Piracy protection costs 'prohibitive'

Major players in the mobile industry have taken exception to the licensing costs proposed for the Open Mobile Alliance's DRM standard
Written by Jo Best, Contributor

The GSM Association (GSMA) — the über mobile phone trade group whose members span Microsoft, BT and Nokia — has complained the current piracy protection for mobiles is "unworkable" and will cost them too dear.

The pre-eminent standard in the mobile phone world for DRM — technology designed to prevent mobile content being pirated — is one being proposed by the Open Mobile Alliance.

Patents used to create the standard are drawn from a small group of companies, which includes Philips and Sony and is known as MPEG LA. MPEG LA is thought to be demanding a $1 payment for every phone sold using the technology, plus a per-transaction fee every time mobile content protected by its DRM is bought and sold.

That, according to the GSM Association is "impractical, excessive and short-sighted" and the per transaction fee is "unworkable" in the market.

A spokesman for the Association said it hadn't changed its mind about its commitment to open standards over proprietary systems but said MPEG LA will have to alter its licensing for the adoption to continue.

"The ideal solution would be to have MPEG LA review this and come back with more reasonable terms," he said. "We would prefer to have a single open approach but not on these terms."

The Association also expressed concern that what it considers a high cost would force mobile companies to adopt proprietary solutions, such as Microsoft's WMA format, already in use on some models of digital music players and coming soon to Nokia handsets.

That fragmentation would mean users would be unable to transfer music or movie downloads from one mobile to another after an upgrade, for example. The GSM Association said this would also cause problems with roaming, changing networks or exchanging media content with friends and would stifle market growth.

The GSMA is now calling for proposals from other DRM providers, to be submitted by 11 April. This short turnaround has prompted some to question if the Association is puffing its chest out in an attempt to scare the MPEG LA into lowering its licensing fees.

Dario Betti, senior analyst at Ovum, said the strategy is likely to pay off for the GSMA. "It sounds to me like they're playing a bit of a game — and it's worked in the past," he said. "I still think the OMA DRM will be kept as standard with all the investment that's gone after it and [it] has been optimised for mobiles. I don't think they'll turn their back on something they helped create."

The GSMA's spokesman denied it was making idle threats. "There are more tangible alternatives out there," he said, adding that other DRM vendors had already come forward with proposals. The GSMA has yet to be contacted by MPEG LA, according to the spokesman.

Ovum's Betti, however, isn't convinced. "It's 'mission accomplished' — people [at MPEG LA] are quite scared."

Larry Horn, vice-president for licensing and business development at MPEG LA, said the organisation is "pleased by the markets' interest". He continued: "In an ongoing effort to be responsive to the marketplace's concerns, [the company and patent holders] are pleased to receive and consider the GSMA's comments. The choice of technology is an independent determination to be made by each company and each company must make the decision according to their market needs."

He added that the value of the technology should be considered against the new opportunities the company believes it will bring.

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