An association of mobile carriers and content firms joined the fight last week against a group of technology companies it said is looking to overcharge for anti-piracy software.
The Mobile Entertainment Forum blasted a proposal by MPEG LA, the licensing authority of the Moving Pictures Experts Group, to charge handset manufacturers $1 per device and carriers 1 percent of any transaction to cover the costs of digital rights management technologies supported by the Open Mobile Alliance. The MEF called the planned rates “onerous, impractical and unclear,” adding that steep fees threaten the economic viability of the content the technology is designed to protect.
“After an in-depth member consultation program, it is clear that the MEF membership is concerned that the fee level proposed by MPEG LA for mobile DRM licensing will inhibit mobile entertainment industry growth,” said Patrick Parodi, chair of MEF. “We hope to be able to work with MPEG LA to suggest a compromise licensing program and fee structure, which will maximize the opportunities from mobile entertainment for all concerned.”
The MEF’s statement was the most public industry protest to date against the proposed fees, which were unveiled in January. Handset manufacturers, turning out 700 million phones a year, may have the most to lose under the proposal. And unlike operators, most phone makers are unlikely to profit from downloaded transactions of music, video and other proprietary content.
Qualcomm Inc., Lucent Technologies Inc., Siemens-Mobile, Sony Network Services, T-Mobile and Vodafone Group plc and others are among the members of the Mobile Entertainment Forum. The group also took issue with a provision that would charge royalties for products sold since the beginning of the year, and said it is concerned fees could go even higher with the next generation of OMA-supported DRM software.
Several electronics makers made news last month, claiming the rates were too high. Further, some analysts say manufacturers are being asked to foot the bill for DRM protection that actually makes their products less valuable to consumers by limiting how downloaded content can be used or moved between devices.
MPEG LA has pooled patents for anti-piracy technology from DRM companies InterTrust and ContentGuard and electronics makers Sony Corp., Matsushita Electric Industrial Co. Ltd. and Philips Electronics. Lawrence Horn, vice president of licensing and business development for MPEG LA, said the backlash speaks to how important an open DRM technology is to the market.
“This is an enabling technology-it enables new revenue streams to be produced,” said Horn.
While the two sides bicker, some content providers are working to deliver content protected by proprietary DRM software developed in-house. Melodeo, a Seattle-based mobile music company, has launched a music delivery service with its own DRM that protects full-track downloads from being copied and shared with other users.
But such proprietary technology can be costly and limiting, said Todd Chanko, an analyst with Jupiter Research. “Each carrier can develop its own proprietary system, but the fact is, in the long run, it’s going to be more cost effective for individuals as a whole to agree to a standard system that can allow consumers, content providers, carriers and handset manufacturers to help the mobile content market achieve its full potential,” he said.
Research firm Parks Associates seconded the opinion and said the mobile-phone industry is in a unique position to carry out the vision and set DRM standards that will work for consumers and industry players.
“Unlike the personal computing and consumer electronics spaces, the mobile-phone industry has been able to develop interoperable DRM solutions from the ground up, which is a real advantage for providers seeking to add multimedia content to their services,” said Harry Wang, research analyst with Parks Associates. “This environment has created a clean slate for the mobile-phone industry to write its own DRM standard.”
However, the firm said participants must work out the payment of royalty fees and other aspects to encourage the market. The potential is significant; the firm’s new Consumers & Emerging Multimedia Platforms survey found 28 percent of respondents plan to purchase new phones during the next 12 months.
“There are not going to be phones and carriers out there that are going to enable the widespread file-sharing functionality you have on PCs,” said Chanko. “It just isn’t going to happen.”
