Abstract
Media convergence presents a few noticeable dimensions, and requests an interdisciplinary research approach. We conduct a long-run analysis of the main initiatives of technological standardization carried out in the realm of “traditional” (cable, satellite and terrestrial) digital TV, focusing on Europe, to assess the technological determinants of its apparent trends to convergence. This analysis inevitably calls into question IPR strategies and policies. In particular, we investigate how private incentives and the public agenda for interoperability have shaped the on-going convergence of the TV sector toward an “IP-based” meta-platform. Despite the widespread usage of open standards and formats, the real potential for interoperability along the digital TV filière has been modest, and mostly limited to the transmission segment. This is mainly due to the strong proprietary features characterizing the TV sector, where viable content production and provision rests on effective control of content IPR. Further, patent portfolio strategies and control of crucial copyrights become increasingly central for competing in the converging TV sector, where former telecom companies, traditional TV operators and new OTT players strive to become gatekeepers of essential layers of the new IP-based delivery platforms. To sum up, while technological opportunities today do enable pervasive media interoperability and affordable convergence at the user-level, private incentives relentlessly push the industry toward standards fragmentation and the construction of walled gardens.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Notes
- 1.
Due to space limitations, this empirical analysis mostly concentrates on the DVB and EU experience, although keeping an eye on global trends.
- 2.
This section builds on a wide selection of papers and books; for sake of synthesis, we only mention the references most directly connected to our main argument, while skipping other background materials. For a proper presentation of the standardization literature, among others, Blind (2004), Swann (2010).
- 3.
Here, a single company manages to have its own specification acquiring a leading market share and becoming a de facto standard.
- 4.
Also most of de jure standards are privately possessed, but the ownership is usually shared by a multiplicity of subjects/licensors. A main example is provided by patent pool members (see infra).
- 5.
These compatibility standards in the literature have been also called “interface standards” (David & Greenstein, 1990).
- 6.
Generally, a converter is an adapter used to match the physical or functional characteristics of different objects/technologies.
- 7.
Many examples are available in ICT domains, from the simplest (plug adapters and power transformers for electricity) to more elaborated ones, such as analogue-to digital converters for TV receivers (or set top boxes, STB henceforth) or, in computer science, file format converters.
- 8.
This is the implementation of the standard used as its official/definitive interpretation. It checks that the specification is implementable, correcting potential errors and disambiguating its elements. The reference implementation also works as a benchmark for the following (derived) implementations.
- 9.
In a similar vein, other authors stressed the path dependent nature of standards choice and technology evolution. In fact, initial fortuitous events might result in permanent suboptimal trajectories, due to network effects and lock-in dynamics engendered by consumers’ switching costs (hence the dependence—David, 1985; Arthur, 1989).
- 10.
A valuable analysis of the Apple-Macintosh and IBM-Wintel saga can be found in Bresnahan and Greenstein (1999).
- 11.
Being DVB a private body, the developed specifications are submitted to official SDO for formal approval. DVB was born as a temporary consortium, and later transformed into a permanent body.
- 12.
Generally OS have their technical documentations publicly accessible for free or at a nominal fee.
- 13.
Moreover, the concept of “openness” is many-sided and touches upon several dimensions and phases: Krechmer (2006) arrives to categorise ten dimensions of openness, and three main types of stakeholders involved: creators, implementers and users.
- 14.
The software industry provides a high number of examples for enclosure strategies (Shapiro & Varian, 1999).
- 15.
Those necessary to build a material implementation (a product or a service) of the standard.
- 16.
In fact, the most credited definition does not assimilate an OS to a free standard (royalty-free, typical of the open source software world, OSS henceforth).
- 17.
In mass network markets the entry phase may require intensive efforts (high sunk costs) to build the installed base and activate network effects.
- 18.
In other words, in this case the net present value of the project is low mostly because of high licensing costs, rather than negative supply and demand conditions.
- 19.
A main example is the methodology to be used for calculating the royalty base. When patents are embedded in high value added products—e.g.: Apple’s smart-phones and tablets—and percentage royalties schemes are used, they earn high absolute royalties, irrespective of their intrinsic stand alone technical and innovative contribution to the system.
- 20.
A compact historical analysis of patent pools and antitrust practice in the US case is provided by Gilbert (2010).
- 21.
Obviously, the bargaining power of each member of the pool depends on the size and importance of its IPR portfolio.
- 22.
In the first case, standards do not proliferate and unique designs prevail. In the second case, standards may proliferate, but services and devices are interoperable, supporting multiple standards.
- 23.
