At the end of last week, the MPEG-LA consortium announced they were extending the arrangement whereby they allow 'web uses' of the patents reading on the H.264 standard that they administer for their members to be licensed without charge. The arrangement, which runs in five-year periods, has now been extended to the expiration of the patents in the pool.
At first sight, this sounds great. Headlines have popped up all over the place which might lead one to believe that everything is now fine in the area of video streaming on the internet and we can all proceed without fear of having video taxed. But I'd suggest leaving the champagne corked for now.
Unpacking The News
The statement actually takes a lot of unpacking, probably intentionally so. H.264 is the widely-used "MP4" video format created many years ago by the Motion Picture Experts Group, MPEG. Those "experts" were mostly associated with various corporations and research labs, and the international standard they created was heavily encumbered with patents.
Realising that no-one much would use the standard if each user had to go negotiate patent licensing terms with a large number of separate parties, the patent-holders wisely decided to get together outside the scope of MPEG and create the "MPEG Licensing Authority", MPEG-LA.
Despite the name, MPEG-LA is nothing to do with the standards group itself. It's a for-profit company devoted to making the patent problem worse in the name of making it "easier to handle" by creating patent pools for all sorts of other technology areas, beyond the media formats they already police. Go looking for the exact terms under which they are offering "free use" in this case and you'll find they are not keen for you to know. The best available are summaries that are sketchy about the exact definitions of terms.
They had indeed in February decided to waive licensing charges for what they describe as "where remuneration is from other sources" than direct payment by the viewer to the broadcaster. Their original commitment was to leave such uses untaxed until 2015 and thenceforth to tax at a rate no greater than on-demand internet TV viewing. Their announcement last week commits to never charge under these circumstances.
Chain Of Taxes
Their use of language helps us understand what's really happening,
though. For H.264 video to reach your browser, there is a chain of
events that has to happen, and MPEG-LA is taxing every one of them apart
from, now, the last.
First, the H.264-format video needs to be created - but that isn't free under this move.
Then it needs to be served up for streaming - but that isn't free under this move. There then needs to be
support for decoding it in your browser - but adding that isn't free under this move. Finally it needs to be
displayed on your screen.
The only part of this sequence being left untaxed is the final one. Importantly, they are not offering to leave the addition of support for H.264 decoding in your browser untaxed. In particular, this means the Mozilla Foundation would have to pay to include the technology in Firefox.
If they could do that. But they would not be able to do so, since the software they create is open source and thus needs to be able to be freely used by others, as a whole or as a kit of parts, without any restrictions. A license bought from MPEG-LA would not be "sublicensable", meaning they could not gain the right for any arbitrary open source community member to do the same as Mozilla was allowed with H.264. Consequently they are unable to benefit in any way from this apparently generous action by MPEG-LA.
Why are MPEG-LA taking this action now? They wouldn't say clearly when they were asked, so we're left to guess. It seems likely that it's an action induced by Google's WebM CODEC. At a minimum, MPEG-LA owes to its members a duty to maintain the commercial competitiveness of H.264 over WebM.
But there may be more to it than that. When WebM was announced, MPEG-LA made predatory noises and tried their best to instill fear, uncertainty and doubt in the market through veiled threats of patent litigation against Google and WebM. It may be they are getting ready to launch that attack, seeing this as the ideal moment for the opening of a third front of patent litigation against Google after Oracle and Paul Allen have started the war.
Whether or not that "Axis" forms, the news is nowhere near as good as
other commentators would have us believe. The future of the web and of
web video depends on open source software, and H.264 remains unusable in
open source because of patent threats. MPEG-LA's apparently magnanimous
gesture offers as little to open source as their original tactical move.
Given the tendency for commentators to stick to directly-causal explanations, they seem to be getting away with it despite the fact it really changes nothing with respect to modern adoption of H.264. We should not be affording them so much credit for it.