Manufacturers of 4K Ultra HDTVs, Ultra HD Blu-ray players, mobile devices, 4K Ultra HD software and other products using high efficiency video coding (HEVC) compression and decoding technology are about to be handed another bill.

The HEVC Advance, which is a second patent pool that surfaced last March looking to administer royalty collection for HEVC technology, also known as H.265, announced a new price sheet and payment schedule for manufacturers who now must pony up for using the technology.

HEVC is an advanced video compression scheme used to make more efficient use of bandwidth in order to send digital bit streams (including those carrying data-rich content like 4K UHD and 8K video) over narrow transmission conduits, like over-the-top (OTT) streaming broadband services, as well as cable, telephone and satellite TV systems.

More on the HEVC Advance patent fees after the jump:

While not necessarily bringing a new level of confusion to HEVC users, HEVC Advance is creating a stir by dropping a new schedule of fee costs on manufacturers and content producers just gearing up to expand availability of 4K Ultra HDTV streaming and Ultra HD Blu-ray content.

The HEVC Advance popped on the scene around this year’s National Association of Broadcasters (NAB) Show, announcing patent royalties would soon come due from initial members including: GE, Technicolor, Dolby, Philips and Mitsubishi Electric.

Prior to the HEVC Advance appearance, HEVC licensing had been handled by a pool of 32 patent holders administered by the MPEG LA. However, compression technology industry observers said there are a number of additional potential intellectual property holders who still could make claims for patent royalties, and some of those remain unaffiliated with either patent pool.

One of the stated goals of the HEVC Advance is to bring some of those other potential claimants into its patent pool and to help establish fair and balanced fee payments that should help speed along implementation of HEVC in more devices and content.

Why 2 Pools?

Industry observers told us that there are no major issues between the IP holders in the two different pools, rather members of the MPEG LA pool have different motivating factors than do members of HEVC Advance. For example, Samsung, which is both an IP holder and a major HEVC licensee is motivated to both raise income and keep fees balanced to lessen the cost burden on HEVC-enabled: TVs, mobile phones and Ultra HD Blu-ray players it intends to sell at competitive prices.

In contrast, most of the members of the HEVC Advance will make money only from royalties on their IP.

Moller told HD Guru that “there were many licensors and patent users who came to us and said they did not feel the MPEG LA offering struck the right balance between the rights that patent owners enjoy and patent users. They didn’t feel it met their needs and it was clear that an alternate pool was necessary and it had to be official in order to attract a large number of those companies that made it clear to us they were not planning to join the MPEG LA patent pool.”

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Other Compression Solutions

Some have suggested that the additional patent royalty claims could cause some content producers and hardware manufacturers to select alternative efficient compression technologies including Google’s VP-9 system, which is offered royalty free. Google developed the video compression scheme in part for 4K video streaming on its YouTube service. But industry observers told HD Guru the lack of royalties isn’t the motivating factor that you might expect it to be, because from a technical standpoint, it doesn’t perform as well in some areas as HEVC, and has some quality issues that some content producers find problematic.

On top of that, some potential licensees have been skittish of the potential underlying intellectual property issues left over from Google’s VP-8 (AVC claims in particular) compression scheme that some fear could surface down the line in the form of IP property holders making unexpected claims against VP-9, one observer told us. Some potential licensees didn’t elect to use Google’s earlier VP-8 format, even though it was also royalty free, because there was no indemnification. Some fear that unlicensed underlying IP in VP-8 might exist in VP-9, sources told us.

New Fees

Peter Moller, CEO for the HEVC Advance, said the group has developed two fee scales that will be applied to different regions of the world. So-called Region 1 takes into account most of the developed countries, such as the U.S., U.K. and members of the European Union. Region 2 represents mostly developing countries such as India.

HEVC Advance also divided up the royalty rate structure into two categories: one includes devices (4K UHD TVs and other devices) and content, including content providers transacting with consumers on streaming content, over-the-air content etc.

The group also established royalty rates segmented on the profiles that are used, including the base profile (Main 10), which has the most features and will be used in the large majority of units. Then, the Profiles are priced separately. Also included is a category in the H.265 standard called “Optional,” and if selected licensees must conform to certain requirements.

The fees for Region 1 Main Profile devices are: 4K UHD+ TVs ($1.50), mobile devices (.80 cents) and others ($1.10), corresponding Region 2 Main Profile rates are: .75 cents, .40 cents and .55 cents.

“Even though it’s added some complexity to the structure, we added an optional category to make sure we had a complete structure without any holes,” Moller told HD Guru. “We tried to balance the administrative complexity with the value that H.265 brings to certain categories.”

On the surface the fees don’t seem steep, but they are being added to a long list of bill of material costs device manufacturers must pay to market devices, and this is not the only fee just to use HEVC encoding or decoding.

Moller said he didn’t expect at this point that the licensing schedule will come as much of a shock to licensees.

“I think most companies recognized that there are many companies out there that may require a license on essential patents, whether they get it bi-laterally with some companies or more effectively and efficiently through a patent pool, like we are forming or MPEG LA,” Moller said.

HEVC Advance will hold its first meeting of HEVC essential patent users and owners Sept. 2, 2015, in Tokyo.

By Greg Tarr


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