With the same view, CEN and CENELEC believe that standardization has a major role to play in assisting to reach a well functioning Single Market. In the past European standardization has already contributed in essential ways to remove technical barriers for businesses, to promote the spread of new technologies and to foster innovation.

CEN and CENELEC will continue supporting the consolidation of the European single market as detailed through the 50 proposals of the Single Market Act. Our standards are adopted identically by the 31 member countries of CEN and CENELEC, withdrawing national conflicting standards and therefore ensuring one standard for Europe.

CEN and CENELEC also note that the fragmentation of the single market is a matter of concern for both the European Commission and the Council of the European Union, and that the latter, in its Conclusions on the Single Market Act, calls for careful examination of cross border problems arising in national technical regulations in non-harmonized areas. Special attention is given to services.

The role of standardization in the creation of an Internal Market for services has been recognized by the Directive on Services (2006/123). This Directive encourages the development of European standards in order to facilitate compatibility between services, information to the recipient and quality of service provision. The need for further standardization in this area is also one of the issues already mentioned in the EC Communication on Industrial Policy of October 2010 in relation to business related services.

Transparency and a level playing field are as important for services and processes as for products. Nevertheless, although standardization is increasingly being used in the field of services, the number of service standards is still very small in comparison with standards in the field of goods.

Nevertheless, CEN has already developed/is developing European standards in business-related services, such as: facility management, management and engineering consultancy or logistics. More can be consulted on our website.  This process is expected to accelerate in future, notably to avoid the creation of new barriers to trade in services through different approaches in different Member States.  The forthcoming EU Commission standards package will almost certainly ensure the same treatment of service standardization in the EU as applies currently to product standardization, including the obligation to notify new national standards activities to the Commission and CEN-CENELEC.

With regards the question of internationalization of services, in a globalized world, the need for international standards simply makes sense in many cases. The Vienna Agreement − signed by CEN in 1991 with ISO (International Organization for Standardization) its international counterpart − ensures technical cooperation by correspondence and through meetings, and where possible adoption of the same text, as both an ISO Standard and a European Standard.

On the international level, CENELEC has worked hand-in-hand with the IEC since the signature of the Dresden Agreement in 1996 (previously the Lugano Agreement since 1991). This agreement organizes CENELEC’s offer of standards issued in Europe to its international counterpart.

The engagement from CEN and CENELEC in such international dialogues has already been translated into open dialogue with key international partners and various cooperation arrangements with third-country organizations in different area of the world, such as Russia, Japan, Korea, China, US, the Gulf Cooperation Council and the members of the MERCOSUR.

John Ketchell

• INTERVIEW: Malcolm Harbour
Chairman of the Internal Market and Consumer Protection Committee (LINK)

• INTERVIEW: Elena Santiago
CEN-CENELEC Director General (LINK)

• Knut Blind: Interoperability within the Europe 2020 Flagship Initiative – the Innovation Union

www.talkstandards.com/interoperability-within-the-europe-2020-flagship-initiative-the-innovation-union
In the European Commission’s recently published communication on the Innovation Union, the need for “faster setting of interoperable standards” is highlighted. However, as Knut Blind commented, it remains rather unclear how this objective will be reached. While the EC acknowledges the need for more efficient coordination of research and standardization efforts, two other dimensions are missing which are also crucial for assuring interoperability. These are, demand-side considerations (including public sector procurement) and, most importantly, greater integration of international consortia.

• Helen Disney: Creating a Modern Framework
www.talkstandards.com/creating-a-modern-framework
While Interoperability is an essential component in ensuring that standards are utilized across the board, recently, we are witnessing a worrying trend in which policy-makers are afforded a greater degree of discretion concerning the desirable direction and forms in which standardization interoperability should take place. As opposed to this coercion and exclusion, Helen Disney emphasized the need to discuss and consider the most effective ways of securing and maintaining this objective. The real challenge is to create a modern framework that incentivizes and harnesses market forces towards greater interoperability, while also providing the necessary safeguards to deal with market failures when they occur.

• Ken Krechmer: Suggestions for the future of EU standardization
www.talkstandards.com/suggestions-for-the-future-of-eu-standardization
Ken Krechmer outlined five key points which need to be addressed within the European standardization framework. These include addressing the ambiguity within the EU literature, greater emphasis towards Government-led R&D, greater inclusion of stakeholders, avoiding confrontation with consortia, and a move away from “fixed standards”. Regarding the ambiguity of terms, Krechmer commented: “Open standards” is like “democratic government,” it is easy to say but very hard to achieve. The first step is a clear definition.

• James Bryce Clark: Interoperability within the Standards Marketplace
www.talkstandards.com/interoperability-within-the-standards-marketplace
While classical economic theory would say that the standards market is delivering exactly the amount of interoperability that its forces require at equilibrium, OASIS’ James Bryce Clack commented that even at its best, the standards “market” is an example of the imperfect markets spawned by the knowledge economy. Further exasperating this, the word “interoperability” is often thrown around, but it’s rarely quantified. Interoperability requires clear designation, clear criteria and clear proof.

• Ait Jaokar: Standards, Fora, Innovation and Geography
www.talkstandards.com/standards-fora-innovation-and-geography
There is an ongoing debate in the European commission regarding revision of the European Standardization System and the European Commission is currently working on a “Standardisation Package”. Ajit Jaokar outlined the vision as two over-arching goals; ensuring, through standards, European competitiveness at a global scale and Greater Integration on a European scale. Jaokar noted that European integration is a worthy goal, but asks whether we are mixing two goals: That of European integration and European competitiveness?

This event (Thurs October 14th –  3pm GMT / 8am Pacific / 11am Eastern / 5pm CET / 11pm Beijing) is set to discuss mobile payment and transfer services.

Outline:

Framed against the backdrop of the current EU activities, the event will build both upon Talkstandards’ successful July event – “Transparency in EU Standardization” – and our September mini event – “The Future of European Standardisation“. The motivating goal of the event is the facilitation of a common dialogue between European policy makers and experts working in and around European standardization such as industry leaders and academics.

