Sun’s OMS Video codec work was mentioned in Matt Raible’s notes from the “The State of the Web 2009” session at this week’s Web Directions North conference:

“Very specifically, there’s no royalty-free codec for video. This is nothing that standards bodies can solve. The most promising is that Sun Microsystems is developing an open codec and spending money to make sure they’re not infringing on patents.”


Also, “open video codec” topped the panelists’ biggest-thing lists:

“After each panelist talked, John asked them questions about what’s the biggest thing they’d like to see implemented by everyone (open video codec, geo location api were the winners).”

(emphasis added)

The whole write-up is worth reading here.

Updating market information in this post on the release of the royalty-free OMS Video draft specification, here are data points about MPEG released at the MPEG 20th Year Anniversary Commemoration in Tokyo in November 2008.

Importantly, Lawrence A. Horn, CEO of the license administration company, affirmed the:

“Freedom of Licensors and Licensees to develop competing products and standards”

(Note: the US Department of Justice required as much in its 1997 antitrust review of proposed MPEG patent licensing:

”We understand this to mean that licensees are free also to develop technological alternatives to the MPEG-2 compression standard.’)

Specific market info:

  • “~ 3.5 Billion MPEG-2 Devices
  • More than 1 million people working 40 hrs/week, 52 wks/year for 15 yrs (1994-2008)
  • ~ 40 Billion MPEG-2 Video (DVD) Discs
  • $2.5 Trillion in MPEG-2 Product Sales
  • In 2008 each of the world’s ~ 6.7 billion people will spend an average of $66.46 on MPEG-2 product”

Some interesting observations were made by Leonardo Chiariglione, the convenor of the MPEG committee:

  • “the MPEG-4 Visual licensing killed half of the standard
  • The “use fee” licensing model facilitated the widespread use of proprietary codecs
  • In the second half of the 1990s MPEG repeatedly invited ITU-T to collaborate on MPEG-4 Visual. The lack of collaboration produced the alternative H.263 Recommendation, similar – but not quite – to MPEG-4
  • 20 years after MPEG was born There are just too many video codecs…
    Compression technology has advanced
    The entry level to make video codecs is getting lower
    Many devices have to support many different codecs”

All the presentations of the commemoration are located here.

“Patent and legal issues” topped, at least numerically, the community goals developed at the recently-held Foundations of Open Media 2009 workshop, a write-up of which was just posted here.

Also noted in “Patents and the bright future of open media codecs”, the FOMS group has set aside 15% of its budget to support patent analysis.

For those who haven’t seen it, check the interesting article “Patent Status of MPEG-1, H.261 and MPEG-2” and associated wiki here.  Comments on calculating expiration dates can be found in the responses to article here.

To be blunt:  America has the world’s most overpriced, antiquated, under-performing and anti-convergence digital TV system, and yet another delay in transition will create yet another round of inevitably-necessary but paper-over-the-problems government subsidies to highly questionable interests of highly doubtful economic value to enfranchise millions of consumers into the digital TV transition who should never have been disenfranchised in the first place.

All for technology that could be much less expensive, indeed free!

So how could this possibly be a good thing?

For one, it might spark a much-needed rethink of how we got here in the first place and a consideration of a better path forward.

Rethinking digital TV is no doubt a mind-bendingly complex topic fraught with peril, and one that will require hunting into the very nature of good government oversight.

A hunt for good government oversight of commerce — a very timely topic on many fronts, isn’t it?

So here are three start-the-hunt topics, hints to further analysis, really, I’d suggest to anyone looking into digital TV:

  • – “vendor capture”
  • – “misplaced Americanism”
  • – “out-sourced justice”

“Vendor Capture”

One hint at the need for broader rethink came in pledges last week by the new acting FCC chairman Michael Copps for more openness at the FCC to

“make the FCC more transparent, open and useful to the stakeholders that we serve. And when I say stakeholders, I include not just the industries that we regulate but, more importantly, all citizens—and here let me once again underline the word ‘all.'”  (emphasis added)

Such a pledge to openness taps into a vein of “Reforming the FCC” projects sprouting up.

Of course, vendor capture by interested interests is nothing new for regulatory agencies or even standards groups that purport to represent broader interests.

