46 th FITCE CONGRESS 30 th August – 1 st September 2007. Warsaw (Poland) Multimedia Home Platform: an Analysis of Standardization, IPRs and their Implications.

46th FITCE CONGRESS

30th August– 1st September 2007.

Warsaw (Poland)

Multimedia Home Platform:an Analysis of Standardization, IPRs and their Implications for Commercial Deployment

Claudio FEIJÓO1

José-Luis GÓMEZ-BARROSO2 Álvaro MARTÍN1&2

Yasmina BENMESSAOUD1

1 Grupo de Tecnologías de la Información y las Comunicaciones (GTIC)E.T.S.I.Telecomunicación

Universidad Politécnica de Madrid{cfeijoo; amartin; ybenmessaoud} @gtic.ssr.upm.es

2 Dpto. Economía Aplicada e Hª EconómicaUniversidad Nacional de Educación a Distancia (UNED)

[email protected]

About Multimedia Home Platform and its Commercial Uses

The Standardization Process: IPRs and licensing agreements

Patent Pooling for MHP

Potential Implications for Business and Commercial Deployment

Introduction

Conclusions

:: Contents

…MHP seems to be an attractive solution for interoperability of digital interactive applications

Innovation and competition within the ICT sector are some of the best tools to ensure

productivity and social welfare in a world led by

Technological knowledge,Industry standardizationInteroperabilityProduct compatibilityEconomies of scale

(Source: MHP)

:: Introduction

:: Introduction: The Multimedia Convergence

The DVB-MHP Project is an alliance of over 260 companies, originally European and now

spread worldwide in over 36 countries.

Main aim → To provide a common platform that avoids the fragmentation existing in some

audiovisual areas. A platform that brings integration of all kinds of multimedia applications

The Project has focused particularly on interactive applications for Digital Television

(iDTV) systems.

MHP extends the existing DVB standards (in satellite, cable, terrestrial networks and

microwave systems) and also provides access trough the Internet to e-commerce, e-

government and similar services.

MHP contributes to the convergence process between traditional broadcast and interactive broadcast services and the World Wide Web

:: Introduction. The Multimedia Convergence (II)

:: Introduction. The Multimedia Convergence (III)

Windows CE Windows CEWindows CE

2000 2004

About Multimedia Home Platform and its Commercial Uses

The Standardization Process: IPRs and licensing agreements

Patent Pooling for MHP

Potential Implications for Business and Commercial Deployment

Introduction

Conclusions

:: Contents

MHP is a fully open middleware system and standard designed by the DVB Project that

defines an interface between interactive digital applications and the terminals on which those

applications execute.

(Source: DVB)

:: Commercial uses of MHP

Transversal Markets Multi-application environments

MHP Terminal Device

API – Application Programming Interface

Applications- High flexibility in implementation

- Several service providers

- Return channel. Interaction

Broadcaster ↔ User- Contents and Applications - HW independent

- Wide range of terminals with

different capabilities supported

MHP enabled Receiver

:: Commercial uses of MHP (II)

TYPES OF SERVICES Local Interactivity Remote Interactivity

Information Services

EPGImproved Teletext

GamesNews/sport/stock Tickers

-

Programming attached Services

Programme-related statistics

Extended programme information

Developed news

Quiz show participationEnquiries

Guests interviewsPay per view

Transactional Services -Tickets reservation

Economic queryShopping

Applications can run and access from a broadcast network, a local storage device, or an

interactive network Priority to Enhanced Broadcast, Interactive Television and Internet Access

:: Commercial uses of MHP (III)

THE CASE OF SOUTH KOREATHE CASE OF SOUTH KOREA

In 2004, the government of Korea, in cooperation with Alticast, SkyLife and KBS, offered Touch 2004, an MHP interactive TV election service. The service allowedviewers to

• participate in debates and polls, • view background information on the candidates, • explore in detail the election counts as they happened.

A total of 6 Multi-System Operators (or MSOs) launched OCAP-based services; • the first, CJ CableNet, began in February 2005 (Mosaic EPG, VoD, karaoke, a finance

portal and T-shopping)• Gangnam Cable, a Korean regional cable operator, launched recently T-Government

services for people that do not have easy access to the Internet.

:: Commercial uses of MHP (IV)

About Multimedia Home Platform and its Commercial Uses

The Standardization Process: IPRs and licensing agreements

Patent Pooling for MHP

Potential Implications for Business and Commercial Deployment

Introduction

Conclusions

:: Contents

The MHP standard was published as an ETSI Specification within the DVB Project

ETSI IPR Policy seeks a balance between• the needs of standardization for public use in the field of telecommunications• the Intellectual Property rights of its members

FRAND terms – Article 82(a) of the European Commission Treaty

Fair – equitable. Taking into account all interests involved (proportionality).Reasonable – moderate, bearing some rational relation to objective criteria other than monopolist’s desire to maximize profits.Non-Discriminatory – equal treatment of all customers, including the IPR owner’s own downstream business.

