MPEG-LA, the largest group of MPEG-4 patent holders issued its controversial licensing proposals on January 31, 2002.

Apple's decision to bring its disagreement with these proposals into the open is the highest profile criticism of MPEG-LA to date.

Phil Schiller, Apple's senior vice president of worldwide marketing, said: "MPEG-4 is poised for great success once the licensing terms are modified to allow content providers to stream their content royalty-free."

Acceptance Apple is holding back the release of QuickTime 6 and QuickTime Broadcaster in the hope that different licensing conditions are set. The company believes that charging content creators a license fee will hold back adoption of the standard.

MPEG-LA seeks royalties from both software companies implementing MPEG-4 (capped at $1 million per company), and $0.02 per hour from content creators offering MPEG-4 streams. However, the body is offering license signatories "forgiveness" of their payment of royalties for one year from the start of the license program – to help boost market acceptance of the standard.

MPEG-4 has been developed by the same committee that developed the MPEG-1 and MPEG-2 standard – the standards that made digital TV possible.

Interactive incentive It promises a great deal. Recorded images and sounds should co-exist with computer-generated images and sounds. The standard also promises compact-disk sound quality at extremely low data rates, and multimedia content should even be able to adjust itself to suit the transmission rate and quality. It also supports more interactivity than exists currently – users are promised the power to modify scenes by repositioning or deleting certain objects. However, the standard needs to be implemented before such content appears.

Responding to Apple's statements about the license, Larry Horn, vice president of licensing and business development at MPEG-LA, told Cnet: "We're optimistic the use fee can work, and we're very thankful for the feedback that we're getting from Apple and the marketplace because we think that we can work with everyone to come forth with a solution. A use fee is fair."

Frank Casanova, Apple's director of QuickTime product marketing, explained to "We’re happy to pay encode and decode fees. It’s a small price to pay for such an incredible standard." He also revealed that Apple has met with MPEG-LA to discuss licensing terms, and that Apple's working with them to re-think the fees.

Patent problem MPEG-LA CEO Baryn Futa said: "The patent owners understand the risks inherent in a start-up technology in which companies large and small are asked to make a pioneering investment, and are sensitive to the role that their licensing model will play in that process."

MPEG-LA claims its license agreement – MPEG-4 Visual Patent Portfolio License – is "designed so that reasonable royalties are shared fairly by a variety of industry participants in order to stimulate early, rapid and widespread MPEG-4 product investment, development, deployment and use".

The discussion ofver licensing could delay QuickTime 6's release significantly, CNet warns. Horn said that MPEG-LA hopes to finalize its licensing deal "within the next three to five months", which promises a wait ahead.

Companies holding patents in the technology include: France Telecom; Fujitsu; Hitachi; Hyundai; Matsushita; Microsoft; Mitsubishi; Oki; Philips; Samsung; Sanyo; Sharp; Sony; Toshiba; and the Victor Company of Japan.