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Chinese IPTV Carriers Facing Patent Fees

http://www.tmcnet.com/usubmit/2006/03/10/1446614.htm

(Comtex Business Via Thomson Dialog NewsEdge)BEIJING, Mar 10, 2006 (SinoCast China IT Watch via COMTEX) --While the two lineups of radio & TV and telecom carriers are quarreling with each other about which audio video coding standard should be selected, it is said that they will be charged huge patent fees, no matter which one they choose.

A report from China Academy of Telecommunications Research of Ministry of Information Industry (CATR for short) pointed out that MPEG-4 and H.264, the two IPTV (Internet Protocol Television) standards favored by Chinese carriers radio & TV operators and telecom carriers, will be no longer free of charge for their usage. Foreign owners of the two standards will levy patent fees not only from equipment and terminal manufacturers, but from carriers as well.

Previously, telecom carriers have never been charged patent fees for any businesses. Even Qualcomm, which is considered the "overlord of patent fee" by some manufacturers, have never collected fees from carriers but flattered them. However, the report released by CATR said that carriers were required to pay not only the patent fee for the usage of MPEG-4, but also fee for the broadcasting of programs each time; With regard to H.264, apart from the two fees above, carriers will be charged even for the copy of discs.

In addition, the patent fee is not paid once for all but every year, and is increasing with the rise of the nubmer of users. The upper limit for Chinese carriers is estimated at USD 300,000 every year.

Except for carriers, equipment makers have to pay fees for each coder/decoder and PC software manufactured and sold. Moving Picture Experts Group stipulates that manufacturers will be allowed not to pay in accordance with their production volume unless their payments have amounted to USD 3 million in a year accumulatively. And the upper limit for H.264 is USD 3.5 million.

The announcement of levying MPEG-4 and H.264 patent fees from carriers was made as late as November last year, and the time annoyed some people.

Beginning from the year before last, China Telecom and China Netcom, the two largest fixed-line carriers in China, started to brew the creation of IPTV test networks, and released numbers based on MPEG-4 or H.264 standards in nearly 20 cities of five provinces. Since owners of the two standards had never made it clear that they would levy patent fees, the two carriers have given publicity to IPTV service in a big way. An expert with CATR noted that the announcement of collecting patent fees at the critical time was equal to looting a burning house. This is extremely similar to what happened in the DVD (Digital Video Disc) industry.

However, the expert also remarked that China Telecom and China Netcom were just about to build test networks, and had not decided to choose which IPTV standard. Even they choose one of the two foreign standards for their networks, they still have to adopt an industrial standard in the formal commercial networks. In view of this, the state is considering adopting an independently developed one as the industrial standard to avoid patent fee, such as AVS, the expert disclosed.

From Beijing News, Page 1, Thursday, March 09, 2006
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