The European Parliament’s “Committee on the Internal Market and Consumer Protection” (IMCO) has drafted a report on the future of European standardization which will see an EU vote in October. The report builds upon the EU Whitepaper from July 2009, “Modernising ICT Standardisation in the EU – the Way Forward” – a short summary by Talkstandards can be found here: www.talkstandards.com/modernizing-ict-standardization-in-the-eu/ – and recommends building upon the strengths of the existing European system as opposed to a complete overhaul

Some key questions to be addressed include:

• How timely are current EU reform proposals and how should the emphasis be divided among issues such as interoperability, transparency and efficiency?
• Do the proposals bestow a large enough role upon informal industry fora and consortia?
• What roles does interoperability play in achieving a single European market, particularly with regard to infra-national standardization system based upon national standards bodies with greatly varying degrees of knowledge, experience and resources?
• How can access by all relevant stakeholders, particularly SME, to the standardization process be guaranteed?
• Within European standardization reform initiatives, how much emphasis should be placed upon international integration and interoperability?

Discussion Material (MORE TO COME!):

James Bryce Clark: Interoperability within the Standards Marketplace

Ken Krechmer: Suggestions for the Future of EU Standardization

Knut Blind: Interoperability within the Europe 2020 Flagship Initiative – the Innovation Union

Ajit Jaokar: Standards, Fora, Innovation and Geography

Helen Disney: Creating a Modern Framework

INTERVIEW: Malcolm Harbour, Chairman of the EU Internal Market and Consumer Protection Committee

INTERVIEW: Elena Santiago, CEN-CENELEC Director General

Event Page: Reforming EU Standardization

Past Event: The future of European Standardisation

Past Event: Transparency in EU Standardization

BACKGROUND: Interview with Edvard Kožušník, Rapporteur of the IMCO Committee

Join the discussion and post your comments below!

Mattias Ganslandt, Editor

Image from Wikimedia Commons by user Aktron

Please see Elena’s previous Talkstandards contribution “Transparency’s Role in CEN-CENELEC Operations” from our July event Transparency in EU Standardization.

Join the Forum discussion here: www.talkstandards.com/questions-for-event-reforming-eu-standardization

1. The IMCO report on the “Future of European Standardisation” recommends that any reform initiative of the European Standardization System sound build upon the current system as opposed to a more dramatic reworking. Is this the best approach to take?

Indeed, this is in my view the best approach to take. IMCO has forged its opinion on the basis of various information exchange sessions with the European standardization community and further to a detailed analysis of the strengths and weaknesses of the current European Standardization System. Why reinventing the wheel when the system has proved to successfully address the needs of its stakeholders and provide a platform that is inclusive, comprehensive and that has an international dimension? European industry has on various occasions expressed its satisfaction with the values of the system that has offered them state-of-the-art, market-driven deliverables, fostering their global competitiveness and contributing to the development of the European Single Market. The effective co-regulation tool that European standards provide is also valued by market actors and by European legislators. The European Standardization System often stands as a reference for regional standardization worldwide and is the best example so far of market harmonization.

This said, we are aware that the world we live in is in constant evolution and that many patterns – be them societal, environmental or economic – have changed, bringing along new needs. We have faced these new challenges over the past years and have strived to provide adequate solutions to preserve the values of the European standardization model while encompassing these new elements. Many tools have been developed and are being implemented to facilitate the access of SMEs and of societal stakeholders to the standardization system and to help them fully enjoy the benefits of standards. We have bet on many innovative and green standardization sectors such as smart grids, electric vehicles, energy management, etc. to support the economic recovery and to open up new market niches. Yes, more remains to be done, but we strongly believe that we are on the right track.

The fact that standardization comes more and more in direct support of public policies has brought our activities and our model in the limelight of the European Institutions; and we very much welcome this situation. This only proves that standardization is a key component of the European market and of European society’s welfare and sustainability. So we are happy to join them in this exercise of improving the system, provided that we capitalize on the numerous achievements and successful elements of the current system, filling then the gaps in order to secure a sustainable future for Europe and its evolving specificities.

2. What value does the European model bring to the table in the context of international standards setting?

The European model abides to the principles of the WTO TBT Agreement of transparency, openness, impartiality and consensus, effectiveness and relevance, coherence, and to address the concerns of developing countries. These principles are of course also fully embraced by all our National Standards Bodies.

Beyond these basic principles to avoid technical barriers to trade, the European model offers to the world a market that is fully harmonized cross-frontier and also very much in line with the international standards of ISO and IEC. Indeed various sectors work very closely with the international standards platforms and adopt international standards as European ones identically. In 2009 more than 82% of European electrotechnical standards were identical to or based on IEC standards amongst which almost 30% are “harmonized standards” giving direct presumption of conformity to the European legislation. Through the Vienna Agreement (CEN and ISO) and the Dresden Agreement (CENELEC and IEC) we work as much as possible at the international level. We would rather do it once, internationally … Through this commitment we intend to offer a level-playing field to all economic actors worldwide and to foster fair trade.

3. Similarly, which aspects, from an efficiency perspective, of the European System should be should be amended as per the IMCO recommendation?

We believe that no radical change or amendment should be made to the current system but rather some improvement. In terms of improvement we support the IMCO recommendation to integrate better the interests of SMEs and societal stakeholders in the standardization system. However, even though these two categories of stakeholders deserve a special focus to improve their access to the system and its deliverables, we would like to stress that they should not be amalgamated due to their distinctive interests. Indeed SMEs are driven by economic interests and should therefore be considered as an integral part of industry as a whole.

Several initiatives have already been undertaken to improve SMEs access to the system and their use of standardization deliverables. A special CEN-CENELEC working group is focusing on implementing right across Europe some 58 recommendations on this matter and a dedicated helpdesk and web portal have been launched.

