With fierce competition between mobile operators as well as handset manufacturers, both aim to keep handset prices to a minimum. Recently the MPEG
Licensing Authority proposed a $1 levy per handset and 1% per transaction royalty to offer an OMA standard that would allow digital music stores and mobile phones using OMA to all be compatible with each other. This would mean that a consumer would not have to worry if the music store they are downloading from is compatible with their handset, unlike the situation we have with ringtones where one must ensure they get a ringtone that is compatible with their handset.
However recently the mobile handset manufacturers began complaining about the levies and now the main GSM operators, represented by the Association of GSM (GSMA) are also going against what they call expensive unworkable tariffs. According to the GSMA, if this OMA anti-piracy technology was used in the 684 million mobile handsets sold in 2004, the $684 million in royalties would exceed all the online digital music sales made last year.
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The GSMA representing cellular operators using the GSM standard, with over a billion users worldwide, has described the proposed tariff, put forward to the Open Mobile Alliance standards group as unworkable and felt it harms the users. The tariff proposals require carriers to pay one per cent of transactions and $1 per handset back to the DRM patent holders, notably ContentGuard, Intertrust, Matsushita, Philips and Sony. GSMA feels the technology used in the open standard developed for anti-piracy software is expensive. It has threatened to boycott the standard and called for less expensive DRM systems. The open standard is necessary to download and play music and movies on handsets. |
It will be interesting to see if the MPEG Licensing Authority will change this handset levy or per transaction royalty. $1 may not seem like a lot, but for a large operator which sells millions of handsets, this means an extra $1 million lost in royalty costs for every million handsets they sell using the OMA DRM.
On the other hand, the MPEG Licensing Authority will need to be careful how much to adjust their levy. Too much and this will drastically affect their flow of income from royalties. Too little and the handset operators may go with their own DRM systems, thus leading to a situation we already have with online music stores being compatible with only certain portable players and ringtones being compatible with only certain handsets.
Feel free to discuss and find out more about online music stores on our Music Downloads, Peer-to-Peer (P2P) & Legal Issues Forum.
Source: Earth Times - Technology News
