As a leading global provider of next generation telecommunications network solutions, Huawei is a major contributor to various industry standard bodies, including 3GPP (3rd Generation Partnership Project) and 3GPP2 , Huawei is committed to the establishment of a robust, cost effective, open ecosystem for Long Term Evolution (LTE) and Services Architecture Evolution (SAE). Therefore, Huawei applauds and welcomes the sharing of IPR to facilitate the advancement of new technologies that promote healthy competition and encourage new entrants to the industry.

As a major IPR holder in LTE/SAE standards, Huawei will grant its LTE essential patents to third party licensees according to reasonable and non-discriminatory (FRAND) principles, subject to reciprocity. Effectively, Huawei will allow any company to use Huawei's essential patents to practice the standard based on reasonable compensation in consideration of Huawei's long-term substantial investment in the development of the standards.

Huawei anticipates and supports a low single-digit percentage of sales prices as a reasonable maximum aggregate royalty rate applicable to end-user devices. The rate shall be based on value added by the technology in end-user products, and competitive pressures in international markets will dictate such royalty rates. Huawei believes it will hold 15-20% of all essential patents relate to LTE standard, therefore, a royalty rate with some flexibility, but not to exceed 1.5%, is expected. And this rate is negotiable in bilateral negotiations, subject to reciprocity provided by other party.

Huawei's business philosophy is to maximize value for customers by providing excellent telecommunications network solutions and services, continually focusing on our customers' challenges and needs.

Huawei actively participates in 83 international standardization organizations including ITU, 3GPP, 3GPP2, OMA, ETSI and IETF. Meanwhile, Huawei's representatives have been elected to positions in various organizations, including vice chair of ITU-T SG11, chair of 3GPP SA5 , vice chair of RAN2/CT3, vice chair of 3GPP2 TSG-C WG2/WG3, vice chair of TSG-A WG2 ,chair of ITU-R WP8F Technical Group , vice chair of OMA GS/DM/MCC/POC , Board Member of IEEE CaG etc.

Through our active participation in these groups, Huawei is committed to realizing the vision of network convergence, where communications and networking services are genuinely merged together.

By September 2008, Huawei had filed 32,822 patent applications. By the end of 2007, we had held 7% (152 patents) of the world's UMTS essential patents, ranking amongst the top five in the world.