On the societal stakeholders’ front, more can be done. However it is important to understand that most of the improvements will come from the national level where societal stakeholders are best represented and where they can actually have access and contribute in their own language. We are committed to find ways to ensure appropriate representation of all stakeholders in the system for topics of public interest, but we cannot achieve this on our own. Societal/environmental Associations also have a key role to play in transferring relevant information to their members and in having the best expertise possible to provide relevant input in the standardization work.

Another area of key focus which is in line with the IMCO recommendations is our wish for closer cooperation between the formal standardization system and fora and consortia. This will be further developed later.

4. The European framework places greater emphasis on judicial guidance with regard to the direction of standardization, and relatively less upon a bottom-up, industry-driven process, when compared to say the US system. Is this a necessity in facilitating a common market, given the significant fragmentation inherent within Europe?

The European Standardization System is above all market-driven. It was created for industry and by industry. European Standards are developed in response to a market need and only if there is a need. This is the reason why the application of European standards remains voluntary even when harmonised standards are concerned. No European Standard is compulsory. It is important to note that Harmonised Standards – European Standards that support European Directives – follow the same development process as other European Standards and that they are drafted by industry because there is an interest to do so. Through the New Approach, a good cooperation between the private and public sector exists and has proved to be very efficient.

As far as the European market is concerned, this is far from being fragmented. Diversity is certainly a good qualification for Europe whose motto is “United in diversity”. However, it is this very same diversity that makes our strengths and that brings a variety of fruitful exchanges and best practices. Despite this diversity, Europe has managed to create and secure a coherent and harmonised Single market that is taken as a great example at international level. The system imposes to our members that all European Standards have to be identically implemented at national level and that any conflicting standards must be withdrawn. Therefore one standard replaces 31 different national standards and creates access to a market of 490 million consumers.

This is very different to the US system which indeed provides a very fragmented approach to standardization and where industry is left to choose which standard to apply.

5. The European Digital Agenda comments that in many regards the EU is at risk of falling behind the curve in maximizing the potential of ICT. In what way does the European system require reform to enhance efficiency?

This issue is less a matter of reform than one of using the European system to its best effect. We welcome the establishment of the Digital Agenda in support of the European single market. We believe that the European Standards Organizations can prove critical in removing the barriers, and can help at the same time to resolve some the other real problems identified in the recent Commission Communication, such as lack of interoperability or fragmented digital markets, and also help foster the link between standards and research.

We support the Commission’s contention that the standards environment is weak. But this environment will not be strengthened by welcoming industry consortia products that may not meet European needs – partial market acceptance of these in isolation is in fact the cause of much of the weakness including interoperability issues, not the cure for it.

Clearly a lot of the barriers will have to be removed by regulatory action, but standardization – for example of the technical parameters needed to support regulation – can also be of considerable help as well. The European Standards Organizations are well able to provide the necessary standards frameworks, and have the processes to resolve the problems. Our principles of full openness and transparency – including access to societal stakeholders and national involvement – offer guarantees of universal acceptance and we are prepared to do this in association with the consortia wherever this is appropriate.

6. One issue related to modernization efforts, is the role of informal, international consortia in the European standardization framework. What role will these organizations play in a modernized European standardization system and how would the ESOs coordinate/cooperate with these informal bodies?

The core business of CEN and CENELEC is to develop European Standards within their technical structures, in response to market needs. CEN and CENELEC have always worked with third parties, for instance including industry associations at European level, to bring European Standards covering a wide range of needs and subjects to the market. It should, of course, be understood that CEN and CENELEC recognize that all international standardization work shall be done through and in coordination with ISO and IEC, respectively.

To meet the needs of today’s changing environment and increasing market and regulatory pressures, CEN and CENELEC want to provide an even more welcoming platform for other organizations (including informal, international consortia) to propose their well (and less-well) established specifications to become recognized as, or be further developed to become European Standards to meet European needs.

CEN and CENELEC will offer the possibility for these organizations to have their specifications become European Standards through a quick, efficient process, which respects the well -recognized values of European Standardization. CEN and CENELEC are happy to work with these organizations in a flexible way to identify and agree the most appropriate, efficient and timely treatment for the proposed specifications.

7. Given informal standards bodies often follow their own unique set of rules and processes, could we see transitory problems as informal fora and consortia are integrated into the formal European standardization process? And will their increased presence affect moves towards greater interoperability and transparency within the system?

Key values of the European Standardization System (including inclusive participation, openness, transparency, market-relevance and availability of draft and final European Standards in a range of languages) underpin the strength and importance of published European Standards. This contrasts with the perceived benefits of the rules and processes of informal fora and consortia (“light” procedures, apparent speed of delivery – but we also have our own “light” products as well, that can help to meet the needs of European research projects, for instance).

CEN and CENELEC see that integrating fora and consortia specifications into the System will require a flexible approach, one that can treat existing, recognized and market-relevant fora/consortia-derived documents through an appropriate mechanism and provide the means to develop and extend other less advanced or mature documents.

The European Standardization System, as it has demonstrated previously, is able to integrate a wide range of interests and needs resulting in standardization work ranging from postal services, through air traffic management, energy management, eHealth and smart grids to pest control and aesthetic surgery services. Many of these activities link with industry-based informal consensus activities.

Integrating fora and consortia specifications will further increase interoperability between consortium documents and possible European Standards and promote coherence (by reducing fragmentation and the potential for conflict and contradictions) and increase their visibility to a wider audience and transparency, as these documents become public standards – including at national level in 31 countries – and not ‘hidden’ specifications within an industry sector.

Integrating fora and consortia will also give greater recognition to and a means of exploiting the results and benefits of the output of, for example, research programmes (many funded by public bodies) that might otherwise not find a suitable outlet.

8. Among other CEN-CENELEC initiatives you outlined in your Talkstandards article – “Transparency’s Role in CEN-CENELEC Operations” particular focus was placed upon increasing SME participation in Standardization efforts, which is echoed in the IMCO recommendations. How do these initiatives consider efficiency trade-offs as a result of this greater inclusion?

