EU's Kroes: open standards are smart business move

BRUSSELS, June 10 (Reuters) - Companies make a smart business decision when they choose open standards, EU Competition Commissioner Neelie Kroes said in a wide-ranging talk on an issue involving Microsoft (MSFT.O) and others.

Kroes laid out her policies on Tuesday as the European Commission wrestles with contentious standards cases, one involving mobile phone company Qualcomm (QCOM.O) and another concerning chipmaker Rambus (RMBS.O).

Standards are important as they ensure fire hoses fit fire hydrants, train carriages slot into railway tracks and software packages operate together smoothly.

They can be decided by government, agreed upon by industry groups, or imposed by monopolists who set proprietary standards.

"It is often wise to resist the impulse to regulate. If the propriety technology initially appears to harm consumers more than it helps them, often the market will find a way out of the problem," Kroes said in remarks prepared for a seminar.

Business customers can make a difference, she said.

"I know a smart business decision when I see one. Choosing open standards is a very smart business decision indeed."

Government customers can help. She said the European Commission, executive arm of the 27-country European Union, needed to work harder to carry out an internal policy to choose open, well-documented standards when it bought technology.

But even open standards can be tampered with, she said.

The Commission is investigating how the International Standards Organisation (ISO), which had an open standard for documents, came to choose Microsoft as a second standard.

There are allegations Microsoft made a worldwide effort to stack the ISO committee. The ISO, which had previously settled on a single standard, expanded to two.

That is unusual in such standard-setting, which typically results in the appliance of a single standard, as in the triumph of Blue Ray over HD-DVD in next-generation DVD technology.

"If they need help in tightening up their rules to avoid being manipulated by narrow commercial interests, or to design the right ... rules then they have my support. My door is always open," Kroes said of standard-setting groups.

Tighter rules might have prevented the Rambus case. The Commission has charged Rambus hid patents when the company's ideas were incorporated into standards for memory chips and imposed licensing fees later, so-called "patent ambush".

Rivals of Qualcomm say it overcharged after promising to charge fair and reasonable rates. Caps on fees set during standard-setting could have prevented the dispute.

Companies that set standards are often afraid that they will be subject to cartel laws. But there is no problem so long as groups choose on the merits of technologies, Kroes said.

Kroes also said governments should be slow to extend the time for patents, unless it "will lead to more innovations and will therefore promote consumer welfare". (Reporting by David Lawsky; Editing by Dale Hudson)