- - Tuesday, February 3, 2015

ANALYSIS/OPINION:

In most any complicated issue, the devil is in the details. That is certainly the case with the continued defense of the ATSC television standard by the patent pool’s operator, MPEG LA, which enjoys substantial licensing revenue.

Denver-based MPEG LA isn’t wrong to point out that the company provides a “one-stop” license for a pool of patents whose owners would otherwise charge individually for them. Troubling, however, is that nearly one-quarter (22.6 percent) of the patents bundled into the ATSC standard have expired. Moreover, when a consumer purchases an ATSC license, he is also required to pay a licensing fee for the MPEG-2 pool because products with ATSC incorporate that technology, which MPEG LA also licenses, according to its own website. When combined, almost three-quarters (74.4 percent) of the 1,481 patents included in the two pools have expired. It’s difficult to argue that such a service is much of a “convenience” to consumers when the product’s shelf-life is largely expired.

Even if consumers are to believe they should pay full price for the grab-bag of pooled licenses, it’s simply disingenuous of MPEG LA to imply that consumers are getting them at a “reasonable cost.” The royalty per ATSC standard is $5. That may seem pretty inconsequential in the larger scheme of things, but consider that in Europe and Japan licenses for the same technology only cost approximately $1.03 and $0.98, respectively. In a competitive market it is difficult to imagine American consumers would be paying so much more.

The fact is that MPEG LA is the beneficiary of a misguided and outdated mandate from the Federal Communications Commission that effectively monopolizes the market. That’s no crime. But if the company is going to make a case for continuing to require the ATSC standard, it shouldn’t pretend consumers are coming out on top. The reality is whether consumers use the technology or not — and as more and more people transition to streaming video and other services, the tendency is gravitating toward not doing so — they are paying a tax on every television patent, licenses of which the preponderance have expired.

It’s time the FCC reconsider the ATSC mandate, even if it doesn’t bode well for those like MPEG LA who profit from it.

ANDREW LANGER

President, Institute for Liberty

Washington

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