Hoping a little superhero power will win the day, Cisco has introduced project Thor, an initiative to create a royalty-free video codec as an alternative to the industry standard H.265. H.265, which is also known by the name High Efficiency Video Codec (HEVC), has been widely expected to pave the way for next-generation television formats like Ultra HD (UHD) TV. However, recent concerns over licensing fees have put a damper on HEVC enthusiasm.

With an eye toward keeping licensing costs in line, Cisco Systems Inc. (Nasdaq: CSCO) has released the code for its project Thor codec. This is not a ready-for-use technology, but a project still under development, with Cisco looking for further input. Not only has the company open sourced the code, but it's also shared its work directly with the NetVC workgroup under the Internet Engineering Task Force (IETF) . NetVC is also aiming to develop a new royalty-free video codec and is accepting contributions from experts in the industry. Mozilla is another active member in the group and has contributed its technology called Daala.

In addition to the Thor code, Cisco has built a patent analysis process designed to help the development work avoid collision with other patents in the space.

HEVC promises to reduce bandwidth requirements for video delivery by up to 50%. However, an organization called HEVC Advance has set prices for its HEVC patent pool that may seriously slow down adoption. (See HEVC Advance Could Hurt 4K TV Advancement.)

While HEVC Advance only began assessing which patents would be included in that pool at the beginning of this month, it has already set prices for licensing fees. Those fees include .5% of attributable revenues for content owners; $1.50 per unit for TV sets using HEVC; $1.10 per unit for connected devices like set-tops and computers as well as software for media delivery; and $.80 per unit for mobile devices.

In Cisco's case, the company is particularly worried about HEVC licensing costs in free video-based collaboration tools like Skype and Cisco Spark. While HEVC Advance hasn't specified that it will collect licensing fees for B2B applications like video conferencing, it hasn't discarded the notion either.

"The economics don't work well for these free type of products, especially free viral products," says Cisco's Jonathan Rosenberg, CTO of collaboration. He adds that while HEVC Advance hasn't offered details on fees for enterprise applications, "Our default assumption is that we would need to pay."

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The problem in Cisco's mind is not just the high per-unit or percentage cost of licensing fees, but also the fact that HEVC Advance hasn't instituted a cap on payments. When H.264 was adopted, Cisco paid the licensing cap to get the codec functioning in the open source Firefox web browser. The move helped spur usage of video applications relying on the codec, which benefitted Cisco, Mozilla's Firefox and consumers. However, with no cap, it wouldn't be possible to do the same with H.265.

Because of pricing conditions, prominent Frost & Sullivan analyst Dan Rayburn is calling for companies to boycott the HEVC Advance program and refuse to pay the licensing fees based on current rates. Rosenberg says Cisco hasn't made a decision on that proposal yet, but notes that there are a lot of people very upset with HEVC Advance.

"I've been in conversations with colleagues from other companies who are involved in real-time voice and data communications," explains Rosenberg, "and they agree that something's going to give because the licensing terms from HEVC Advance are just not acceptable."

There are other possible video codec solutions in the works. Rayburn has noted that a new HEVC patent pool is already forming. Google (Nasdaq: GOOG)'s VP9 codec is also on the table, although Rosenberg says Cisco has concerns about that technology because while it is open source, it is still controlled by Google.

In the longer term, Cisco hopes that more companies will join the effort around Thor and contribute to the IETF's NetVC workgroup. "We're investing in this," declares Rosenberg, "and inviting others to help us."

— Mari Silbey, Senior Editor, Cable/Video, Light Reading