On January 12, the "EVS Technical Standards and Rates Seminar" hosted by Dolcera, a US intellectual property consulting agency, was held. Dolcera CEO Samir Raiyani, Xiaomi Strategic Cooperation General Manager Xu Ran, OPPO Intellectual Property Policy Director Yu Yuanfang, and consulting firm STOUT Managing Director Mitch Rosenfeld fully discussed the challenges and prospects of EVS patent licensing.
The icing on the cake? Part of the cellular communication standard
EVS stands for Enhanced Voice Services, or Enhanced Voice Services Codec, which is one of the standards developed by the Third Generation Partnership Project (3GPP) for 4G/LTE applications. According to Samir Raiyani, the main application scenarios for EVS are listening to music and voice calls. The previous generation of EVS technology was AMR-WB (Adaptive Multi-Rate Wideband). AMR-WB technology has greatly improved the call quality of 3G networks. Compared with its predecessor AMR-WB, EVS has significantly improved data transmission efficiency and bandwidth coverage. However, an important improvement in EVS is its improved music quality during calls, a technology that currently seems limited.
Because of the limitations of the application scenario, most people have not even heard of this technology. For the same reason, the value of this technology is difficult to generalize. As Xu Ran said: "The value of EVS depends on the industry perspective, and network operators may want to adopt this technology in their network functions in order to improve efficiency and make full use of bandwidth; For chipset manufacturers, EVS technology will also be supported from the perspective of making full use of EVS features to add value to their products; For end device manufacturers, there are often not many options because they need to obtain chip supplies from chip suppliers and network access licenses from network operators. But from a user experience perspective, how much value can this technology bring to end device manufacturers? Few users can currently distinguish EVS from its predecessor technology in a call. ”
Yu Yuanfang added from the perspective of terminal manufacturers: "Today's smartphones have very rich functions, which are supported by a large number of patented technologies, including 2/3/4/5G, WiFi, Bluetooth, video encoder, audio encoder, fast charging, etc. By definition of 3GPP, EVS is only a small part of 3/4/5G technology, and it is not the core. It is mainly used to deploy on LTE and 5G voice to improve voice call performance, but as far as I know, EVS has not been widely used for LTE and 5G voice. So it's hard to see great value right now, which might be more of an icing on the cake. ”
EVS licensing status: more than ten times more than 5G rates
According to the "EVS Patent Overview" (Enhavced Voice Services, Patent Landscape) released by STOUT, as of 2022, there are 350 families of standard essential patents (SEPs) declared under the EVS standard, of which 339 families are valid, accounting for about 0.61% of the total 3GPP 3G-5G SEP. In accordance with industry practice, EVS patent licensing rates should also match this share. However, according to STOUT's calculations, the current public EVS rate is ten times or even a hundred times higher than the 5G rate.
Based on the TCL v. Ericsson and Unwired Planet v. Huawei cases, the total cost of 4G licensing should account for 6% to 10% of the total cost of the mobile phone. Correspondingly, the licensing cost of EVS should account for 0.036% to 0.061% of the total cost of the phone. Based on the average selling price of a phone of $410, the EVS license cost should be around $0.15-$0.25, and its value should be between $0.0004-$0.0007 per family of patents.
Graphic: Overview of EVS licensors and rates
At present, three institutions have publicly announced EVS license rates: VoiceAge EVS, Crystal Clear Codec, and MPEG LA, each with its own public rate shown in the figure above. Converted to the value of a single patent, the highest fee-charging Crystal Clear Codec advertises an EVS rate that is a hundred times higher than it should be.
Illustration: 5G SEP rates for some patent owners
In fact, even if the above-mentioned EVS rate is compared with the 5G rate announced by the main patent owner, there is a premium of tens or even hundreds of times. According to Crystal Clear Codec's fees, the total licensing cost of EVS technology will stack to $15 per device, and the cost of licensing a cellular patent will reach a sky-high price of $2459. This is clearly not a reasonable rate that end-device manufacturers can afford.
Licensing dilemma: Some EVS operating NPEs directly litigate without negotiation
What makes the EVS-licensed industry environment even more unhealthy is the preference of EVS patentees for litigation. Public information shows that since the standardization of EVS, the operation NPE (Non-Practicing Entity) of related technologies has sued all mobile phone companies, including Apple, HTC, Motorola, Xiaomi, LG Electronics, Sony and so on. Yu Yuanfang mentioned that some EVS operating NPEs directly litigate without even negotiating first. HMD also announced on its website that it has filed a complaint against the VoiceAge EVS with the European Commission.
For this series of EVS licensing chaos, Xu Ran believes that the patent pool may be a good choice, "For example, MPEG LA's audio and video patent pool – AVC (Advanced Video Codec) patent pool is a very good example in the industry. The AVC Patent Pool brings together the majority of AVC patents to form a single platform that provides a one-stop licensing solution from which almost every relevant licensee is licensed. Of course, this will be very challenging work, because some NPEs have already started licensing work, and their asking price is high, and it is not easy to bring people back together into a market-accepted patent pool to license. However, I don't think it's too late, and I still hope to see this effort adopted by the industry and accepted by the market in the future. "Jiwei Network learned that the MPEG LA AVC PATENT POOL by setting a reasonable rate, bringing together most AVC patents, providing one-stop licensing, not only obtaining the recognition of almost all licensees, avoiding disputes in licensing activities, licensees obtaining patent licenses while the right holders also get reasonable returns, but also greatly promote AVC technology, enrich the market equipment containing AVC technology, so that end consumers can truly enjoy the good life brought by science and technology."
Mitch Rosenfeld agrees that patent pooling may be the answer to EVS licensing. He mentioned that the Via Licensing patent pool is exploring the possibility of establishing an EVS patent pool. "Whether such an EVS patent pool will be more attractive to all, we will wait and see."
It is worth mentioning that although the road ahead is not yet clear, the participants, whether licensors or licensees, expressed their willingness to negotiate together to face the challenge. "Hopefully, eventually, we will find a solution that can appropriately compensate patent owners for their R&D investments, while also allowing implementers to sell mobile devices that consumers can afford at a reasonable price." This is obviously good news for the prospects of EVS licensing.