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SMPTE Issues VC-1 Standard, License Terms Pending

VC-1, the advanced video compression codec derived from Microsoft Windows Media 9 has finally become a SMPTE standard. The Society of Motion Picture and Television Engineers released the standard documents this week after more than two years of disputatious review.

"The work was contentious at times, and initially some people thought that SMPTE would just 'rubber stamp' the Microsoft document," said Peter Symes, vice president of engineering for SMPTE. "In fact, many individuals and organizations contributed to the final documents."

The documents--SMPTE 421M-2006 "VC-1 Compressed Video Bitstream Format and Decoding Process," and two supporting recommended practices have been posted at the SMPTE Web site.

When Microsoft submitted what was then known as VC-9 for standardization in September 2003, another advanced video compression codec--H.264/MPEG-4, Part 10, or AVC--was already formalized. However, the licensing terms for AVC, particularly on the content side, delayed its adoption. For broadcasters, AVC fees initially started at $10,000 a year per use of each encoder in markets with more than 100,000 households, regardless of the number of decoders (receivers) in those markets.

Broadcasters bristled, Microsoft submitted VC-1 to SMPTE, and the AVC fee was subsequently dropped to $2,500 per encoder for stations in markets of at least 100,000, but not more than 499,999 TV households. At 500,000 households, the fee kicks up to $5,000; and at 1 million, to $10,000--again, regardless of how many receivers are in a market.

These royalties on encoder use kick in Jan. 1, 2006.

Meanwhile, the six- to 12-month turnaround that Microsoft anticipated for getting its codec standardized dragged on as MPEG proponents objected to its ratification. The squabbles appeared to be settled early last year when a final committee draft was released. However, a procedural appeal was raised and summarily voted down.

Patent licensing terms for VC-1 are still up in the air, but an announcement should be forthcoming in the next couple of weeks, according to Larry Horn, manager and CEO for MPEG LA, a patent-licensing firm based in Denver. Horn said the VC-1 patent pool now consists of 16 companies, but besides Microsoft, the identities of the remaining 15 will not be released until a consensus is reached on licensing terms.

The absence of licensing terms hasn't stopped VC-1 from reaching the street. HD DVD players, which have just been rolled out in the retail market, use VC-1. Blu-ray players will as well. Motorola and Scientific-Atlanta are expected to incorporate VC-1 into set-top boxes for the AT&T Project Lightspeed initiative, which is being deployed with the Microsoft IPTV platform.

Harmonic has been incorporating VC-1 into its encoder line for more than a year, and Tandberg Television also offers encoders with VC-1. Both handle AVC as well, and under the licensing terms for that codec, the companies can make up to 100,000 units per year before incurring royalty fees. After that, units 100,001 through 4,999,999 cost 20 cents per; and quantities 5 million and above cost 10 cents each. Royalties on encoders and decoders kicked in Jan. 1, 2005.

Until licensing terms for VC-1 are revealed, it's not certain if these existing VC-1 devices will be grandfathered in or charged for back royalties. However, Horn said, "typically, these licenses provide coverage for the past."