniére, Yann. Fair, Reasonable and Non-Discriminatory (FRAND) Licensing Terms: Research Analysis of a Controversial Concept (EUR 27333, Publications Office of the European Union 2015) JRC96258, p. 3.
[8] Avanci, ‘Avanci 5G Vehicle - Avanci’ (Avanci, 11 November 2024) https://www.avanci.com/vehicle/5gvehicle/ . AS of December of March 28, 2025, $32 is equivalent to €30.4, using an exchange rate of 1 USD = 0.95 EUR.
[9] Ibid.
[10] European Commission, Impact Assessment: Annex to the Proposal for a Regulation of the European Parliament and of the Council on Standard Essential Patents (SWD/2023/124 final, 2023) https://single-market-economy.ec.europa.eu/document/download/a009816a-3b24-46c8-9c3c-fd8bd89a1380_en?filename=SWD_2023_124_1_EN_impact_assessment_part1_v4.pdf p.11
