Digital Media in Italia Proposal and progress report Leonardo Chiariglione 2007/07/08

2007/07/08 Digital Media in Italia Proposal and progress report 1

What is “dmin.it”, “digital media” and the “dmin.it proposal”?

• dmin.it is an interdisciplinary, open, non-profit group, with the goal to define and propose areas where Italy can gain a leading role in the exploitation of “digital media” • Digital media is any digitally represented content which can be transported over digital networks and processed by programmable devices • The dmin.it proposal concerns actions designed to maximise the flow of digital media 2007/07/08 Digital Media in Italia Proposal and progress report 2

The context

• Digital media offer a range of advantages • Digital techniques substantially modify the traditional roles in and operational modalities of value chains • So far all attempts at innovating media value chains have failed • Today most digital value chains look like old analogue value chains thanks to control techniques based on proprietary technologies • The size of the “open” market is dwarfed by the size of the “black” market • The problem cannot solved by just “putting people in jail” 2007/07/08 Digital Media in Italia Proposal and progress report 3

The idea

• Find the good equilibrium point between – The right of operators to provide services using the technologies that best support their business – The right of consumers to access services with a minimum level of interoperability if they so wish • Design the equilibrium point – For the national territory – Respecting international treaties • Achieving the equilibrium point will – Create a homogeneous market of 60 million people – Provide lifeblood to the national culture industry – Stimulate innovation in the digital media market 2007/07/08 Digital Media in Italia Proposal and progress report 4

The gist of the proposal

• The dmin.it proposal requires actions in three different areas: – Digital media rights management – Network access – Online payment systems • An operator may utilise both interoperable and proprietary forms of content, network and payment services • All other users (creators and consumers) may access proprietary or interoperable services at their discretion 2007/07/08 Digital Media in Italia Proposal and progress report 5

Interoperable DRM (iDRM) system

1. An iDRM specification is adopted at the national level 2. A service provider releasing content using a proprietary technology must 1. Release it also using the iDRM technology 2. At conditions that are not discriminatory compared to the proprietary technology 3. Anybody may realise devices and services, request and obtain conformance certification for them and offer them to interested parties 4. The iDRM specifications are 1. Public 2. Implemented as Open Source Software (OSS) 3. Not prescriptive of a particular business model 5. The governance of the iDRM ecosystem is managed by representatives of the affected parties 2007/07/08 Digital Media in Italia Proposal and progress report 6

iDRM – how it works

pDRM Distribution Channels Type 1 iDRM Content of operator A pDRM iDRM pDRM: proprietary DRM iDRM: interoperable DRM 2007/07/08 Digital Media in Italia Proposal and progress report Distribution Channels Type 2 pDRM device iDRM device pDRM device iDRM device 7

Open network

1. Two-way broadband operators can offer bundled and/or unbundled access to their networks with technical characteristics of their choice 2. A user of the network (content provider, intermediary or end user) may request and obtain from a two-way broadband operator 1. The pure two-way service-agnostic access to the "big Internet" 2. With technical features already offered by the operator 3. At conditions that are not discriminatory compared to other offers of the operator 3. Two-way broadband operators 1. Guarantee network service interoperability 2. Agree and provide specific QoS levels at peering points so as to provide users end to end QoS levels 2007/07/08 Digital Media in Italia Proposal and progress report 8

Open access to broadband networks according to dmin.it

Proprietary Access Proprietary Network Of Operator A Proprietary Access Proprietary Network Of Operator B Open Network Of Operator A Network of Operator C Open Network Of Operator B 2007/07/08 dmin.it

Access Peering Point Digital Media in Italia Proposal and progress report Peering Point dmin.it

Access 9

Open payment systems

• Anybody can open a “virtual” account based on guaranteed “real” payment systems, e.g. – Bank accounts – Credit cards – Prepaid card – Utility bill (gas, phone etc.) – etc.

• Synchronisations between virtual and real circuits performed at regular times or on demand – Transaction costs only apply at synchronisation time 2007/07/08 Digital Media in Italia Proposal and progress report 10

The dmin.it market economy

Value Chain User 1 (e.g. Retailer Negotiation of content with payment data Negotiation of ntwk resources with payment data Value Chain User 1 (e.g. End user) Acct11 Acct12 Acct1n Virtual Account Service Provider 1 Bank account 2007/07/08 Credit card Payment with units Shared Services Prepaid card Digital Media in Italia Proposal and progress report Bank account Virtual Account Service Provider 2 Acct21 Acct22 Acct2m Credit card Utility bill 11

Advantages of the dmin.it proposal

• A large homogeneous broadband market can be created • Content creators have a low barrier to access value chains – Provide more value to self-generated content – A more pluralistic market • New intermediation forms can be created by combining – Network access – iDRM – Flexible payment systems supporting micropayments • End users can access content from – Their network operators (bundled) – Outside their operator’s offer (unbundled) • Abundance of properly priced legal content discourages piracy 2007/07/08 Digital Media in Italia Proposal and progress report 12

Where we are/will be

• At its 11 th meeting dmin.it issued a call for technologies for the 3 area • At its 12 th meeting dmin.it selected technologies for iDRM and iPay • At its 13 th meeting dmin.it will issue the first draft of – The iDRM and iPay specification – The first iDRM governance rules – The first draft of the iDRM legislation initiative • The development and experimentation subgroup of dmin.it is developing the dmin.it reference software – Based on Chillout for iDRM – Based on the specific solution proposed for iPay • Dmin.it will publish technical specification, governance rules and the necessary legislation initiatives on 2007/12/15 2007/07/08 Digital Media in Italia Proposal and progress report 13