tiring of royalties

[Dave Farber <dave () farber net>]

> Delivered-To: dfarber+ () ux13 sp cs cmu edu
> Date: Fri, 10 Oct 2003 01:21:31 -0600
> From:
> Subject: tiring of royalties
> To: Dave Farber <dave () farber net>
>
>
> please filter my ID info if used...
>
> -------------
> Tiring of royalties, China seeks new compression spec for video
>  http://www.eetimes.com/story/OEG20031003S0024
>
> By Mike Clendenin, EE Times, October 3 2003 (1:47 p.m. EST)
>
> TAIPEI, Taiwan - China is pushing to define a homegrown audio and visual
> compression technology that would rival MPEG-4 and H.264 and, by various
> estimates, save Chinese consumers and manufacturers anywhere from $300
> million to $1 billion in royalties during the next decade. The video
> compression spec is due out at the end of this year, followed by basic
> decoder intellectual property (IP) in 2004.
>
> The standards initiative is part of a Chinese effort to lessen reliance on
> foreign IP. Increasingly frustrated over clashes with licensing agencies
> like MPEG LA, China is striving to wean itself from foreign standards and to
> free itself of royalty payments for high-volume products, such as DVD
> players and cell phones.
>
> The move could undercut the power and revenue of licensing agencies like
> MPEG LA, a consortium of patent holders such as Apple and Sun that charge a
> royalty of $2.50 per system, compared with China's proposal of 1 yuan (12
> cents) for its codec. During the past few years, MPEG LA and others have had
> trouble collecting royalties from Chinese manufacturers of DVD players, who
> feel the combined fees of $15 to $20 per system are too high (DVD players
> are often sold at ~$100 and less).
>
> Since Chinese manufacturers produced 10 million of the world's 50 million
> DVD players in 2002, the stakes are high. And over the next decade, as
> Chinese consumers help expand the market for consumer electronics, they will
> only get higher.
>
> The video compression project is directed by the Audio Video Coding Standard
> (AVS) Workgroup of China, a consortium of 50 universities, government
> organizations and companies that has been given authority by China's
> influential Ministry of Information Industry and placed under the
> supervision of the Chinese Academy of Sciences. The academy has been working
> on compression technologies for more than five years, but few details have
> emerged. http://www.avs.org.cn/en/history.asp
>
> About a year ago, during the height of acrimony between Chinese
> manufacturers and various licensing agencies, the AVS was formed to help
> commercialize the research.
>
> "The government was scared by the DVD royalty fiasco," said Mike Yu, chief
> technology officer for Vimicro, a Beijing-based designer of graphics chips
> for cell phones. "They understand that there is a new organization working
> on the next-generation compression technology and they are worried. They
> don't want to be left alone again."
>
> That fear was a big factor in China's adoption of a little-known
> mobile-phone standard called TD-SCDMA, or time-division synchronous
> code-division multiple access. Supported by Siemens AG in Europe more than a
> decade ago, the technology was once considered a has-been. But the Chinese
> government rekindled interest in TD-SCDMA and then co-developed the latest
> iteration with Siemens in exchange for lower royalty payments.
>
> The government has helped build an AVS-like consortium around TD-SCDMA, and
> foreign chip makers have come together in joint ventures to hedge their bets
> against the more entrenched standards, wideband CDMA and cdma2000. TD-SCDMA
> is now one of three international third-generation cellular standards and a
> contender in China for a 3G license.
>
> Other examples of greater self-reliance are also emerging. Over the summer,
> China formed a group devoted to networking home appliances and IT products.
> The Information Gateway Resource Sharing (IGRS) working group consists of
> some of China's biggest electronics companies, including Great Wall Computer
> Group, Hisense, Konka, Legend Group and TCL.
>
> IGRS is similar to another standards group founded this summer in the United
> States, dubbed the Digital Home Working Group, of which Legend is also a
> member. Although the two groups have similar goals and will cross-pollinate
> each other's markets with products, it appears that little contact has
> occurred between them. IGRS is expected to develop a protocol for automatic
> detection, networking and resource sharing among IT systems, home appliances
> and communication devices in wired and wireless environments. The standard
> will use a TCP/IP-based application protocol, which should be out in draft
> form by year's end. Development tools will follow next year and a final
> protocol will be ready in 2005, the group said.
>
> In a statement, Konka said, "The establishment of the IGRS working group
> reflects the desire of Chinese companies to get rid of the dominance of core
> technologies and standards of foreign big names in the information
> technology industry."
>
> China has also made forays into new optical-disk technology during the past
> few years, but nothing concrete has emerged. Part of the problem has been
> overcoming an entrenched video-CD and DVD industry that carries most of the
> world's popular content, such as Hollywood movies.
>
> As much as Chinese manufacturers would like to be free of foreign IP, there
> is little alternative to using it. Even if their systems used a Chinese
> standard, they would still want to be backward-compatible with DVD and CD
> technology for domestic and, more importantly, foreign export markets like
> North America and Europe.
>
> Unlike TD-SCDMA, however, the AVS specification will not require a massive
> and expensive new infrastructure, so it may be easier to implement over
> time. The government has no immediate plans to make it mandatory, said Huang
> Tiejun, secretary-general of the AVS Workgroup. Huang said the group can
> develop a more efficient compression technology than MPEG-4 or MPEG-2. After
> that, "the market will decide," he said. "AVS is only a choice - a better
> choice for markets in China and outside of China."
>
> Foreign companies have taken an interest in the project, but it's difficult
> to tell whether they think AVS is a legitimate rival to MPEG-4. At this
> early stage, it is more likely they just want to keep an eye on
> developments. Philips, Sony, Microsoft and IBM have been members of the AVS
> Workgroup, and LSI Logic Corp. recently joined.
>
> Huang said the consortium is open to anyone who can contribute research
> staff and pay the roughly $1,000 annual fee.
>
> As part of the 3C consortium that requires a $5 royalty payment per DVD
> system, Philips and Sony have had their own problems with royalty collection
> in China and are viewed by some Chinese manufacturers as part of the
> problem. Philips believes otherwise and said it is willing to lend its
> expertise to China-based standards.
>
> "Philips is pushing MPEG-4, but in China I think Philips is doing the right
> thing to support Chinese efforts and to also try to push our own IP," said
> Ernest Ma, Philips' representative to the AVS Workgroup.
>
> Even domestically, AVS will have an uphill battle against MPEG compression
> standards. Vimicro's Yu cautioned, "The difficult part is to convince
> everybody to take it seriously and come up with product."
> -------------

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