Delivered-To: dfarber+@xxxxxxxxxxxxxxxxxx
Date: Fri, 10 Oct 2003 01:21:31 -0600
From:
Subject: tiring of royalties
To: Dave Farber <dave@xxxxxxxxxx>
please filter my ID info if used...
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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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