This is Part 6 in a series of articles in which contributor Stacy Baird presents and in-depth analysis of the role of governments in standards setting initiatives which is released on a bi-weekly basis. For previous instalments see here: Part 4, Part 5 – Editor

PART 6: The Well Developed Range of Standards, both Proprietary and Open, Reflect a Sophisticated Standards-Setting Ecosystem

Previously I described the several forums and market characteristics that can develop an IT standard: SDOs, patent pools, market driven de facto standards and consortia. As further evidence of the sophistication of the IT standards-setting marketplace, there are numerous and highly differentiated types of standards that can achieve interoperability

There are two broad categories: “open” standards, developed through formal standards-setting organizations, SDOs, and “proprietary” standards, developed by informal standards bodies, consortia or by individual or groups of companies and adopted as de facto standards.

“Proprietary standards” are technical specifications developed and maintained by a single entity or by a private, small group of cooperating entities, often a patent pool or consortia. Standards are by their nature intellectual property and, thus, are potentially subject to ownership protected by copyright or patent law. Since proprietary standards are created by a small group of private parties, often working ad hoc, they are typically not subject to the formalized rules of a traditional standards-setting organization; and thus, the owners of the underlying intellectual property may control implementation of such a standard more tightly through the licensing terms. One of the key reason standards are developed as proprietary is that working in small groups without many of the procedural issues of an open standards-setting organization (particularly issues having to do with consensus among many and the openness of the process) is more efficient, and thus, interoperable products can be developed and brought to market more quickly.

The status of a proprietary standard may change over time. Commonly, proprietary standards are developed by groups of companies working in consortia, less formal efforts with the use of “patent pools” or cross-licensing, or even by a single company, and emerge as de facto standards. Some proprietary standards are subsequently submitted to formal standards-setting organizations to become de jure, or formal open standards. For example, it may be a good business decision for only a few companies to work together to develop a standard for their mutual benefit, since doing so can be done more quickly than in a formal setting. Eventually, more adopt the standard to achieve interoperability and the standard becomes a de facto standard. At this point, the standard may be submitted to a standards-setting organization, such as TIA, IEEE, ITU, or ISO, for formal adoption as an open standard (de jure standard) to encourage yet wider adoption. Examples include Bell Laboratories C Programming Language; ANSI CAT-5 Cable (and other such cable specifications developed by the Telecommunications Industry Association, a trade association and ANSI-accredited standards developing organization) and hundreds of IT standards (many designated as ISO or ANSI standards) developed by International Committee for Information Technology Standards (INCITS, an ANSI-accredited standards development organization supported by the Information Technology Industry Council (ITI), a trade association), Adobe’s PDF format (various parts of which have been submitted to ISO for adoption as an open standard) and Microsoft’s open XML file formats (which have been submitted to ECMA for adoption as an open standard).

An “open standard” is a technical specification that is, broadly speaking:

(a) Developed, maintained, approved, or affirmed by rough consensus, in a voluntary private-sector (i.e., non-governmental) standards-setting organization that is transparent in its process and open to all interested and qualified participants;

(b) Published (i.e., made available openly to the public) including specifications and supporting material providing sufficient detail to enable a complete understanding of the scope and purpose of the standard;

(c) Documented: The documentation of the standard is publicly available without cost or for a reasonable fee for adoption and implementation by any interested party; and

(d) Any patent rights necessary to implement the standard are made available by those developing the standard to all implementers on reasonable and non-discriminatory (RAND) terms (either with or without payment of a reasonable royalty or fee).

Well-known and widely implemented open IT standards include TCP/IP, HTML, HTTP, 802.11, MPEG, XML, SNMP, and SMTP.

Many if not most IT standards, including open standards, have patented components that are owned or controlled by one or a few companies. Whether open standards or proprietary standards are involved, entities that develop standards and own the associated patents typically license the technology on reasonable and non-discriminatory (RAND) terms, either with or without a reasonable royalty, and therefore facilitate the wider adoption of the standard.

These many standards, open and proprietary, adopted by SDOs, developed through patent pools, consortia, or as a result of de facto adoption, there is abundant evidence of the sophistication and maturity of the IT standards marketplace. Further evidence can be found by looking at the relevant industries and examining their history of standard setting, which I will do in my next entry.