The European system by definition guarantees the ability of all interested parties to participate in the process. SMEs already can participate directly, through their own trade associations, or alternatively be represented by NORMAPME, the association representing their interests in European standardization. From CEN-CENELEC, efficiency is ensured by providing clear guidance on how SMEs can contribute to the standardization process. For example, at national level, SMEs can access and comment on draft standards online. CEN and CENELEC have also launched a common SME web portal and Helpdesk which provide clear and effective guidance on the standardization process and on standards projects relevant to SMEs.

We firmly believe that our work to implement the current package of 58 best practice recommendations to improve SME access to and participation in the standards process will considerably improve the overall efficiency of the system. It will make more information available on standards and how to influence them and improve the clarity and usability of the end product, and this across our 31 member countries. This will not only benefit SMEs but all stakeholders in our process, whether industry, governments or societal stakeholders.

9. We are seeing modern standardization efforts increasingly move towards ever more complex arenas, such as greenIT and SmartGrid, which in many ways require a guiding hand due to factors such as the high degree of interoperability required and the public nature of the technology. Does the European Standardization system, through the ESOs, better meet this need than say the US?

Again, in Europe we have 31 countries, not one. In Europe the coordinated and coherent Standardization System, coupled with the traditional close relationship between European institutions and European Standardization Organizations, provide a strong basis for matching modern standardization efforts with public needs. The European experience of the success of and familiarity of working in the context of the New Approach which provides a means of achieving regulatory goals in the field of safety of products through the commitment and contributions of industry gives Europe a head start in addressing increasingly complex technological and societal needs. We have an inclusive approach and already we are addressing Smart Grids, electric vehicles and ICT application issues on a collaborative basis in Europe and with our global counterparts, thus helping to improve coherence and understanding between different standards activities. We are of course conscious that technology issues need to be globally addressed wherever possible – our European activity on Smart Grids, for instance, is seeking to understand what are the specific European needs and how these can be met.

10. Does the restriction of EU policy to standards developed by the ESOs run the risk of limiting the ability of the European parliament to foster innovation considering the large role informal global fora and consortia play in the setting of international standards, particularly within the ICT sector?

Europe often lacks indigenous companies developing ICT specifications of the kind that are produced in global consortia. On the other hand, we have many companies that contribute to innovative standards in other technological areas such as nano or bio-technologies (where standardization is in global formal bodies), and to the standards needed in Europe to apply technologies.

We already have a flexible approach and can offer fast standards solutions through our informal Workshops as well as the more formal processes with their guarantees of inclusiveness transparency, consensus and recognition. We will consider with the European Commission in the light of the just published Communication on the Innovation Union how we can enhance our links

Join the Forum discussion here: www.talkstandards.com/questions-for-event-reforming-eu-standardization

The IMCO recently hosted a public hearing on the Future of European Standardisation which Mr Kožušník co-chaired. The outline of the hearing, including the presentations made can be found here.

Join the Forum discussion here: www.talkstandards.com/questions-for-event-reforming-eu-standardization/

What value does the European model bring to the table in the context of international standards setting?

The commitment of the European Standardisation System (ESS) to international standardisation is acknowledged and reflected by the Vienna and Dresden Agreements and the working methods of ETSI. The ESS recognises the primacy of international standards developed by ICO and IEC. However the international approach of European standardisation cannot always be met as there is no formal obligation at international level to withdraw contradictory national standards. The ESS should support international standardisation wherever possible unless the need is uniquely European. Europe could promote the methodology of the New Legislative Framework, or equivalent standards-receptive regulatory models, in its regulatory trade-related cooperation with EU trading partners.

In what respects, if any, does the EU policy to standards developed by the ESOs limit the ability of the EU to foster innovation, particularly within the ICT sector?

For many years, the European Standardisation Organisations (ESOs) have had a policy of producing fast deliverables on innovative topics, in particular through the CEN and CENELEC Workshops Agreements or the ETSI Industry Specification Groups. On the other hand, several fora and consortia contribute considerably to the global standardisation system by providing, in the ICT domain, most notably, specifications with global relevance which are often more receptive to innovative technologies, thereby accelerating their acceptance by the market. We should implement improved mechanisms for cooperation between ESOs and fora/consortia within the European Standardisation System in order to foster innovation. Standardisation, in order to fully realise its potential benefits in support of innovation, must adapt itself to the needs of the market and respond to the challenges resulting from globalisation, the emergence of new economic powers, and the evolution of technology.

Is the European framework, which places greater emphasis on judicial guidance with regard to the direction of standardisation a necessity due to the significant fragmentation inherent in the European market?

Standardisation has been recognised over the last 25 years as a central element in the completion of the single market under the New Approach. However, the increasing role of standardisation as a tool to achieve the goals of EU legislation and public policy entails a strategic, and more public-oriented, approach to European standardisation in order for it to remain successful and fit to the needs of the forthcoming decade. The European Standardisation system should be capable of meeting the needs of society, business and public authorities and of responding to the rapidly changing needs of the world, including the development and convergence of technologies, the improvement of product safety, consumer protection and welfare for citizens, and the protection of the environment.

How will initiatives such as the Digital Agenda and the Europe 2020 influence the EU standardisation system?

Both initiatives include several references to standardisation as a policy tool to ensure competitiveness, growth and interoperability, although they do not seem to pay sufficient attention to the current and potential role of the European Standardisation System. The use in legislation and public procurement of ICT standards developed by certain global fora and consortia, as announced in the Digital Agenda, remains a contentious issue.

Similarly, how will these initiatives help guarantee the inclusion and integration of all stakeholders in the European system?

The inclusion and integration of all stakeholders in the standardisation process, at national and European level, is one of the main challenges of the ESS. It is difficult to see at the present stage whether indeed these initiatives will help guarantee the effective participation of societal interests in the European system.

