For simplicity, we can divide standards as open or close (proprietary). An open standard is publicly available while the proprietary or close standard is not. Proprietary standards are only available, if available at all, under very restrictive contract terms from the organization that owns the copyright of the specification. An example of open standard is the HTML specification while Microsoft Office's document format falls under close.
An open standard increases the compatibility between hardware, software or systems since the standard is available for anyone to implement. In practical terms, that means that anyone with the right knowledge can build its own product which can work together with other products following the same open standard.
An open standard may not necessarily imply that there are no licenses or patent rights. While we can assume that all free standards are open, the opposite does not necessarily need to be true. Some open standards are free of charge while in others, patent holders may require a royalty fee for “using” the standard. Standards published by major international standardization bodies such as the ITU, ISO and IEEE are considered to be open but not always free of charge.
In summary, open standards are not only important for all players to create interoperable and affordable solutions but also to promote competition among vendors by setting up the clear rules of the game.