Other ancillary supporting standards were also developed, such as DVB-SI (for service information), DVB-SUB (for subtitling), and MHP, the open middleware specification analyzed infra. The transmission-independent part of MHP has led to the GEM specification, used also in off-line media (Blu-ray Disc).
- 24.
At that time, typically, a signal of 166 Mb/s or more.
- 25.
Historically, satellite and cable have been used complementarily for primary transmission of TV signals. The wide footprint enjoyed by satellite helped to connect separate distant cable networks (Parsons & Frieden, 1998).
- 26.
Concerning modulation, two different techniques were chosen. For satellite, QPSK (quadrature phase shift keying), for cable QAM (quadrature amplitude modulation). These techniques, through different implementations, are also the modulation core of other platforms such as DSL modems, CDMA, 3G, Wi-Fi and WiMAX.
- 27.
For example, two different modulation schemes were developed, differentiating geographical areas starting DVB-T services early (based on 2k OFDM + QAM) and those starting later, and building on single frequency networks (SFN, henceforth). The second required adopting 8k OFDM + QAM modulation, which is backward compatible with 2k/QAM broadcasts. Later on, several EU countries adopted improved algorithms, adds-on and devices to the basic DVB-T standard, in order to cater for their specific transmission and spectrum needs.
- 28.
In fact, with satellite, a single up-link transmission site (from the earth base station to the satellite transponder) concentrates all system control and signal management functions (Drury, 1999; Reimers, 2006). Here the main problem is transmitting a compatible signal receivable by household devices produced by different vendors, and patronized by different satellite TV operators, while satellite services have transnational coverage and reception.
- 29.
All figures include the DVB second generation of transmission standards. The latter at 2011 is relevant for satellite, still marginal for terrestrial and zero for cable.
- 30.
Obviously, backward compatibility is a technological possibility offered by the DVB-S2 design, but its actual materialization will always depend on what happens during the commercial implementation, id est, on the commercial choices and incentives held, country-by-country, by broadcasters and satellite operators, which interact with CE manufacturers’ incentives and market expectations.
- 31.
Nolan (1997) remembers that a strong obstacle for analogue satellite TV diffusion in EU had been the fragmented structure and incompatibilities affecting the reception devices, with the satellite receiver being typically universal and separated from the decoder (signal descrambler), proprietary. Hence, those offering a proprietary unique piece of receiving equipment (STB) enjoyed a strong market boost.
- 32.
- 33.
Despite the general formulation requested by law, the provisions of NRF were first and foremost inspired—if not specifically crafted—at the benefit of the MHP, which was the first specification to be formally recognized in the list of EU official standards for ITV.
- 34.
At that time, EC (2006) argued that this success was jointly due to a virtuous and synergic public-private mix of factors: the public subsidies to MHP decoders, the voluntary agreement of Italian broadcasters to use MHP, and the definition of common specifications for the national implementation of the MHP standard. As a counterfactual, the Commission noticed that the same degree of stakeholders coordination did not materialize in Germany, nor in the Northern EU markets, despite the early market consensus.
- 35.
MHEG-5 is a language for presentation of multimedia information, particularly used for ITV services. To be useful for broadcasting, the language has been codified (“profiled”) as ETSI standard. WTVML (Worldwide TV Mark-up Language) is an XML-based content format, standardized through ETSI, allowing web designers to create ITV services with minor adaptation requirements.
- 36.
Minor variations and logical subsets are also “Web-TV”, “Net TV”, “OTT TV”, “Catch-up TV”.
References
Arthur, B. (1989, March). Competing technologies and lock-in by small historical events. Economic Journal, 99, 116–131.
Besen, S. M., & Farrell, J. (1994). Choosing how to compete: Strategies and tactics in standardization. Journal of Economic Perspectives, 8(2), 117–131.
Blind, K. (2004). The economics of standards: Theory, evidence, policy. Cheltenham: Edward Elgar.
Bresnahan, T. F., & Greenstein, S. (1999). Technological competition and the structure of the computer industry. Journal of Industrial Economics, 47, 1–40.
Cave, M. (1997). Regulating digital television in a convergent world. Telecommunications Policy, 21(7), 575–596.
Cawley, R. A. (1997). European aspects of the regulation of pay television. Telecommunications Policy, 21(7), 677–691.
Cerri, D., & Fuggetta, A. (2007). Open standards, open formats, and open source. The Journal of Systems and Software, 80(11), 1930–1937.
Choi, J. P. (1996). Do converters facilitate the transition to a new incompatible technology? A dynamic analysis of converters. International Journal of Industrial Organization, 14(6), 825–835.
