Seven companies will pour some of their broadcasting and technology abilities into a new joint venture to bring MPEG-4 interactive television technology to cable companies.
Based in Tokyo, e-BOX Corp. will be a collaborative effort between Pioneer Corp., Sharp Corp., National Semiconductor Corp., Sigma Designs Inc., CMC Magnetics Inc., iVAST Inc. and Modern VideoFilm Inc., the companies said in a joint statement Wednesday.
The MPEG-4 standard can compress video more efficiently than the MPEG-2 standard currently used by satellite and cable companies for transmitting television signals. An MPEG-4 television signal can be delivered at similar quality to MPEG-2 with less bandwidth, and can carry interactive features like a DVD.
However, potential licensees of the MPEG-4 standard have balked at terms offered by MPEG-LA LLC, a consortium of patent holders for the compression technology. The preliminary terms would require device manufacturers to pay US$0.25 for each MPEG-4 product such as a set-top box decoder or video encoder, with product fees capped at $1 million a year.
The product fees are less than those currently charged for MPEG-2, but the licensing terms also call for content producers to pay a fee of $0.02 per hour for each use of the standard.
If each of the 22 million subscribers Comcast Cable Communications Inc. expects to have after its merger with AT&T Corp.'s broadband division watch an average of five hours of television each day, Comcast would have to charge an extra $3 per month per subscriber to use the MPEG-4 standard, not counting the cost of implementing the service.
Apple Computer Inc. delayed the release of its QuickTime 6 and QuickTime Broadcaster software last month, in protest of the MPEG-4 licensing terms.
If MPEG-LA charges a fee for each of the hundreds of digital television channels available to a household, the cost would be prohibitive.
Though 2 cents may not sound like a lot, "times all those subscribers, times all those channels, times all those hours ... that math doesn't work, and I think everybody is aware of that," said Elliot Broadwin, chief executive officer of iVAST, an MPEG-4 content delivery company in Santa Clara, California.
Broadwin is convinced that the license holders will modify their licensing demands for broadcasters over time, he said.
"I don't know if there's going to be a cap or some other adjustment," he said. "It does impact us, there's no doubt."
Comcast seems to think that change is on the horizon as well, since it agreed to advise the joint venture partners on the technical requirements of the system and to test e-BOX's set-top boxes and cable facility equipment once it comes out of development some time next year.
Once in place, MPEG-4 will allow subscribers to interact with programs delivered over cable, pausing or rewinding them, downloading background data or soundtracks, or ordering video on demand, said Moshe Barkat, president of Modern VideoFilm, a Burbank, California, company providing post-production services and MPEG-4 compression and authoring for the joint venture. Cable companies will be able to earn additional revenue from these new services, justifying the relatively higher cost for using the standard, he said.
The joint venture has no plan to extend its efforts to Internet broadcasting, and it will incorporate antipiracy technology into its products, addressing one concern of the studios owning the content.
"The higher the image quality, the greater their concern about piracy," Barkat said.