VC-1 Goes to Ballot

Standard could be final by March
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Standard could be final by March


The Windows-based video compression codec known as VC-1 could become a standard by March. SMPTE, the group conducting the standards process, releases its final committee draft (FCD) on the codec this month, which is then submitted on a five-week ballot to about 80 members, who are expected to iron out any bugs. Once that process is complete, the directions on how to build a once-proprietary Microsoft technology will become available to the world.

"We've got to the stage where all of the major comments appear to have been dealt with," said Peter Symes, SMPTE vice president of engineering. "Anything left is mostly details."

A March release would land VC-1 in the market just as demand for advanced video compression starts to sizzle. Telcos, video-game makers and the hi-def DVD industry are all lined up to use advanced compression codecs, which can deliver standard-def video in about half the bandwidth used by MPEG-2.


The road to standardize VC-1 was not without conflict. When Microsoft offered up the technology in September 2003, another codec from the MPEG camp was already in the can and being considered for inclusion in the ATSC digital television standard. However, that codec--H.264/MPEG-4, Part 10, now commonly known as AVC--carried licensing terms that delayed its adoption. Into the gap stepped Microsoft with its Windows Media 9 compression scheme, from which VC-1 was derived.

Objections arose from MPEG proponents, who accused Microsoft of disruptive opportunism. Meanwhile, Microsoft predicted a six- to 12-month turnaround from SMPTE in what became known as the "rubber-stamp" expectation. A few words were exchanged, but the work continued and the industry awaited the standardization of a second codec.

"Both are under consideration to become part of the existing [DTV] standard, so A/53 could be amended to include AVC and VC-1," said ATSC President Mark Richer.

A draft proposal is expected to reach T3, the ATSC Technology Group on Distribution, within the first half of the year, Richer said.

"One possibility is that we don't do anything, or we could adopt one or the other or both. Hopefully, we'll reflect what the industry wants," he said.

For gear providers like Harmonic in Sunnyvale, Calif., a second codec was a mixed blessing. Harmonic makes the DiviCom M-100, an encoder that handles MPEG-2, AVC and VC-1. David Price, vice president of business development, said Harmonic would have preferred the emergence of just one advanced codec instead of two, but "in the absence of sensible commercial licensing terms, it may be a good thing."

The licensing terms for those who made AVC devices were not as controversial as for those who would use AVC devices, particularly broadcasters.


Companies making AVC encoders and decoders can make up to 100,000 units a year before incurring royalty fees; 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.

For broadcasters, AVC fees initially started at $10,000 a year per encoder in markets with more than 100,000 households, regardless of the number of decoders (receivers) in such markets. In the wake of objections and the emergence of VC-1, the fee was 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.

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

For both broadcasters and manufacturers, fees are capped at $3.5 million a year through 2006; at $4.25 million in 2007-08; then at $5 million through 2010.

The AVC fee structure was developed by MPEG LA, a patent-licensing firm based in Denver. The same firm has opened up a patent pool on VC-1, with 12 essential patent holders currently participating, according to Larry Horn, a spokesman for MPEG LA. No agreement on licensing terms for VC-1 had been reached at press time, but Horn said a meeting was scheduled for early February.

"I hope the remaining issues may be resolved in the first quarter so an announcement of licensing terms can be made," Horn said.

Before SMPTE started the standardization process on VC-1, the license fee associated with the mother technology, WM9, consisted entirely of a 10-cent royalty on encoders and decoders, capped at $1 million a year. While users weren't subject to royalties, they were only indemnified for their dime and therefore left vulnerable to patent suits from third-party claimants.

Horn said it was premature to say whether VC-1 licensing terms would resemble those of AVC, but the video industry isn't waiting to find out.


"We've already seen demand far exceed our expectations," said Price, of Harmonic. "We've sold more than 1,500 of these next-gen encoders already."

Modulus Video, also of Sunnyvale, went pure-play AVC with its line of advanced-compression encoders and decoders. Both started shipping last month, said Bob Wilson, chairman and CEO.

"We have been overwhelmed by the market response to AVC," he said.

Like Harmonic, Tandberg Television of Southampton, U.K., offers multicodec encoders. The Tandberg Television models have an activation feature so royalties are levied only on the format used, said Matthew Goldman, director of technology. Tandberg Television has two standard-def models using identical hardware, one that comes keyed to VC-1 and the other to AVC. A downloadable license key is available to switch between codecs, and both models simultaneously output MPEG-2 with either AVC or VC-1. Tandberg Television also has two similarly configured HD encoders. Goldman said Tandberg Television would be involved in two pending North American deployments of VC-1 and AVC.

The first big deployments will likely be in set-top boxes for cable and satellite, said Dave Arland, vice president of corporate communications and government relations for Thomson.

Companies making AVC-enabled set-tops include ADB of Poland and Sentivision of Japan. Motorola has announced advanced compression set-tops, but they haven't been deployed, said Paul Alfieri, spokesman for Motorola.

"We showed AVC boxes last summer," he said. "Now that they're done, demand is materializing."

SBC is expected to goose the VC-1 set-top market with its telcoTV initiative. Late last year, the San Antonio, Texas-based telecom announced a $400 million, 10-year IPTV partnership with Microsoft, and a $4 billion plan to connect around 18 million homes to fiber over the next three years. Bell Canada and BellSouth are also testing Microsoft's IPTV application.

Hi-def DVD players, expected to reach stores next Christmas, will represent another wave of deployments. AVC will also show up in handheld devices, such as the Sony Playstation Portable, said Rob Koenen, chairman of the MPEG Requirements Group.

Finally, there's E-VSB, the enhanced DTV transmission format that was the original impetus behind the development of AVC. While it eats up twice the bandwidth of its payload, E-VSB provides a more robust signal and may provide coverage in areas where 8-VSB can't punch through. Broadcasters are developing uses for it, particularly now that the question of codecs appears to be settled.