itvt

By Anthony Smith-Chaigneau and Paul Bristow, Osmosys S.A.

Via Licensing’s recent attempt at resolving the MHP Patent Pool Licensing Fees (http://www.vialicensing. com/news/via_pr_0603_MHP.html) has once again resulted in a negative reaction from many countries and companies in the television industry, which have launched or are poised on the selection of the "DVB-MHP-Open Standard Middleware" for their future Interactive Television requirements. This appears to be another "timely release" that has done quite the opposite to The Patent Pool Coordinators’ stated intention which is to "promote wide adoption of MHP by the market!"

The initial Patent Pool announcement on July 13th 2005 was categorically and unanimously rejected in a collaborative Joint Industry initiative by all stakeholders in MHP. Clearly this latest announcement shows no consideration of the economic state of the MHP STB, MHP iTV Applications and MHP Services market or the effect of these new and onerous fees. This letter addresses those issues.

Following the announcement, France’s DTT sector has categorically stated that it will not select MHP under this regime and Spain has stated that these terms will result in killing the MHP standard in its country. Italy is strongly opposed and has also stated that this will stop any further roll-out of MHP, which now stands at around 4 Million MHP units. With respect to the status of the present market, the European Union’s conclusions in the "Com2006 37 Final" Communication, issued on the 2nd February 2006, are very premature. The EU will not see a cohesive industry-led roll-out of MHP whilst the MHP Licensing issue goes unresolved. This Patent Pool initiative will, as it stands, only serve to harm the existing market and inhibit any uptake and roll-out of new iTV services and E-Government services. This will create a stagnation effect in the industry including the new IPTV standardisation efforts and will impact other mobile systems such as DVB-H.

What the MHP Patent Pool members may need reminding of is that the competition for MHP devices is not other devices carrying Interactive TV middleware, be they "Standardised" or "Proprietary," but NON-INTERACTIVE "Zapper" set-top boxes. Furthermore the present regime of additional costs levied upon Broadcasters, from 2009 onwards, as seen by the reaction of France and Spain, is likely to cause them to give up on iTV services altogether, concentrating their resources on linear Digital TV only and therefore zero revenue to the Patent Pool.

This situation is yet another stealth-like "killer blow" to the hopes of an industry aiming to rectify the middleware problems of yesteryear and the very reason MHP was invented. By this form of Standardisation Hold-Up via IPR Hijacking, the New Television landscape of the future cannot flourish! Business growth will be severely affected across the iTV sectors in Europe creating bankruptcies and mass unemployment and the EU’s Information Society goals cannot be achieved with such a convoluted and fragmented/weak Interactive Digital TV landscape. We can only conclude that the Patent Pool members either a) do not understand the interactive television industry or b) are actively trying to kill the MHP standard for other business or financial reasons.

The lucrative business of patents and patent pools is known to be of a much higher value in today’s high-technology and software dependent world. Given the very low profit margins in the individual but "core technologies" incorporated into solutions created by specification bodies, these patents will be vigorously pursued regardless and this will, as previously highlighted, be to the detriment of the initial intention of creating this very industry "Open-Standard."

We do not believe that the Licensing Fees as proposed are "FRND." Some of the reasons for this are set out below:

• Fair–Is it fair charging for unknown IPR which may cause Content and Service Providers to unwittingly infringe patents?
• Reasonable–Should IPR Patent Pool costs be more than the Java licensing which is the core of the technology employed in the specification?
• Non-Discriminatory–Is it non-discriminatory when arbitrary fees are set on arbitrary points in the MHP value chain–e.g. FTA-THH covered by the Broadcaster whether or not those people have a device or are actually using the technology?