Choi, J. P. (1997). The provision of (two-way) converters in the transition process to a new incompatible technology. Journal of Industrial Economics, 45(2), 139–153.
Cowan, R. (1991, July). Tortoises and Hares: Choice among technologies of unknown merit. Economic Journal, 101(407), 801–814.
David, P. A. (1985). Clio and the economics of qwerty. American Economic Review, 75(2), 332–337.
David, P. A., & Greenstein, S. (1990). The economics of compatibility standards: An introduction to recent research. Economics of Innovation and New Technology, 1(1), 3–41.
Drury, G. M. (1999). Interoperability in digital broadcasting systems. In IEE colloquium on digital television—where is it and where is it going? (Ref. No. 1999/072) (pp. 6/1–6/7).
EBU. (2004, April 30). Comments by the EBU on the commission staff working paper on the interoperability of digital interactive television services. Available at http://europa.eu
ECCA. (2003, February 20). Comments on the commission staff working document on barriers to widespread access to new services and applications of the information society. Brussels.
Economides, N. (1996). The economics of networks. International Journal of Industrial Organization, 14(6), 673–699.
Eltzroth, C. (2008). IPR policy of the DVB project: Negative disclosure, FR&ND arbitration unless pool rules OK, Part I. The International Journal of IT Standards and Standardization Research, 6(2), 21–47.
Eltzroth, C. (2009). IPR policy of the DVB project: Negative disclosure, FR&ND arbitration unless pool rules OK, Part II. The International Journal of IT Standards and Standardization Research, 7(2), 1–22.
European Commission. (2004, July 30). On the interoperability of digital interactive television services. Communication from the Commission, n. COM 541 final. Available at http://europa.eu
European Commission. (2006, February 2). Reviewing the interoperability of digital interactive television services pursuant to communication COM[2004] 541 of 30 July 2004, Communication from the Commission, n. 37 final. Available at http://europa.eu
Farrell, J., & Saloner, G. (1992). Converters, compatibility, and the control of interfaces. Journal of Industrial Economics, 40(1), 9–35.
Farrell, J., & Shapiro, C. (1992). Standard setting in high-definition television. Brookings Papers on Economic Activity: Microeconomics, 1–93.
Funk, J. L., & Methe, D. T. (2001). Market- and committee-based mechanisms in the creation and diffusion of global industry standards: The case of mobile communication. Research Policy, 30, 589–610.
Gandal, N. (2002). Compatibility, standardization and network effects: Some policy implications. Oxford Review of Economic Policy, 18(1), 80–91.
Gerbarg, D. W. L. (Ed.). (1999). The economics, technology and content of digital TV. London: Kluwer.
Gilbert, R. (2010). The essentiality test for patent pools. In R. C. Dreyfuss, D. L. Zimmerman, & H. First (Eds.), Working within the boundaries of intellectual property. Innovation policy for the knowledge society. Oxford: Oxford University Press.
Grimme, K. (2002). Digital television standardization and strategies. London: Artech House.
Hart, J. (2004). Technology, television and competition. The politics of digital TV. Cambridge: Cambridge University Press.
Hawkins, R. (1999). The rise of consortia in the information and communication technology industries: Emerging implications for policy. Telecommunications Policy, 23, 159–173.
Helberger, N. (2005). Controlling access to content. Regulating conditional access in digital broadcasting. The Hague: Kluwer Law International.
Jenkins, H. (2006). Convergence culture. New York: New York University Press.
Katz, M., & Shapiro, C. (1994). System competition and network effects. Journal of Economic Perspectives, 8(2), 93–115.
Klevorick, A. K., Levin, R. C., Nelson, R. R., & Winter, S. G. (1995). On the sources and significance of interindustry differences in technological opportunities. Research Policy, 24(2), 185–205.
Krechmer, K. (2006). The meaning of open standards. The International Journal of IT Standards and Standardization Research, 4(1), 43–61.
Lemley, M., & Shapiro, C. (2007). Patent holdup and royalty stacking. Texas Law Review, 85, 1991–2049.
Lerner, J., & Tirole, J. (2004). Efficient patent pools. American Economic Review, 94(3), 691–711.
Matteucci, N. (2004). Diritti Televisivi, oligopolio ed intervento antitrust nella pay-TV: il caso Telepiù-Stream. Quaderni di Dipartimento, n. 215. Available at http://econ.univpm.it
Matteucci, N. (2008). Open standards and interoperability in EU digital TV: Economics and policy issues. Review of Economic Research on Copyright Issues, 5(2), 45–70.