Indeed, vendor capture is a timeless occupational hazard even when challenged with the best of intents.  But recognizing and controlling vendor capture seems to have been an un-exercised muscle in the DTV regulatory community, particularly in the deregulation orthodoxies of recent decades.

One saga of vendor capture worth reexamining in light of downturn economics is the FCC’s decade long (5744 filings to date!), epically byzantine “separable security” proceeding for cable TV.  Like the DTV transition, this proceeding lives on in an odd “convergence-what-convergence?” bubble of regulating each industry sub-segment in isolation and has only recently begun to ask such basic questions as “whether there are technological solutions that are network agnostic and deployable across all MVPD [Multichannel Video Programming Distributor] platforms”.

“Misplaced Americanism”

But before a rush to blame “someone” devolves to easily-blamed “usual suspects” — like non-voting foreigners — take a look closer to home.

The CUT FATT group has sounded a very important alarm about the patent royalties fiasco that is dogging the US digital TV transition, and has connected the dot to the delay in DTV transition:

“Delaying the DTV transition date is the first step to protecting consumers, but is only part of the remedy needed,” …“Large foreign corporations that bought U.S. patents are exploiting the transition to make outrageous profits off digital television sales to consumers.”

Now such a statement read superficially might be misconstrued as a call to “misplaced Americanism”  (big foreign corporations bad etc. etc.) — which would miss the point that it is American consumers who ultimately pay.

Rather, look back to a well-known anecdote from the “Grand Alliance” that was tasked in the mid-1990s with recommending the digital TV system to the FCC in the first place, whose decision making process was later neatly summarized in a news article after ensuing litigation:

“half of the voting members, MIT and Zenith, of the Grand Alliance were receiving monetary compensation from Dolby as a partial result of their vote for Dolby … Dolby’s selection came after it offered another of the four voting members of the Alliance’s Technical Oversight Group, Zenith Electronics Corp., a 25 percent discount on patent royalties in exchange for Zenith’s vote”

MITThe scandal of relevance isn’t whether the decision making was rigged or not (though the jury in the subsequent contract dispute concluded Dolby indeed owed MIT for a secret agreement in which MIT fell on its sword in voting against its own technology in favor of Dolby) — it is the more subtle “vote American” context that some used to rationalize the situation overall and was captured in the same news article:

“Jae [the MIT representative on the Grand Alliance] was very pro-American,” … “He would naturally favor an American system over a foreign system.” …“Jae knew he supported American solutions, so that deal was consistent with that,” … “If it hadn’t been consistent, I don’t think Jae would have made the deal.”

An interesting justification indeed for one American institution (MIT) to vote for an American institution (Dolby) in a backroom deal that was to benefit both.

“Out-sourced Justice”

Another aspect of the curious MIT-Dolby dispute was the question of whether there was a conflict of interest at all, since the Grand Alliance was only recommending a joint decision to the FCC, not actually making the final decision.

“I can see how it would be perceived as a conflict of interest,” Gast said. But the Grand Alliance “wasn’t a decision-making body,” it was a group of companies joining together, at the request of the FCC, to make a unified proposal, she said.

Sounds reasonable enough, until one fast-forwards a few years and considers such statements in the CUT FATT filing to the FCC as:

“The FCC does not know what license terms ATSC patent holders demand or how much consumers ultimately pay for the DTV standard the FCC chose.”

If that sounds like a case of “out-sourced regulation” — consider it might be even more — a case of “out-sourced justice”.

Patent pool licensing practices, which also began to be authorized in the same time frame by the US Department of Justice after a long period of at most skeptical legitimacy, have begun to beget “To Join or Not to Join” trolling:  “as many as one half to two-thirds of the eligible firms choose not to join a patent pool”, engendering a “myth of essentiality” practice of outsourcing patent pool evaluations to so-called “independent contractors” paid by the very same patent holders.

But more on that topic another day — in the meantime: happy hunting!

Open video — specifically open, royalty-free video and media formats — got a boost when Mozilla Foundation announced yesterday it is providing $100K to support development of improved Theora encoders and more powerful playback libraries.

That’s great news, hugely deserved, and even TechCrunch took note. Congratulations!