In more detail, over and above the Broadcaster fees, the lack of consideration of the economic factors relating to the $2.00 Fee levied on DTT MHP Receivers is another case in point. A DTT MHP Receiver presently retails for as low as €70, of which €1.70 ($2.00) is approximately 2.5% of the retail value alone, and this Patent Pool fee does not take into consideration the other IPR obligations in the receiver, i.e. MPEG2 at $2.50 and DVB-T at €0.75, plus Sisvel and Thomson IPR, thus making the product an uninteresting product in a European manufacturer’s portfolio. Typically add-on Java-based software IPR licenses are in the realms of cents versus dollars, therefore we are further confused at the level of proposed pricing as MHP is merely additional technology components added to a base core that does not feature in this Patent Pool.

We believe that a reasonable FRND fee of no more than $0.75 cents/device and no Applications or Service fees to any MHP Broadcasters will bring many more tens of millions of dollars to the patent pool than the current proposal, which will result in the end of MHP Services and no long term ($0.00) revenue.

In another unusual twist, the MHP Patent Pools’ "secretive methodology" is in complete contrast to other industry bodies, including the DVB, which created this particular specification. Openness is essential in this complex industry as discussed in "Navigating the Patent Thicket: Cross Licenses, Patent Pools, and Standards Settings" by Carl Shapiro (http://haas.berkeley.edu/~shapiro/thicket.pdf). Most other Patent Pools, from MPEG2 onwards (www.mpegla.com), publish the full list of companies participating in the pool and the essential patents that are being licensed against the particular standard or technology in question. This secrecy means that as an MHP middleware implementer, we have assumed that the independent assessor of Essential IPR looked at IPR Essential to MHP Implementations (The MHP Standard in question is a Receiver Implementation). We have concluded however that it is not guaranteed or known whether the creation of applications and services necessarily uses any or all of those patents in the pool! This ambiguity cannot be blindly enforced upon the applications and service creators (in this case named as Broadcasters) who are being forced to pay as of 2009. In other words, IPR that is essential for the implementation may well not be essential for the applications to run on top of that implementation. Without visibility of the Essential IPR in this Patent Pool this issue will never be resolved. We therefore call upon the Patent Pool and Patent Pool coordinator to issue the full list of Patent Holders and those Essential Patents included in the MHP Patent Pool in order that the industry can move forward to a successful and meaningful conclusion that is in the interest of all parties.

As background to the aforementioned issue the DVB Commercial Requirements Blue Book A062, published by the DVB Consortium (http://www.dvb.org) in 2000, clearly states in section 2.12 para.3 the following: Applications shall not carry any MHP royalty from the owner of IPR used in the MHP specifications. Members of the MHP Patent Pool who are equally Signatories of the DVB Memorandum of Understanding were well aware of this requirement and are we believe morally in breach of the rules of the DVB.

The call for Patents as per the DVB Press Release of 3rd September 2001 expected a resolution of the Patent Pool Licensing in early 2002. 4 years on and well into the successful volume launch of MHP, we still have no resolution of the licensing costs and, by virtue of the tariffs requested, this clearly looks like a case of IPR Hijacking that is now endangering the wide adoption of MHP!

Note: [itvt] received this open letter just as we were going to press with this issue of the newsletter. According to its authors, a copy of the letter has been sent to EU commissioner, Viviane Reding, the European Broadcasting Union, the DVB and "all other parties involved in this industry." Geneva-based Osmosys specializes in developing MHP and OCAP solutions. Anthony Smith-Chaigneau is the company’s VP of business development and marketing, and Paul Bristow is its chief technologist. Smith-Chaigneau was formerly head of marketing and communications for the DVB Consortium, and is the co-author of "Interactive TV Standards: A Guide to MHP, OCAP, and JavaTV" (published by Focal Press). Bristow chairs the DVB Consortium’s PVR sub-group.

and the

http://blog.itvt.com/my_weblog/2006/01/_announcing_the.html

Click http://www.itvt.com to subscribe to our free email newsletter, which contains all the news stories you see on this Web site, and additional breaking news and scoops, in-depth features, interviews, screenshots, videos, and other exclusive content you will not find anywhere else.