MPEG LA, the licensing agency, said that the essential H.264/MPEG-4 AVC patent holders have reached agreement on the terms of a joint patent license for implementation and use of the AVC video compression standard.
AVC, long touted as a major improvement in MPEG compression technology, can double the efficiency of the MPEG-2 compression standard. It has potential broadcast applications, mainly for the delivery of HD images.
Proposed royalties to be paid by end product manufacturers for an encoder, a decoder or both (units) begin at $0.20 per unit after the first 100,000 units each year. There are no royalties on the first 100,000 units each year. Above 5 million units per year, the royalty is $0.10 per unit.
The maximum royalty for these rights payable by a company is $3.5 million per year in 2005-2006, $4.25 million per year in 2007-2008 and $5 million per year in 2009-2010.
Proposed usage fees are two cents per title for each pay-per-view, video-on-demand, and download longer than 12 minutes. Subscription video delivered by satellite, cable or Internet would be priced according to the size of the system, starting at $25,000 a year for systems with 100,001 to 250,000 subscribers; $50,000 for 250,001 to 500,000 subscribers, $75,000 for 500,001 to one million subscribers and $100,000 for anything above one million. Fees for broadcast transmission begin at $10,000 a year, per market, in markets with more than 100,000 households.
The initial term of the license is through December 31, 2010. To encourage early market adoption and start-up, the license will provide a grace period in which no royalties will be payable on decoders and encoders sold before January 1, 2006.
For more information, visit: www.mpegla.com.