Now venture capitalists, enterprises, governments, education & research facilities and others should take note, too — Mozilla is onto an important unmet need and critical missing link, made even more important by these economic times.

Check out  BBC’s Dirac and Sun’s OMS Video, too — there’s a lot more than $100K of work to do!

American consumers will purchase more than 45 million DTVs
and will be overcharged more than one billion dollars in the
crucial digital transition years of 2008 and 2009 alone”

What?  The transition to digital TV is a massive overcharging scam?

That’s the gist of a filing last week to the FCC by two US-based TV makers, upstart VIZIO and Westinghouse Digital Electronics, in an aptly named coalition, CUT FATT.

The filing has caught good timing — a delay in the long-set-in-stone turn-off date of analog TV is being debated in Congress, with various industry interests weighing in.

But the filing isn’t about analog shutoff glitches, it’s a proposal to address the broken patent licensing situation that has made the US’s digital TV system uncompetitive in the global marketplace:

“the total cost of rampant overcharging has already dwarfed the entire transition subsidy provided through the National Telecommunications and Information Administration converter box program”

“the FCC’s 1996 policy of ad hoc enforcement to prevent DTV price gouging by patent holders is now hopelessly inadequate.”

And citing the FCC chairman’s own response to a 2008 congressional inquiry:

“Chairman Kevin Martin conceded that the FCC is shockingly ignorant of the technology the government forces Americans to buy…. The Consumer Electronics Association and several other parties have alerted the FCC to problems involving DTV patent licensing practices, but the FCC has not yet taken any action to investigate alleged abuses or impose appropriate remedies.”

Ouch — harsh light indeed.

Significantly, VIZIO and Westinghouse are the only US-based companies mentioned in a recent analysis of the bloody price and feature acceleration war gripping the global TV industry, an industry that since 1996 has migrated almost entirely out of the US.  Both are actually closely tied to Asian suppliers, and are on the receiving end of a patent ecology that tends to be controlled by larger consumer electronics companies, independent patent “trolls”, and other vested interests.

The filing puts a lot of stock in setting a price baseline based on “international comparables” as a methodology to corral patent holders into an acceptable framework — an interesting idea in itself, but one that risks simply embracing superficial concessions in a still-broken system and also one that opens the door to the more fundamental question — how did we get into this mess in the first place, over the decade since the US DTV system was adopted by the FCC, and what would be a better systematic policy approach?

I suggest this broader question is the starting point for considering a “new deal” in digital TV, one that addresses long-neglected issues of “who-wins-who-loses” and appropriate roles for government oversight (sound familiar in the current economic climate?)   For a start in the analysis needed, click here, or here.

Sun Microsystems has released a royalty-free Java specification as an alternative to the royalty-encumbered “GEM” and “MHP” family of digital TV specifications developed by the European Digital Video Broadcasting group and associated groups.

“GEM” and “MHP” may not be exactly household words, but they are the backbone specifications of the interactivity layer of Blu-ray, US cable’s “tru2way” platform, and national DTV adoptions in Italy, Korea, and elsewhere.

The backstory to this seemingly minor announcement should be evaluated closely by anyone around the world interested in the still-emerging field of digital TV deployments — it will provide eye-opening insight into the techno-politics of royalties, and the alternatives.

This royalty-free/open source specification work, announced in March 2008, has been a collaboration between Brazil’s Digital Television forum (SBTVD), the Brazilian government, Sun, and leading DTV vendors in Brazil to provide a royalty-free foundation to Brazil’s Ginga interactivity specification for DTV.

Patent royalties have been a painful aspect of digital TV rollouts around the world and belatedly recognized as problematic in the US.

Brazil is leading the charge of developing countries that are rethinking the business-as-usual approach of the developed world to the nexus between patent pools, standards, and open source (the word “neocolonial” comes up not infrequently when one looks at efforts by patent pools from developed countries to charge developing countries royalties to “join the digital TV era”).