Modern standardisation efforts are increasingly moving towards increasingly complex areas, such as Green IT and SmartGrid, which in many ways require a guiding hand due to factors such as the high degree of interoperability required and the public nature of the technology. How is this process handled most efficiently?

We need to ensure there is a proper understanding of what are the European needs for usable interoperable standards and then to match these against the overall global standards landscape. An inclusive process works best. On SmartGrid, for instance, the ESOs have created a joint working group to take a common view of what is becoming an unbearably fragmented standards approach and ensure that our European requirements are documented and met.

In some areas, such as eHealth, we are seeing the US trend towards a more European style approach. Do you think this is a trend that will continue internationally and what implications does this have for European reform?

There are important divergences between EU and US with regard to the structure of standardisation systems, the mode of cooperation between Commission/US government and standardisers and the perceptions on «international standards». The emphasis put by the US side on the role of sectoral agencies and the decentralised structure of the US standardisation system confirm that cooperation at the level of coordinating structures between Commission and US government in a regulatory context appears difficult. It might therefore probably be easier to identify common interest for cooperation following a case by case sector oriented approach. EU-US cooperation in the field of standardisation will be the subject of meetings next week in Washington of the Chairman of the European Parliament’s Committee on the Internal Market and Consumer Protection, Mr Malcolm Harbour, with the American National Standards Institute and the US Department of Commerce.

In what respects should a reform in Europe encompass greater transparency within European standardisation?

The ESOs have made efforts over the last years to increase transparency and improve the participation of all stakeholders in the standardisation process. The national delegation principle is a cornerstone of the ESS, however, it has its limits and needs corrections where certain interests can systematically not be heard. The current imbalance between the business and public interest in the standardisation process, both in the European technical bodies and national mirror committees, is owed to the low participation of societal stakeholders, in particular at the national level. There is a need for additional efforts to improve transparency and reinforce stakeholder engagement, in particular for European standards meant to support EU legislation and policies.

One issue related to modernisation efforts, is the role of informal, international consortia in the European standardisation framework. How will their increased presence relate to the move towards greater transparency?

The ESOs and fora/consortia should operate on the basis of open, transparent and consensus-based development processes and should find ways of cooperation during the planning of their activities by transferring standards to the most appropriate level, international or European, in order to ensure coherence and avoid fragmentation or duplication. The ESOs could also develop and implement an improved mechanism for the adoption of fora/consortia specifications as European Standards, which should not restrict the possibility to submit those specifications to International Standards Organisations in order to seek a more global status.

Join the Forum discussion here: www.talkstandards.com/questions-for-event-reforming-eu-standardization/

Patents and Open Source Are Not Always Like Water and Oil:
“Patents have long served to enable innovation while assuring the complete disclosure of inventions and a reasonable return to inventors”. While RAND (Reasonable And Non-Discriminatory) licensing requirements, which provide equal and fair access to IP for use in both open and closed standards, has significant support from governments and industry, there exist some within the OSS (Open Source Software) community who wish to abolish RAND licensing all together. In the first of two featured articles, Stacy Baird outlined both the motivations and consequences of this desire.

The OSS Roadmap to a Minefield of Patents:
“Standards bodies are a microcosm of the marketplace: alternative ideas compete for inclusion in a draft” with organizations offering a wide range of approaches towards IPR technology, ranging from allowing to disallowing its inclusion or alternatively falling somewhere in between. In the second featured article, OASIS’s James Bryce Clark reported that “demands for royalties are becoming rarer” particularly during the recent boom in internet technology such as cloud computing which increasingly depends upon interoperability and transparency, in contrast to traditionally closed telecommunications networks.

FOSS (Business), Standards, and Intellectual Property Rights:
There is ongoing discussion covering how FOSS can be used in scalable business and what business models support using FOSS. For instance: “how one makes money when one gives the product away for free”. Stephen Walli argued that the nature of any tension between FOSS and standards is in their relationship and concluded that a well-run FOSS project should have the same level of IPR policy considerations in place as an SDO.

Betwixt and Between: Open source software and RAND standards development patent policies:
Regarding the tension between OSS and RAND, George T Willingmyre posed the questions: “What is the problem? Is this actually a “problem” or a matter of differing goals?” and “what is the lesson?” Arguing that rather than being a conflict between the Open Source definition and RAND, the tension instead comes from certain patent licensing restrictions which are included in some Open Source licenses and RAND. He concluded that the world’s policy makers should take heed when contemplating any decisions regarding Open Source policy affecting standard setting.

The Intersection of Royalty-generating Standards and OSS:
“All open source licenses are not created equal – hard line licenses, like the GPL, place more restrictions on users and thus create tensions with RAND/FRAND that don’t otherwise exist”, argued Daniel Garcia-Schwartz and Anne Layne-Farrar in their co-authored response to the featured articles. Counter to OSS ideals of “Information wants to be free”, the more restrictive the OSS license, regarding IPR inclusion, the less that information flow is possible. These licenses not only limit the pool of information from where OSS reliant firms can draw, but also delay standard implementation due to uncertainty.

Shaping the Debate – Are Some of the Tensions Created by “RAND-OSS” or by “RAND-GPL”?:
Many open source advocates reinforce the belief that RAND is incompatible with open source licenses with phases tending towards too strongly a worded, argued Jay Kesan. But the patent grant in an OSS license does not necessarily result in a royalty-free grant of all patents the distributor holds that read on a certain code, which is important to for maintaining a vibrant ICT sector.

An Open Source Approach to Policymaking?:
As global competition and the convergence of new technologies continues to increases, issues related to standards and standard development is “becoming a growing focus of policymakers who are struggling to keep up with the pace of change”. Helen Disney commented upon the discussion between proponents of open and proprietary-based standards and some of the misconceptions regarding the obstruction of innovation. She argued policymakers should neither “idolize nor demonize” business models based upon either OSS, RAND, etc and should take a more collaborative approach towards the most open, competitive ICT marketplace possible.

