Arris Irate Over HEVC Licensing Moves
Arris has launched a scathing attack on organizations aiming to make money from HEVC patent licensing, saying the prospect of a costly intellectual property battle is "causing a lot of turmoil right now."
Speaking to Light Reading on the sidelines of this week's IBC show in Amsterdam, Bruce McClelland, Arris Group Inc. (Nasdaq: ARRS)'s president of network and cloud, global services, said there was a "lot of unhappiness" following recent developments in the HEVC area.
In July, a group calling itself HEVC Advance -- whose members include General Electric Co. (NYSE: GE), Technicolor (Euronext Paris: TCH; NYSE: TCH), Dolby Laboratories Inc. (NYSE: DLB), Royal Philips Electronics N.V. (NYSE: PHG; Amsterdam: PHI) and Mitsubishi Electric Corp. (Tokyo: 6503) -- unveiled plans to charge broadcasters royalties for the use of the HEVC standard, a video compression technology designed to support online streaming services.
HEVC Advance wants to charge broadcasters as much as 0.5% of their revenues -- a royalty rate that could deal a major blow to some players.
But McClelland believes the consortium will ultimately fail to get its way. "No one will agree to give a percentage of revenue to somebody," he says. "I think logic will prevail and that HEVC will be a very successful technology but time will tell."
Arris has been incorporating HEVC technology into its products and could suffer if broadcasters come under pressure from HEVC Advance.
Dan Rayburn, an analyst with market-research firm Frost & Sullivan, has previously called for a boycott of the HEVC Advance program and Arris appears to share his views. (See New Alliance Aims at Royalty-Free Video Codec and HEVC Advance Could Hurt 4K TV Advancement.)
The equipment maker also announced new deals with Spain's Telefónica and Dutch MSO Delta N.V. during the IBC event and said it was seeing increased interest from companies keen to provide gigabit-speed services to their customers.
Telefónica is to begin rolling out a new set-top box (STB) that comes with more processing power and memory and will allow the operator to support over-the-top services.
Delta, meanwhile, has become the latest customer for the E6000 converged edge router. The product -- which is also being used by cable operators including Liberty Global Inc. (Nasdaq: LBTY), Comcast Corp. (Nasdaq: CMCSA, CMCSK) and SK Broadband -- will help Delta to introduce a 400Mbit/s service next year, effectively doubling the connection speeds it can offer today.
Arris says the deal shows that Delta is preparing for the shift to DOCSIS 3.1, the next-generation cable standard that promises much faster connection speeds than are possible over today's DOCSIS 3.0-based networks. (See Clock Starts on DOCSIS 3.1.)
Trials of DOCSIS 3.1 will happen later this year and be followed by commercial deployments in 2016, according to the company.
While its cable business is performing relatively well, Arris is still blaming the merger between AT&T Inc. (NYSE: T) and DirecTV Group Inc. (NYSE: DTV) for a slowdown in its telco operations in North America. (See Slumping Video Sales Hurt Arris Results.)
Following the $48.5 billion takeover, AT&T is focusing more heavily on the development of DirectTV's platform, which Arris does not support, than on its own U-verse technology, according to McClelland. (See AT&T Starts DirecTV Era With New Bundles.)
Earlier this week, Sweden's Ericsson AB (Nasdaq: ERIC) secured a major new contract with AT&T that will apparently involve shifting the operator's satellite and wireline TV services on to a single platform. (See Ericsson Beefs Up TV Biz With Envivio Buy, AT&T Deal.)
Circumstances could change for Arris, however, once it completes its takeover of Pace plc , a vendor that does cater to DirecTV's needs. "Once the integration is done we stand to benefit," says McClelland.
Arris announced in April that it would pay $2.1 billion for the rival STB maker, whose portfolio of satellite STB products is much stronger than its own. It is still confident of finalizing that deal by the end of the year, says McClelland. (See Arris to Acquire Pace for $2.1B.)
— Iain Morris, , News Editor, Light Reading