The EC is aware of the stakes involved in standard development and IPR management, in terms of innovation, interoperability needs and consumer protection. Some of these concerns have been expressed in an active consultation on “EU Strategy for International Co-operation on ICT” (until September 17th 2007).

:: The Standardization Process IPRs and licensing agreements

The European Telecommunications Standards Institute (ETSI) – is in charge, through its

Standards and Technical Specifications of ensuring the compatibility and interoperability of MHP-

enabled products and components. IPR management in normalization processes in Europe:

Disclosure of patents essential for the implementation of the standard by the rights-holder at an

early stage

→ Avoids anti-competitive practices that would exclude other emergent technologies

from the market.

→ However… Patent owners sometimes claimed for high royalties on patents that had not

been disclosed at an early stage (higher switching costs, lock-in strategy).

…how to prevent patent owners from demanding supracompetitive royalties, and guarantee reasonable license fees?

:: The Standardization Process (II) IPRs and licensing agreements

15

The Standards Association of the Institute of Electrical and Electronics Engineers (IEEE-SA)

adopted in May 2007 an enhanced IPR policy including:

→ Any participant in an IEEE standards development project rmust now reveal personal

knowledge they may have of patents they or their employer hold on intellectual property being

considered for inclusion in the standard.

→ Everyone in a standards working group is "encouraged to inform the working group chair" if

they are aware of any patented intellectual property held by others

→ Improved commitment from patent holders in the legally binding letters of assurance (LoA).

These letters express willingness to license its technology, either on a royalty-free basis or

with license terms that are reasonable and non-discriminatory (RAND).

→ LoA may now include license terms such as the maximum royalty rate the patent holder will

charge (ex - ante disclosure).

:: The Standardization Process (III) IPRs and licensing agreements

About Multimedia Home Platform and its Commercial Uses

The Standardization Process: IPRs and licensing agreements

Patent Pooling for MHP

Potential Implications for Business and Commercial Deployment

Introduction

Conclusions

:: Contents

Firms holding essential patents organized a patent pool for MHP

VIA LICENSINGVIA LICENSING

US entity that administrates the joint patent licensing program for MHP of the following

licensors: Comsat Cable Holdings, LLC; Koninklijke Philips Electronics N.V; LEG Electronics, INC.;

Matsushita Electric Industrial Co., Ltd; OpenTV Corp.; Samsung Electronics Co., Ltd; Time Warner

Cable, Inc.

Via presented on July 2005 the first terms for the payment of royalties,• Highly criticized: royalties considered disproportionate• On former patent rights - almost 5 years before the publication of the ETSI norm

on IPR Policy and with millions of MHP decoders distributed all over Europe and

Asia!

:: Patent pooling for MHP

Via’s final licensing fees on July 2006, were classified as follows:

• Device fees: $1.75 per device

• MHP services-providers by

– subscription-based service provider: $ 0.25 per household

– Free-to-Air (FTA) broadcaster: several options.

(depending on the number of households with MHP receivers and whether

or not the FTA broadcaster generates revenue from MHP services or

advertising: from $0 to $50,000)

• Initial administrative fee of $15,000 per licensee

:: Patent pooling for MHP (II)

HIGH FEES COULD MAKE THE SOLUTION IMPOSSIBLE TO DEPLOY COMMERCIALLY

UNEQUALLY SUPPORTS SOME BUSINESS MODELS AT THE EXPENSE OF MANY OTHERS, OR

ELSE CONTRIBUTES TO DISCOURAGE THE ADOPTION OF MHP

About Multimedia Home Platform and its Commercial Uses

The Standardization Process: IPRs and licensing agreements

Patent Pooling for MHP

Potential Implications for Business and Commercial Deployment

Introduction

Conclusions

:: Contents

Via Licensing’s fees are still being disparate compared with the conditions set by Sun Microsystems for the use of the JAVA Virtual Machine (JVM) → LESS THAN 1$ PER DEVICE, AND EXCLUSIVELY BY THE MANUFACTURER! The business model cannot take into account the revenues obtained from the use of the return channel and the interactive services as the population – excepting some Asian countries - does not use intensively those services.

Final compromise,the use of commercial requirements to set cap on royaltiesthe use of commercial requirements to set cap on royalties

However a full consensus is still pending. And the question is…

:: Potential Implications for business and commercial deployment

… which are the reasons that block the business and commercial deployment of MHP from a standardization/IPR perspective?