Matteucci, N. (2009). Interoperability provision in NGC: The case of Italian DTV. Info, 11(6), 30–50.
Matteucci, N. (2010). Strategies for digital television: DTT in Italy. International Journal on Media Management, 12(3), 159–181.
Matteucci, N. (2013). Lo stato della banda larga in Italia: statistiche, modelli diffusivi e implicazioni di policy. L’industria (n.s.), Anno XXXIV(1), 11–50.
Matutes, C., & Regibeau, P. (1996). A Selective review of the economics of standardization entry deterrence, technological progress and international competition. European Journal of Political Economy, 12(2), 183–209.
Moore, G. E. (1965). Cramming more components onto integrated circuits, reprinted from Electronics, 38(8), 114ff., Solid-State Circuits Society Newsletter, IEEE, 11(5), 33–35, September 2006.
Negroponte, N. (1995). Being digital. New York: A.A. Knopf (Random House).
Nolan, D. (1997). Bottlenecks in pay television. Impact on market development in Europe. Telecommunications Policy, 21(7), 597–610.
OFCOM. (2012, December 13). International communications market report 2012. Available at http://stakeholders.ofcom.org.uk/binaries/research/cmr/cmr12/icmr/ICMR-2012.pdf
Owen, B. (1999). The internet challenge to television. Cambridge, MA: Harvard University Press.
Parsons, P. R., & Frieden, R. M. (1998). The cable and satellite television industries. Boston: Allyn & Bacon.
PriceWaterhouseCoopers. (2012). 2012 Patent Litigation Study. Available at http://www.pwc.com/en_US/us/forensic-services/publications/assets/2012-patent-litigation-study.pdf
Quayle, A. (2012). TV delivery evolution: Hybrid TV, over the top (internet) TV and TV everywhere (Multi-Screen) TV. Status report and projections 2012–2017. Alan Quayle business and service development consultancy report.
Reimers, U. H. (2006). DVB-The family of international standards for digital video broadcasting. Proceedings of the IEEE, 94(1), 173–182.
Rochet, J. C., & Tirole, J. (2003). Platform competition in two-sided markets. Journal of the European Economic Association, 1, 990–1029.
Salop, S. C., & Scheffman, D. T. (1983). Raising rivals’ costs. American Economic Review, 73(2), 267–271.
Shapiro, C. (2001). Navigating the patent thicket: Cross licenses, patent pools, and standard-setting. In A. B. Jaffe, J. Lerner, & S. Stern (Eds.), Innovation policy and the economy (Vol. I). Cambridge, MA: MIT Press.
Shapiro, C., & Varian, H. R. (1999). Information rules. Cambridge: Harvard University Press.
Siebert, P. (2011, October 24–27). DVB: Developing global television standards for today and tomorrow (pp. 171–175). Telecom World (ITU WT), 2011 Technical Symposium at ITU.
Stango, V. (2004). The economics of standards wars. Review of Network Economics, 3(1), 1–19.
Swann, P. (2010, May 27). The economics of standardization: An update. Report for the UK Department of Business, Innovation and Skills (BIS), Version 2.2. Available at http://www.bis.gov.uk/feeds/~/media/ED32CDA672764D7C8AC2F4E323581010.ashx
Treacy, P., & Lawrance, S. (2008). FRANDly fire: Are industry standards doing more harm than good? Journal of Intellectual Property Law and Practice, 3(1), 22–29.
Van Schooneveld, D. (1996). Standardization of conditional access systems for digital pay television. Philips Journal of Research, 50(1–2), 217–225.
West, J. (2003). How open is open enough? Melding proprietary and open source platform strategies. Research Policy, 32, 1259–1285.
West, J. (2007). The economic realities of open standards: Black, white and many shades of gray. In S. Greenstein & V. Stango (Eds.), Standards and public policy. Cambridge: Cambridge University Press.
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2016 Springer-Verlag Berlin Heidelberg
About this chapter
Cite this chapter
Matteucci, N. (2016). Standards, IPR and Digital TV Convergence: Theories and Empirical Evidence. In: Lugmayr, A., Dal Zotto, C. (eds) Media Convergence Handbook - Vol. 1. Media Business and Innovation. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-54484-2_12
Download citation
DOI: https://doi.org/10.1007/978-3-642-54484-2_12
Publisher Name: Springer, Berlin, Heidelberg
Print ISBN: 978-3-642-54483-5
Online ISBN: 978-3-642-54484-2
eBook Packages: Business and ManagementBusiness and Management (R0)