Open Standards and Open source – Maturity and beyond:
In many regards Open Source is maturing, claimed Ajit Jaokar citing the recent Talkstandards debate, which focused upon the evaluation a specific Open source licensing options rather than simply the OSS/IPR dichotomy, as part of a continued evolution of the discussion regarding Open Standards and Open Source. Arguing that “Open source licenses are not incompatible with IPR” and that the “Demands for royalties are increasingly depending on the domain” he outlined a series of implications stemming from this maturity.

Standing at the Intersection of RAND and OSS:
While on the surface it may seem a simple debate between RAND and “Open Source” regarding patent royalties, claimed Steve Mutkoski, “neither RAND nor OSS are singular or uniform concepts capable of such a simple comparison”. Outlined a number of ways in which the dozens of OSS licenses currently in use uniquely treat the inclusion of patents, Mukoski described the situation as a “complex legal discussion”.

Standards and Open Source Software:
“Is there an inherent tension between the FRAND … and the imperatives of Open Source software development? In one word, no” argued Timothy Simcoe. Nothing prevents a firm contributing technology to an open standard under a FRAND licensing agreement for free, via a non-assertion covenant or setting the maximum royalty rate to zero during ex-ante disclosure. Simcoe cites the potential holdup possibility as the key priority for policy consideration, in particular the improvement of IP policy (greater transparency, reduced vagueness such as “reasonable” royalty rates, etc).

On the positive side, the understanding of open source principles and ways of working has motivated us all to be more transparent, more open to creative partnerships and to place a premium on innovation as a public good.

Yet while it is perfectly fair to argue that open source does lead to greater innovation in software, it is not fair to say that open source is the only way in which innovation takes place in this field.

In fact, there is a great likelihood that those innovations in software that require substantial time and resources to reach the market, would still depend on good “old-fashioned” proprietary models, a.k.a intellectual property rights (IPRs).

Simply put, IPRs allow innovators to recoup the rewards of taking risks and often investing vast sums of money in creating products and services that would never come to market without the associated R&D efforts that were put behind them. Attempting to circumvent that process – even for the most laudable of reasons such as increasing interoperability – starts to weaken and undermine the IP system which has grown up precisely to protect this important principle.

Nonetheless, a heated debate exists between proponents of open and proprietary-based standards. In this debate, “open” is often equated with “free” and “proprietary” is seen as being synonymous with so-called “closed” efforts. One argument is that because open source efforts allow anyone to access standards at no cost, they promote more competition and better innovation than proprietary-based efforts. Furthermore, because IPR-based standards offer access at a price, they are sometimes considered to be barriers to competition and innovation, and as such, closed standards. Crucially, a distinction is not always made between proprietary standards that are not publicly accessible and those that are accessible for a fee.

In fact, proprietary-based and “closed” standards (i.e. not publicly accessible) are not necessarily synonymous. Neither are open standards and those that are free. Rather, many standards involving IPRs are publicly accessible at a reasonable, transparent and non-discriminatory price – hence, they are open. Many patent pools, like MPEG LA and the Open Patent Alliance for the field of WiMAX technology (4G wireless technology) are a good example of this. And many standards typically considered to be open (i.e. which do not involve conventional licensing structures) are still based on an IP model of some form.

For instance, “defensive patent pools” work similarly to SDOs in that they aggregate a set of standards for public use with the intent that users can implement the standards without facing litigation; however, in the case of “defensive patent pools” member companies pay an annual fee to access all the standards. In the case of RPX, members can access over 1,000 standards for a fee that is considerably less than purchasing each individual license, but the IPR regime of the rights owners is still protected. Google’s Android technology is not IPR-free either. It is available to users under an Apache License, under which copyright is still preserved and while vendors may access the technology for free, they can add proprietary extensions without making them open to the open source community. Thus, a variety of hybrid models have come to exist.

With global competition and the convergence of new technologies only set to increase in the 21st century, the issue of standards and standard development is becoming a growing focus of policymakers who are struggling to keep up with the pace of change. Indeed, policymakers may even benefit from taking a more collaborative approach to forming policy in this area, allowing for more direct inputs online from a wider range of stakeholders in order to reach a consensus on what works.

However, ultimately public policy should neither idolise nor demonise a particular business model – be it based on IPRs or on open source – but should instead allow for the most open, competitive ICT marketplace possible. For those who truly believe in creativity, open collaboration and fair competition, let us try to set the rules of the game in a way that does not exclude either proprietary or open efforts and let human ingenuity solve the rest.

Join the Forum discussion here: http://www.talkstandards.com/questions-for-standards-and-oss-open-forum/

In many ways, our forum topic this month addresses that issue. Stacy says: The answer lies in licenses: not the patent licenses, but certain open source software licenses. James says: Demands for royalties are becoming rarer, in our own domain.

My thoughts specifically to these two comments are as below. I also extend this discussion with implications for the future.

1) Open source licenses are not incompatible with IPR: Open source licenses are admittedly complex but they come down to one basic principle. (No, it is not about ‘free’ or ‘paid’). Essentially, Open source licenses come down to the ability to modify and distribute derivative code. The two positions are: Either you have to contribute back any modifications to the original code and redistribute the modifications as per the original license (copyleft) OR you can ‘keep’ and distribute the modifications and add any conditions (IPR, payments etc) to the modifications as long as you indicate the original license of the code and do not violate anyone else’s IPR. The two best known examples of the two perspectives for Open source licenses are GPL v 3 (copyleft) and Apache.

The Apache License, does not require modified versions of the software to be distributed using the same license. In every licensed file, any original copyright, patent, trademark, and attribution notices in redistributed code must be preserved (excluding notices that do not pertain to any part of the derivative works); and, in every licensed file changed, a notification must be added stating that changes have been made to that file.

This means there is no conflict between the Apache license and IPR, patents, payments etc.