BENEFITS OF STANDARDIZATION and a wide deployment of MHP, from the perspective of: Users

• Freedom of choice• Resolves the interoperability issue – access to a wider range of new and existing services with a given piece of equipment

Service Providers• Would be able to develop new services• Enables diversity of players and equipments, according to consumer choices

Equipment Manufacturers• New market: otherwise, no commercially viable way to produce and maintain separate populations of receivers with APIs across Europe… Except for pay-TV market!

Free-To-View broadcasters• their business model being the access to the broader audience as possible and not the commercialization of APIs

Vendors of proprietary APIs• No direct benefit for them…

:: Potential Implications (II) for business and commercial deployment

Several Mobile TV technologies for different platforms

Is Mobile TV a Killer Application in a mass market…?

Mobile TV was considered as a relevant service for mobile users by 87% of the participants in a trial in Stockholm on April 2007, but up to 3 major technological alternatives: DVB-H; DMB; MediaFLO

Main Technologies

Frequency Band

Current situation Companies

DVB-H UHF, L band

Terminals availableCommercially launch notably in Europe and worldwide: in Italy, Finland, South

Africa, etc.

Alcatel, Motorola, Nokia, Siemens, Thomson

T-DMB L band

Terminals availableCommercially launch in South Korea (at the forefront with 5Mio in June 2007),

Japan, China, India, and Germany (during the Football World Cup 2006).

Microsoft, Samsung, Deutche Telekom, and some TV operators

Other technologies:

• MediaFLO ( Media Forward Link Only): starting technology to be tested in Europe. Field tests in the US• DVB-SH: Hybrid system. Standard to be published in 11/07. No terminals available.• MBMS (under UMTS): Field tests in Europe. No terminals available

:: The case of DVB-H for mobile TV

Regulatory framework for DVB-H

The need for a common technical standard, to attain a critical mass and ensure sustainability of the Mobile TV business models, with no kind of barriers for its correct adoption

- The EMBC (European Mobile Broadcasting Council) agrees on the importance of a common standard, but does not propose a specific one.

-The European Commission recommends specifically the use of DVB-H as the single European standard for mobile TV to avoid the risk of fragmentation in its Internal market

“Strengthening the Internal Market for Mobile TV” - European Commission Communication, 18 July 2007 -

• DVB-H appears to be the strongest contender for future terrestrial Mobile TV deployment in Europe:

40+ DVB-H pilot networks all over the world (including USA and Asia) and trials in most European Member States…

:: The case of DVB-H for mobile TV (II)

Penetration Rate of Mobile TV/video

• Italy (leader in Europe) 1% Vs South Korea 10%

• More than 65M estimated users in Europe in 2011

• Mobile broadband handset penetration (3G/3,5G) in Europe:

1/3 by 200862% by 2011

•1,5% of U.S. wireless users (3M) had accessed mobile TV services. More than $40 per month on average. (Source: Telephia Study, 2006)

:: The case of DVB-H for mobile TV (III)

About Multimedia Home Platform and its Commercial Uses

The Standardization Process: IPRs and licensing agreements

Patent Pooling for MHP

Potential Implications for Business and Commercial Deployment

Introduction

Conclusions

:: Contents

The standardization of the MHP technology still has to tackle with several issues

concerning IPR policies and licensing terms Risk for the global success of MHP and the real uptake of this technology compared to

the success story of the DVB standard. Relationships of open standards and IPR still being a general matter of discussion:

MHP seems to be just the “tip of the iceberg”…

:: Conclusions

MHP is an outstanding example of how MHP is an outstanding example of how incorrectly managed IPRsincorrectly managed IPRs might might

constitute an constitute an insurmountable barrier for the development of technologiesinsurmountable barrier for the development of technologies,, no no

matter if they are the most attractive, complete and efficient in the market or if matter if they are the most attractive, complete and efficient in the market or if

they contribute to the users’ welfare.they contribute to the users’ welfare.

46th FITCE CONGRESS

30th August– 1st September 2007.

Warsaw (Poland)

Multimedia Home Platform:an Analysis of Standardization, IPRs and their Implications for Commercial Deployment

Claudio FEIJÓO1

José-Luis GÓMEZ-BARROSO2 Álvaro MARTÍN1&2

Yasmina BENMESSAOUD1

1 Grupo de Tecnologías de la Información y las Comunicaciones (GTIC)E.T.S.I.Telecomunicación

Universidad Politécnica de Madrid{cfeijoo; amartin; ybenmessaoud} @gtic.ssr.upm.es

2 Dpto. Economía Aplicada e Hª EconómicaUniversidad Nacional de Educación a Distancia (UNED)

[email protected]