What would the Internet look like today if history had been just slightly different?

Say for example the Internet’s open, royalty-free foundation — protocols, HTML, etc. — hadn’t mostly won out?

Leaving only proprietary solutions or shifting interest groups (and their designates) maneuvering to disadvantage, overcharge, or end-run each other as the only — and underwhelming — drivers of deployment?

Unimaginable?  Improbable?  Hardly.  Welcome to daily life in the chronically-stunted US Interactive TV near-industry, little known outside its own community, which bared its soul this week at the superbly-run TV of Tomorrow Conference.

Don’t get me wrong, the US  interactive TV “ecosystem” — a term that when used at the event sparked discussions of sharks and survival — is as vibrant, passion-filled, and technically gifted as any you’ll find.

And ground-zero relevant, sitting squarely at the multi-industry techno-policy nexus of broadcasting, cable, broadband & wireless.  Multiplatform TV and “over the top” TV — Internet video to the TV without a gatekeeping operator or PC — are yet more cutting edges that the event considered in light of the US interactive TV experience.  But missed boats, like the millions of subsidized US DTV converter boxes which because of overpriced and/or controlled ITV specifications lack interactivity to speak of, merited no discussion.

But as one of the several impressive award winners evoked — the very idea of Interactive TV in the US can seem like a toxic relationship that keeps dysfunctionally drawing back an incredible amalgam of talent.

It may be tempting to write the whole movement off as some cautionary tale of the perils of convergence, a “Tragedy of the Anti-commons“, or a Darwinian techno-niche.

But can America really afford another underperforming, gridlocked opportunity, stalled in the starting gate?  Can’t this gifted, visionary community offer more?

The simple, compelling answer is “go open”.  Embrace a royalty-free, truly open approach.  All of the controlled and/or royalty-bearing specifications are available royalty free, an open video movement is gaining steam, and TV patent-pool lock-ups are under assault.  Even the long industry-captured US FCC may be willing to hear new ideas.

Admittedly, the thought of “going open” at the event seemed beyond the collective imagination of the US interactive ecosystem. The topic was skirted and slammed in a fiesty roundtable at the end of one day on the break-out potential of over-the-top video.

The reasons against going open are easy to list.  Too late/slow/hard.  Too risky.  The powers that be would never allow it, and would crush any dare to try.  “Someone” (usually the proprietary set top I’ve developed or hope to get venture-funded) will provide the industry-opening breakout.  I’ve got, or will get, my crumb, so don’t rock the boat.  I’ll get my own clever path to the TV, and everyone will get on board.  Standards take too long.

Each true in the small, tragic in the large.

ITV-ers unite:  demand a real, and really open, industry!

The FCC has requested comments on the CUT FATT petition (discussed here) to review DTV patent abuses.

Some articles on the FCC request are here and here, the FCC notice (comments due April 27) is here, and filings will be posted here (select “Search for Filed Comments” on right, proceeding 09-23)

A related petition in front of the FTC filed by the American Antitrust Institute is pending, see here.

A related request for relief is here, a settlement of note is here, a proceeding at the International Trade Commission is discussed here, an antitrust and unfair competition lawsuit by VIZIO against Funai over Thomson patents is discussed here and in more detail here.

But more interesting is to pan back a bit for historical context, with emphasis selectively added.

A 1958 article from from Time magazine:

“In a sweeping civil consent decree in one of the biggest Eisenhower Administration Sherman Act suits to date, RCA agreed to 1) put some 100 color TV patents into a royalty-free pool, 2) make available to all comers on a royalty-free basis at least 12,000 other existing radio-TV patents, 3) license all new patents during ‘the next ten years at a “reasonable” royalty rate.”

Maybe 10 years was too short.  Consider a 1989 article from the Heritage Foundation, “High-Definition Television: What the Federal Government Can Do”:

“While the federal government should not subsidize HDTV and other new technologies, neither should it stand in their way. Yet current antitrust laws do just that. Through complex and ambiguous rules governing cooperation between firms, the antitrust laws constrain the ability of U.S. companies to develop new products.”

How about a delightfully dated assessment on HDTV and US trade policy a decade later (1998):

Notably, Prestowitz cited HDTV as an “example of the widening U.S. lag” in high technology. “There are not even any Americans involved in this struggle,” he lamented in 1988. Again, Prestowitz was dead wrong. American firms leapfrogged their Japanese rivals and produced a more technically advanced version of HDTV using digital technology. In December 1996, the FCC approved an HDTV standard developed by a so-called Grand Alliance of U.S. and European producers; Japan wasn’t even in the running.

Interestingly interspersed is a historical back view to periodic calls for FCC reform:

A 1974 “Modest Proposal to Reform the Federal Communications Commission”:

“the one clear problem that must be faced is agency”… over-identification with the industries related…” and by that term, I mean the powerful, entrenched elements of the industries regulated, in contrast to new emerging facets or technologies. This is not just a symptom to be glossed over:  It is the root cause of dissatisfaction.

Itself citing a tradition of calls for FCC reform, one from 1962:

“…the Commission has drifted, vacillated and stalled in
almost every major area. It seems incapable of policy planning,
of disposing within a reasonable period of time the
business before it…”

So the lingo may be updated but sentiment recognizable in a Newsweek article from December 2008:

Reboot the FCC

In sum:  Calls for reform are easy.  Actionable policy is hard.  The above is an interesting slice of repeating themes, but the question is what to do.  So one must tip a hat to Acting FCC Chairman Michael J. Copps, quoted in February 2009:

“We do too little of our own research and have come to rely too much on the data and studies of others—too often from the very parties trying to drive a particular outcome….Too often we spend our days refereeing disputes between powerful interests, with consumers and other non-traditional stakeholders pretty much left outside the loop of discussion and decision.”

A bright potential is shining for interactive TV in Brazil, which has a unique moment of opportunity to start from a complete, royalty-free specification — Ginga — and avoid the systemic stalling gridlock that has plagued patent-based/industry-segment-controlled interactive TV in the US and elsewhere.

The first developer conference is announced here for April 2.

It is heartening to see the broad mix of participation, including key players in the industry such as Globo (Brazil’s largest TV broadcaster), Intel, Sun Microsystems, CESAR Institut, University of Paraíba and SouJava (Brazil’s largest JUG).

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!


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!