2) Demands for royalties increasing depending on domain: In the domain I work with (mobility, convergence, sensor networks etc), we do see increasing (and not less) IPR issues. Mobile technology always had to deal with IPR right across the stack (network, device, services etc). My point is: When it comes to hardware and firmware integration (SW-HW interface), IPR has always played a role and it is getting more significant as the entire mobility sector gains in significance. Many of the royalty free arguments arise from the ‘software only’ domain. This may not be valid going forward especially as implementations become more complex and they span software and hardware with blurring boundaries (see below).

Implications:

As Open source matures, here are some of the implications as I see them: (there are many more but I choose three for brevity and focus)

1) Transparency is the key – not Open/Closed

2) Community engagement and trust

3) Blurring the lines between software and hardware

TRANSPARENCY IS THE KEY – NOT OPEN/CLOSED: Today, the biggest challenge for Open source is not the business model or IPR, (the Apache license certainly provides that) but that of trust and transparency. Most people today recognize the difference between Governance models vs. development models. I can explain this simply as: The leverage of control for open source is not who can change the code but rather whose changes will be accepted into the core product. Take the example of Android. The development model is open sourced (anyone can see the code and change it) but the Governance model is (ultimately) managed by Google i.e. if developer A and developer B both modify a specific code segment, the governance model (Google) decides which changes are to be included in the core product. This can be perceived as a barrier depending on the trust, transparency and engagement of the provider. Certainly, the traction gained by Android demonstrates that there is a degree of Trust in Google and indeed benefits for the licensees.

However, staying with Android, last week saw something much more complex i.e. the lawsuit between Oracle and Google over Android. The crux of this lawsuit arises from Sun’s original Java supposedly ‘open source’ terms and is explained by David Vellante via Gigaom which I summarise as follows:

In the license there is a “Classpath Exception” which is a crucial provision that allows developers to link their code to Java without the need to fall under a GPL license—meaning developers can make their own licensing terms and not be bound by GPL. Sun only included the Classpath Exception for the core Java platform – it’s not included the mobile edition.

This meant that it was really neither open nor closed source but rather a lack of transparency on the part of Sun which Oracle is attempting to monetize post its acquisition of Sun. Which brings us to the second point: Why would anyone want to ‘open source’ in the first place?

COMMUNITY ENGAGEMENT AND TRUST: Open source, by definition, needs engagement with the community (specifically with developer communities). Community engagement can occur at many levels. Many successful products have developer programs and the product itself is not open sourced.

Historically, this has worked well for many products. There are two commercial reasons for ‘open sourcing’ a product.

a) Extending the product along unpredictable directions: The first is to extend the product along unpredictable directions. This is the benevolent reason for open sourcing a product. Your product becomes a platform. Others can add value to the product by adding features. This works because the rate of change of products is now too fast. It means that the community ‘morphs’ the product in directions which you (as product owner) could never have anticipated. This could gain you competitive advantage because you gain an early market lead by allowing the community to shape your product in a direction that is beneficial to the community itself(who are often the users/customers of your product)

b) Getting traction for a challenger product: This is often the hidden reason for open sourcing a product. The real reason for open source is to get developer traction for a ‘challenger’ product. Would a Java community develop if Sun launched a proprietary software language? Who would buy license it from (what was mainly) a hardware/server company? So, Java had to ‘appear’ to be open sourced to get community traction.

It is interesting to see the love/hate relationship between open source product owners and the community. Sun clearly misled the community on how ‘open’ its source really was. Following the Oracle lawsuit, Google has suddenly developed a love for the open source Java community, which it had hitherto ignored in favour of its own Android community. Oracle, which has never open sourced its products, has a developer program but no record of any serious engagement with the Open source community. The ASF (Apache software foundation) represents the open source community in the minds of people but does not seem to have any real say in this game (which is between big corporations like Oracle and Google)

BLURRING THE LINES BETWEEN SOFTWARE AND HARDWARE: I said before that the boundaries between hardware and software are being blurred. In future, this will get more interesting when we get into the realms of Open source hardware. Today, one of the hottest products in the open source community comes from a university in Italy – Arduino. A trailer for a documentary for Arduino got 75,000 views in one day. Arduino comes from a university setting. It does not have the baggage from other corporate open source products with hidden agendas. Yet, developers can create commercial products from Arduino because it supports the LGPL license. The hardware is also completely hackable i.e. open and modifiable. This indicates to me that the boundaries are going to get a lot more complex and blurred both for HW/SW but also the management of IPR will be more complex

This is a much longer post that I originally thought and I could add much more but I will stop now.

Based on the above, my only conclusion is: We are going to see a lot more complexity, variety and increasing maturity when it comes to Open source and IPR.

Join the Forum discussion here: http://www.talkstandards.com/questions-for-standards-and-oss-open-forum/

Transparency’s Role in CEN-CENELEC Operations:
Elena Santiago, Director General of CENELEC, highlighted the high degree of transparency within the CEN and CENELEC systems, two official European SSOs. She outlined the implemented framework which guarantees this transparency as well as a number of proposed initiatives to further increase its level.

Modernising ICT Standardisation in the EU – The Way Forward:
Describing the EU standardization White Paper as “a weak attempt to focus on important issues”, Ken Krechmer highlighted a number of the EU’s seven key standardization policy areas in which he suggests government involvement may be undesirable. He concluded that the white paper falls short of addressing the needs of a “post-information society”, and instead based upon the outdated goals of a 20th century “industrial society”.

Reform of Standardization Policy: Building a Risk-Based Regulatory System:
Valentin Nikonov and Lorenza Jachia, of the United Nations Economic Commission for Europe’s (UNECE) Working Party on Regulatory Cooperation and Standardization Policies (W.P.6), presented an overview of the groups “holistic approach” to the management of risks within regulatory systems. The approach, which is broadly based upon a series of codified steps, attempts to delicately balance between the two extremes of regulatory systems: excessive regulations and insufficient regulations. The authors describe the WP 6 as able to “provide insight and directions to the reform of standardization policy”.

