[M4IF Discuss] Broadcasters may balk at 'use fee' for MPEG-4 video

[Craig Birkmaier]

Broadcasters may balk at 'use fee' for MPEG-4 video
February 12, 2024 12:00am
Source: CMP Media Inc.
ELECTRONIC ENGINEERING TIMES: Paris - Details of the licensing 
structure for the MPEG-4 visual digital compression standard are 
prompting anxiety attacks among wired- and wireless-service 
providers, content owners, developers and users.
At issue (see Feb. 4, page 2) is whether the licensing scheme's "use 
fee"-set at 2 cents per hour based on playback/normal running time 
for every stream, download or other use of MPEG-4 video-will trigger 
or hinder MPEG-4's broad adoption relative to proprietary streaming 
and downloading video compression technologies. Among the companies 
with proprietary schemes are RealNetworks, Microsoft Corp. and Apple 
Computer Inc.
The global wireless industry, which has already committed to using 
MPEG-4 for third-generation handsets, is not expected to find the 
licensing terms objectionable. But large Internet service providers, 
cable/satellite operators and Webcasters will likely balk at the fee, 
sources warned.
Under the licensing scheme, a service provider or content owner that 
disseminates MPEG-4 video data and receives remuneration for video 
services would be asked to pay the use fee, which would apply to 
pay-per-view, subscription, advertiser/underwriter-supported and 
similar services. The royalty would not be subject to a cap.
Essential-patent holders to the MPEG-4 video technology say they have 
structured the licensing scheme to spread the royalty burden among 
many, thus keeping royalties per encoder and decoder low enough to 
encourage proliferation of MPEG-4 products. "We make no distinctions 
between wireless and wired services," said Larry Horn, vice president 
of licensing and business development at MPEG LA LLC, an independent 
agency that represents MPEG-4 video licensors. "Our goal is to stay 
in touch with the flow of commerce.
"We don't intend to take money where money isn't, but patent holders 
want to get paid where money is made by service providers or content 
owners [based on delivery of MPEG-4 video]."
Others, however, questioned whether the licensing terms are practical 
for all markets from wireless to broadcast.
"We are very happy to finally see license holders announcing a 
license program," said Rob Koenen, president of the MPEG-4 Industry 
Forum. M4IF, representing more than 100 companies from various 
industries in North America, Europe and Asia, addresses MPEG-4 
adoption issues, including interoperability and certification. "This 
is hard evidence that MPEG-4 is gathering momentum. It is great that 
18 companies have reached this long-awaited consensus."
But Koenen cautioned that M4IF received widely varied reactions to 
the licensing program, ranging from "It sounds reasonable" to "It 
will never work."
He called the terms "generally realistic, as we don't expect 
everything to be free these days. We also think that this would 
particularly work well for mobile phones; U.S. 25-cent royalties per 
decoder and per encoder sound reasonable. But we are not sure in a 
couple of instances-one-to-many Webcasting or broadcasting, for 
example-whether the licensing terms are structured in a way to enable 
[those industries'] business models."
An industry source who spoke on the condition of anonymity said the 
use fee is intractable for the broadcast business model. "Imagine how 
much in royalties a cable company such as Comcast would have to pay, 
if the use fee is set at 2 cents per hour for its 8.4 million 
subscribers, for example, for every video stream compressed in MPEG-4 
they deliver. You do the math."
The Internet Streaming Media Alliance, which is seeking adoption of 
the MPEG-4 standard, met last week to discuss the implications for 
its members but did not respond to requests for comment by press time.
Cable and satellite operators are not yet using MPEG-4 technology. 
They are said to be taking a hard look at the standard, since it 
would allow them a more efficient use of bandwidth as well as added 
capabilities in object-based interactivity.
The wireless industry, meanwhile, is broadly expected to be amenable 
to the proposed terms. "We believe that the existence of a clear 
structure for licensing will dispel many of the misconceptions about 
MPEG-4 and pave the way for widespread adoption," said Joel Espelien, 
general counsel and vice president of strategic relationships for 
PacketVideo Corp., a leading MPEG-4-based technology provider for the 
wireless industry.
Inherent value to user
Although cost is always an issue, he said, PacketVideo believes the 
use fee is not significant for wireless devices. "Remember that video 
in the mobile context is quite different than watching television: 
The typical clip may be in the range of 30 seconds or less." Given a 
usage fee of 2 cents an hour, that works out to approximately 1/60 of 
1 cent per clip. PacketVideo believes other cost components of 
delivering service, as well as the inherent value to the user, "far 
outweigh this amount," Espelien said.
Asked if the new MPEG-4 video licensing structure is sufficiently 
competitive with other video compression and streaming formats, 
Espelien said, "The wireless industry has a long-term commitment to 
open standards and has repeatedly demonstrated a willingness to pay 
license fees associated with specific standards. We do not believe 
MPEG-4 is any different.
"This license fee is unlikely to cause the industry to go against 
both history and common sense and abandon standards in favor of 
proprietary formats controlled by a single vendor."
There nonetheless appears to be confusion within the industry, 
including among some large players in the streaming-media market, 
about how the MPEG-4 licensing structure and patent-pooling scheme 
may work. One source, who asked not to be identified, said that if 
none of the MPEG-4 patents covers servers or streaming, the patent 
licenses might be unenforceable. "Conditioning the grant of a patent 
license upon payment of royalties on products which do not use the 
teaching of the patent amounts to patent misuse," he warned.
But sources close to the MPEG-4 patent holders stated that such a 
view is based on faulty assumptions-first, that MPEG LA's license is 
the only one; second, that the patents somehow would not support 
payment of royalties and third, that the patents do not support 
infringement suits against unlicensed streaming users.
There can be no misuse on the basis of MPEG LA's license, the sources 
said; it is voluntarily offered for the convenience of the market. 
"If MPEG-4 users would prefer to negotiate a different arrangement 
directly/bilaterally with the patent holders for coverage under their 
patents, they are free to do so," said one.
Moreover, the sources argued that it is reasonable and appropriate to 
measure the value of the patents based on the duration of MPEG-4 
streams in the context of this license agreement. Further, "the 
streaming of MPEG-4 streams directly or indirectly infringes the 
patents in the portfolio, and therefore, patent holders have the 
ability to bring suit against unlicensed users," said one source.
Koenen said M4IF believes the terms presented by the MPEG LA warrant 
further clarification. "Those details will determine whether the 
program adequately supports existing services, such as mobile use, 
broadcasting, media distribution and Internet streaming, as well as 
radically new MPEG-4 services."
M4IF has encouraged licensors to engage in open discussion with the 
rest of the MPEG-4 community. Koenen said he was "confident that 
licensors are ready to listen to the arguments before the licensing 
details are finalized." The open discussion list is at 
discuss   lists.m4if.org.
http://www.eetimes.com/
Copyright c 2002 CMP Media LLC
By Junko Yoshida
<<ELECTRONIC ENGINEERING TIMES -- 02-11-02, p. PG1>>
<< Copyright ©2002 CMP Media Inc. >>
-- 
Regards
Craig Birkmaier
Pcube Labs