Tag: CUT FATT

Last week, Business News Americas broke the story that the ATSC Forum — the industry group that lobbies for the international adoption of the US ATSC digital TV standard of the Advanced Television Systems Committee — plans to close its doors at the end of September.

Although the ATSC Forum’s closure has gotten little attention in the US, the story has been picked up in South America, where the ATSC Forum’s lobbying efforts have been swamped by momentum for the Japanese-Brazilian ISDB system (an under-reported story in itself, as some are recognizing).
tv_latinamerica
The ATSC Forum was “established in late 2001 to promote DTV and ATSC standards, especially throughout Latin America”, and has lobbied other countries, including the Philippines, as have rivals European-led DVB and Japanese-led ISDB.  And as quoted below, the Forum has cleverly worded a fantasy strategy to skirt patent fees that will no doubt bring a chuckle on close examination.

Recent strident exception the ATSC Forum has taken to contentions here that there are structurally-flawed patent licensing processes at the heart of ATSC and DTV communities (reiterated below as recently as last month in Haiti, see below), puts an interesting light on the reported reasoning that the ATSC Forum is giving for closing its doors:

“manufacturing companies that represent the ATSC are now less concerned about which digital TV standard the equipment they make represents and so are increasingly less inclined to finance a group advocating one standard or another”.

Really?  Surely, specific patent or commercial interests may be the last standing in an end-game of standards advocacy, particularly when interests are unclearly spread across multiple standards and advocacy groups.

And though the ATSC Forum website does not list which members are sponsors ($25K/year) or just general members ($5K/year), four vendors appear prominent at the website in recent years (Zenith/LG, Samsung, Dolby, and Harris).  Three, as well as the ATSC Forum and the ATSC, have filed in the FCC inquiry on patent royalty overcharging challenged by the CUT FATT group, and Harris, the largest transmission equipment supplier for ATSC, turned against certain patent licensing practices and sided with the CUT FATT group.

But according to government reports, in 2003, the ATSC Forum received $399K in export promotion market development funds from the International Trade Administration of the US Department of Commerce.  Ouch –  patent pool promotion as export trade policy.

Indeed, a 2004 success story at the US Department of Commerce Market Development Cooperator Program website describes the 3-year campaign in optimistic terms, predicting $8 billion in US exports (subsequently revised down to $5.6 million).  And also in terms that likely seemed entirely reasonable at the time, but which now seem vaguely like a fight-the-last-war replay of the 1960s Cold War color TV standards wars — little resembling the new globalization-era, each-country-is-a-partner ethic reflected in the launch of the new ISDB-T International Forum web site for South America.

And in 2007, the US National Association of Broadcasters funded a mobile TV initiative for $750K with many did-they-learn-the-right-lessons parallels to the ATSC Forum.

So the ATSC Forum is leaving unfinished business and (potentially) unlearned lessons:

— Patent Licensing Processes Need Reform.
— Hybrid Broadcast-Broadband Needs Uncaptured Standards.
— The Curious Rebirth of Free TV Needs Tending.
— US Mobile TV Risks Institutionalizing Same Mistakes.
— Network policy in the broadband age should promote a global level playing field

In sum, the Network Policy Techno-Politics mix is still out of balance — but to ATSC Forum’s credit they have included technical reasoning along with political advocacy — something that recent FCC broadband dialog seems to lack so far.

To quote Richard Elkus’ 2008 “Winner Take All: How Competitiveness Shapes the Fate of Nations” (it was Elkus who in 1988 sounded the call that US digital TV policy may “reflect the ebbing tide of United States technological and economic leadership”):

“All of America’s technological industries and institutions are linked. … Strategy is everything.”

References

“Patent license fees are not important in the selection of a DTV transmission standard …. For almost every country in Latin America and the Caribbean, no patents apply for products manufactured and sold within that country”

ATSC Digital Television Update, Robert K. Graves, Chairman, ATSC Forum, Port-Au-Prince, Haiti, August 7, 2009, http://www.conatel.gouv.ht/atsc/ATSC%20Update%20and%20Advantages.pdf

“But almost none of the patents that apply in the U.S. have been filed in the Philippines, so IP fees will be far less in the Philippines than the small fees that apply in the U.S.
…
Dolby has indicated that it has not registered its AC-3 patents in the Philippines, and consequently, Dolby cannot, and will not, charge patent royalties for products that are manufactured and sold in the Philippines (or on products bought from or sold to other non-patent countries by the Philippines).
…

The ATSC Standard incorporates the VSB transmission system developed by Zenith Electronics. However, no Zenith patents associated with VSB have been filed in the Philippines (compared to 13 in North America), so there can be no IP license fee associated with the VSB transmission system for products produced and sold in the Philippines.”

Response of the ATSC Forum to the Consultative Document on Digital Terrestrial Television (DTT) of the National Telecommunications Commission Department of Transportation and Communications Republic of the Philippines,  October 30, 2006  http://atscforum.org/resources/pressreleases/2006/PR-061030-Response.pdf

“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.