Trade-Offs related to the Transparency in the European Standardisation System:
Knut Blind broke down a number of issues related to transparency into those associated with the standardization process and those associated with its final output. However, moves towards greater transparency within the final output – ie making the published standard available free of charge – are in many regards challenging the traditional business models of many standards bodies.

The Dangers of Compulsory FRAND Conditions:
Helen Disney warned that “we should be wary of over-restricting IP-related practices”, with respect to the complexities involved in the standardization process and specifically achieving full transparency within it. Highlighting the need for increased dialogue between SSOs and IP-related organisations, compulsory obligations such as FRAND licensing curb the choice and flexibility which are “cornerstones of competition” and risk hurting innovation.

The Silence of the Chips:
Ajit Jaokar warned, that too much transparency may in fact harm end-users through the phenomenon of Obfuscation – concealment of intended meaning in communication. The “Silence of the Chips” is an EU proposal to guarantee an individual the right to disconnect from their networked environment at their discretion – relevant against the backdrop of “Internet of Things” initiatives and complete with a catchy logo. Ajit questioned whether “under the guise of transparency, the only people who will gain any value from it are the mug makers and t-shirt makers”.

The European Framework for Transparent Standardisation:
Simon Hicks pointed out that transparency is important in the creation of standards that “have widespread use or have regulatory links” and that a regulatory framework can “make abuse of the system difficult”, but that the system must also largely be based on trust. “The European Framework for Transparent Standardisation” also addressed the need of standards being discussed in connection to IPR. However, Hicks warned that this “is likely to draw [standards organizations] too much into the commercial arena and take away from the focus on producing standards”.

Transparency in Standardization under EU policies:
Marcus Glader discussed how applying the same requirements applied under competition law on the EU standardization policy, could safeguard that cooperation on standards do not restrict competition. Regulation can affect the market ubiquity of a standard, but also curb development. Glader concludes that “different governance and organization models may be appropriate and efficient”.

Transparency in EU Standardisation – Response from OASIS:
Laurent Liscia, James Bryce Clark and Carol Cosgrove-Sacks argued that EU directives should “promote interorganizational cooperation, and be careful not to style themselves as competition to marketplace efforts”. “Transparency in EU Standardisation – Response from OASIS” also pointed out how transparency in terms of visibility into projects, availability of legal rights and clarity of administration can help improve open standards.

However, transparency can also have undesirable consequences; leading to collusion, grid-locks and strategic commitments. Regulators should accordingly think twice, and be extremely careful about the details, before mandating or regulating transparency in the standard-setting context.

Decentralized market economies tend to be transparent in very fundamental respects. In relation to consumable products, competing firms rely on dissemination of information through pricing, advertising and other means to maximize demand. With respect to processes, on the other hand, firms typically have incentives to be transparent to reduce transaction costs. Audits, financial reports, public disclosures to capital markets serve to reduce capital costs. Furthermore, external review of internal processes can reduce the cost of arms length contracting and thus facilitate vertical specialization. Transparency is accordingly an equilibrium phenomenon in market economies. It is however key that it is a market response to demand and relies on active choices by customers and users and, therefore, on competition between suppliers.

The same fundamentals are true also for standard-setting; perhaps even more so as long as standardization is market-driven. SSOs have a very basic interest in being transparent about standards they have developed. Success for a standard setting organization is directly related to use and deployment of standards that it develops. The very result of the process is disclosure through publication. Firms that contribute with know-how, including IPRs, do so to maximize the use of its knowledge. It is in the interest of IP-holders to maximize dissemination as long as reasonable compensation is guaranteed and participation is voluntary.

The transparency of standard setting organizations, including informal fora and consortia, varies. As for markets in general, information about the products tend to be disseminated quickly and widely. The largest and most important organizations also tend to be very transparent about processes in order to grow in membership.

The question is then, why is transparency not maximized by markets. And, more importantly, should it be. The key to these questions is that transparency often enhances efficiency; but not always. It is accordingly advisable not to generalize and to be very careful about the details.

Transparent pricing (including IPR licensing terms). While transparent pricing can facilitate choices and improve predictability, it may also facilitate commitment and collusion. Examples are numerous. For instance, experience from US auctions shows that too transparent bidding allows producers to split markets. The Danish government learned several years ago that publishing prices can raise, rather than lower, prices. Airlines used pre-publication of fares to coordinate on higher prices on certain city-pairs. It is accordingly critical to keep scope for secret price cuts, price differentiation and rebates to maintain healthy competition.

Transparent negotiations (including committee work). While transparent negotiations can improve access e.g. for small and medium enterprises, it may also result in gridlocks and negotiation failure. Excessive transparency may reduce the prospects for compromises as participants have to publically commit to certain positions before a decision can be reached. It may also foster undesirable signaling and strategic commitments. One should accordingly recognize the value of strategic flexibility. The benefits of disclosing information from internal processes and discussions can therefore vary across organizations.

Transparent decision-making (including public votes). Disclosure of votes has the advantage that firms have to be public about how they influence a particular decision. However, it also has numerous disadvantages. There are fundamental reasons why most democracies use secret ballots. With secret voting it is impossible to verify, and to reward or punish, a particular voter. There are also fundamental motives for why some courts and governments do not disclose the votes. The idea is that the governing body is a collective. The strength of a decision should not depend on the vote. The outcome should be judged on its merits.

Transparent strategy (including full disclosure of IPR). There are tremendous values at stake as collective decisions are taken. This creates incentives for rent-seeking and manipulation. Transparency can support these interests by fostering truthful behavior. It is accordingly desirable that a holder of an (unknown) patent is prohibited from manipulating a standard in its own interest just to create a lock-in that can subsequently be exploited in IPR licensing by that firm. However, the issue becomes more difficult with respect to passive behavior. Standard development is often done by technical experts from large firms. Requiring that these experts always fully understand and disclose the strategy, interests and IPRs of their employer is neither feasible nor desirable.