A Buyer's Guide to Standards
Friday September 20th 2002, 12:00 am
Filed under: Internet Protocols

This article talks about the two criteria a technology buyer can apply to determine if the 'open standard' they are intended to rely on is really open at all. Those criteria are – licensing and change control.

Licensing controls who gets to implement the standard and what price they have to pay to do it. Open standards are licensed under 'royalty free' terms which means that anyone can implement the standard any time they want without having to pay any money or ask anyone's permission. Closed standards are almost universally RAND or RAND-Z based.

Change control identifies who has the right to say what the standard is and change it as time goes on. Open standards are owned by open standards organizations which have reasonably open membership and voting procedures to approve standards that can not be hijacked by a small group of people/companies. Closed standards either haven't been submitted to any open standards organization, have been submitted under dubious circumstances or have been submitted to pseudo-open standards organizations created to provide the veneer of openness.

Of these two criteria licensing is the most critical. If you check nothing else, check the license because if it isn't royalty free it isn't open.


Introduction

When I worked in the Telco field one of the old hands told me that AT&T had a policy that they would never buy any technology they couldn't get from at least two independent suppliers. All of AT&T's systems were mission critical and downtime was unheard of (remember, it's the Telco who made 5 9s into a household word) so AT&T could not afford to be held hostage by anyone.

When you are a multi-billion dollar multi-national corporation you can afford to demand multiple suppliers but for most companies they can't afford to have more than one supplier. But companies want the same protection that AT&T was able to get by using multiple suppliers. Namely, they don't want to be held hostage on price, features or design. Even more critically for companies smaller than an AT&T the more open and available a technology is the more companies will be able to innovate on top of it and so bring in new value that smaller companies could never afford to develop on their own.

The accepted industry answer to the previous problem is open standards. But just as customers are becoming more sophisticated in demanding open standards so technology suppliers are getting more sophisticated in disguising their closed, proprietary standards as being 'open'.

This article talks about the two criteria a technology buyer can apply to determine if the 'open standard' they are intended to rely on is really open at all. Those criteria are – licensing and change control.

Licensing controls who gets to implement the standard and what price they have to pay to do it. Open standards are licensed under 'royalty free' terms which means that anyone can implement the standard any time they want without having to pay any money or ask anyone's permission. Closed standards are almost universally RAND or RAND-Z based.

Change control identifies who has the right to say what the standard is and change it as time goes on. Open standards are owned by open standards organizations which have reasonably open membership and voting procedures to approve standards that can not be hijacked by a small group of people/companies. Closed standards either haven't been submitted to any open standards organization, have been submitted under dubious circumstances or have been submitted to pseudo-open standards organizations created to provide the veneer of openness.

Of these two criteria licensing is the most critical. If you check nothing else, check the license because if it isn't royalty free it isn't open.

Licensing – "Reasonable and Non-Discriminatory" (RAND) vs. Royalty Free (RF)

The most critical test of openness is licensing. A truly open standard is available royalty free. This means that anyone, anywhere can develop a product using the standard without having to pay any money or ask anyone's permission. If a standard is not royalty free then it is not open.

Companies that want to appear open without actually having to be open have adopted RAND licensing. RAND doesn't have a strict legal meaning so its implementation has to be specified on a case-by-case basis but generally speaking it means that if you want to implement the standard you have to pay money to the license holder. The license holder however promises to give you a license on "reasonable and non-discriminatory" terms. This still means that implementers have to pay money to the licenser and that the licenser still has absolute control over the implementer's ability to implement.

As the outcry over RAND has grown some companies have tried to get more sophisticated in protecting their proprietary technology by introducing RAND-Z. With RAND-Z the company promises to license the technology at no charge. But the tricky part is that implementers still have to get the licenser's permission to implement. So while the licenser may not make money off the deal they can still stop any products they don't like or do more subtle things like drag out the licensing process. In the end RAND-Z keeps the licenser in control which robs you, the customer, of the benefits of openness.

You will hear some companies try to pretend that RAND-Z has something to do with defending against patents. To understand why that argument is nonsense please see my article on Royalty Free/Reciprocal licensing.

The bottom line is – if you want the pricing, features, schedule and innovation protection that open standards provide then the only way to get it is if the standard you intend to use is royalty free.

Change Control

Who has the right to change the standard?

Standards must change over time. As implementation experience is gained, as new innovations come about, the standard must be able to grow and adapt or it will die. However the ways in which a standard changes are of critical importance to the companies that have to implement those standards.

A good chunk of my paycheck as a 'standard geek' comes from figuring out how to make a standard provide favor to my company while disadvantaging my competitors. Of course everyone else is doing the same thing. What keeps the situation from getting out of control is that truly open standards exist in open standards organizations who have the final say as to what changes are made to the standard. In such organizations when a standard is 'done' all the members vote (either directly or through elected representatives) to accept or reject the standard. This forces everyone to come together and negotiate. Most of standards work is just horse trading, I'll give in on feature A if you give in on feature B.

This horse trading process is exactly what proprietary technology owners want to avoid, they want to keep their standard working their way and ensure that it favors their products and disadvantages their competitors. The result for customers is that the 'standard' can only really be bought in a usable version from one company which negates the advantages of open standards.

So when evaluating a standard make sure to look at what organization owns changing it. The general tests to apply are:

  1. Is membership to the standards organization reasonably open?

  2. Is everyone treated equally in the standards organization?

  3. Are the costs for being a member unreasonably high?

  4. Is there anyway for a small group of people to hijack the standards process?

  5. Does the standards organization have the sole ability to change the standard through an open process?

Companies trying to disguise their closed standards as open use a couple of "standard" tricks:

Closed Consortia – Sufficiently powerful companies will form their own 'fake' open standards organizations to push their closed technology. Usually a quick glance at the licensing terms and voting rules will allow one to tell the difference between an open and closed consortia.

Fast Track – A technique I'm seeing used more often is an attempt to fast track a closed technology through an open consortium. The company submits the standard to an open standards org but manipulates the process to make sure that the vote will be on an 'as is' basis.

Closed Change Control – This one pops up every once in a while, a company will submit the standard to an 'open' group but demand that the company still maintains total change control.

Private Proposal – This seems to be the most common trick of late. Why bother submitting to a standards organization when you can just post the standard on your website and make vague promises about submitting it to some undisclosed standards organization 'real soon now'. A popular adjunct to this strategy is to make sure that the 'standard' you post is hopelessly under-specified. This way even if the standard is made available royalty free it will be impossible to implement. Good standards organizations won't release standards that aren't fully specified but private proposals have no such restrictions.

Conclusion

Licensing and change control are the two key indicators to openness. If the standard is available under royalty free terms from a truly open organization then you can be confident that the standard you intend to rely on is really open.

Of these two criteria licensing is the most critical. Standards organizations can and do 'go bad'. I have seen everything from one company literally buying the votes of all the members of an organization to abusing a standard organization's rules to ram their closed standard through. But if the licensing is right then implementers and customers can still get at the technology and if need be extend it somewhere other than the standard org that owns it.

So check the license! If it isn't Royalty Free it isn't open.



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