Brazil has applied this fresh thinking to its digital TV rollout.  In 2006, Brazil chose the Japanese ISBD digital TV and mobile broadcasting standard in an MOU with Japan to “allow Brazilian companies to use the technology without paying royalties” — much to the chagrin and nay-saying of the royalty-encumbered European DVB and US/Korea ATSC standards.  The move sparked ongoing techno-geopolitical debates, but nonetheless has helped to up (or more accurately lower) the royalty ante for future DTV adoptions — like the already royalty-free UK MHEG-5 specification dodging the patent-pool bullet and enabling more royalty-free options for digital TV deployments.  One might suspect downward price pressure and bargaining leverage may have been in the picture when the MHP patent pool quietly lowered its prices.

Congratulations to the many incredibly talented people that have brought out the world’s newest and most innovative (and royalty-free!) interactive specification for digital TV, and thanks for the opportunity to help!

The “Open Media Stack – Video Specification V0.9” is now available for community review at the Open Media Commons website.

OMS, announced in April 2008, is a project of Sun Microsystems’ Open Media Commons initiative to define a complete, royalty-free media specification, including codecs and associated elements.

The OMS Video draft is a key milestone and a big deal, and not just because I am proud to have contributed to this effort at Sun.   This is the first public release of a video codec specification with a vetted royalty-free methodology that is a determined, bottom-up invent-around of the royalty-bearing interlocking and cross-coordinating set of MPEG codec licenses – MPEG-2, MPEG-4, and h.264/AVC (an orchestrated complex of licenses managed through the same license administrator, MPEG-LA, which is owned and controlled, no surprise, by MPEG patent holders themselves).

But do royalties on things like video codecs really matter?  Many people don’t even realize that royalties like these exist, or assume they are a just a nuisance cost-of-business borne somewhere in the value chain.

But consider — MPEG and their related royalties are:

Big. Think on the order of over $2 billion per year, on some one billion or so MPEG integrated circuits a year and growing.  That’s royalties, not sales, so better to think of them on the profit side of the business equation — and that’s on the order of ten percent of the entire profit of the world’s 37 largest consumer electronics companies, calculated from a recent Deloitte study of consumer products industries.  And given that consumer electronics manufacturers are in a notoriously thin-margin business (according to the Deloitte study, average net profit margin of 3.3%, the second lowest profit in all consumer products industries, ahead of only tires) — the $2.50 per MPEG-2 device royalty alone likely exceeds the manufacturer profit on vast numbers of consumer electronics products.

Applicable across the entire value chain of devices, content, and encoders.  Consider also the $100 million or more a year in royalties of 3 cents on “packaged content” on 90% of all DVD discs produced, collected through disc duplicators.  Or the reported 100M Euros in royalties in 2005 on MP3.  Or the temporary exemption on “Internet broadcast” royalties — expiring December 31, 2008 on MPEG-4 (perhaps to the chagrin of MPEG-4 licensee DiVX, who noted in a recent SEC filing “Our license agreement with MPEG LA, under its MPEG-4 Part 2 Visual Patent Portfolio will expire on December 31, 2008. MPEG LA has the right to renew the license agreement for successive terms of five years, upon notice to us.”), and expiring December 31, 2010 on AVC/h.264.

Applicable to you (and virtually everyone else on the network connected planet).  Just check your iPhone EULA (“The iPhone Software and iPhone Software Updates contain AVC encoding and/or decoding functionality, commercial use of H.264/AVC requires additional licensing.”) or Flash licensing restrictions:

“The end-user license for Flash Player allows users to play back H.264 content for their own noncommercial use. Commercial applications of Flash Player to decode H.264 video may require a separate license…. Usage categories that may require a license and involve royalty fees include advanced video coding products, title-by-title video, and subscription video among others. Most categories apply to commercial use and implementation, but some are more broad”.

Sure, some will assert that this doesn’t really apply to “you”, just figure out a clever “not-me” work-around — but to quote Russell Long and countless others:  “Don’t tax you, don’t tax me. Tax that fellow behind the tree.”

Gosh, one can see how one study of consumer electronics patents/standards commented: “Standardization activities are political negotiations and not a forum for assessing which technologies excel over others”.

So here’s to hoping that OMS Video will add to the growing but still under-the-radar open media movement, including Xiph, Dirac, and more to come.  Please take a look at the OMS Video specification and provide comments if you are so inclined.