If the entertainment industry gets its way, the U.S. Federal Communications Commission (FCC) will this week order vendors of every PC capable of receiving digital broadcast signals to use copy protection mechanisms that stop anyone from sharing copyrighted material over the Internet.
The five-member FCC is expected to unanimously approve such a rule, after studying it for more than a year. Makers of PCs and other electronic devices that can receive digital television signals would have to build their gear to recognize a "flag" that broadcasters will embed in their digital signals. If the flag is present, the hardware won't record the broadcast content. What's more, only systems that recognize the flag could play back the content. The broadcast flag would not affect analog devices, such as VCRs.
The restriction against transmission over the Internet may extend to home networks as well, if it is an IP network, warn some opponents of the effort. So a user couldn't transmit a video across a home LAN to play back the recording on another system.
The movie and television industries are pushing the broadcast flag concept as a preemptive strike, to avoid the fate of their peers in the music industry. The Recording Industry Association of America Inc. says music sales are declining, and blames piracy of downloadable music available on peer-to-peer networks.
The Motion Picture Association of America has told lawmakers that unless this rule is adopted, the movie industry will not license its movies for digital television broadcast for fear of online piracy.
The flag works only with digital signals, but commercial broadcasting services are scheduled to convert to digital television mode by 2006. The FCC rule would take effect 18 months after approval, although the MPAA says it's ready to flip the switch next summer.
It's up to broadcasters whether to bear the flag, and not all will use it, says Fritz Attaway, an MPAA senior vice president. But an FCC counsel differs. Exemption from the broadcast flag rule is an issue still being debated, says Paul Gallant, legal adviser to FCC Chairman Michael Powell. He adds that Powell is "not inclined to exempt" broadcasters from this rule, if adopted.
"The goal of this proceeding is to prevent mass redistribution of broadcast programming over the Internet," Gallant adds.
At its core, the proposed rule "effectively erects a wall between your PC and digital television," says Fred von Lohmann, an attorney with the cyber-rights group Electronic Frontier Foundation.
Other public advocacy groups are also already crying foul over the mandate's broad reach. They criticize both its economic toll and its effectiveness.
"The scope of this rule-making is immense," says Chris Murray, legislative counsel of the Consumer Union, a consumers interest group. "This is a solution that won't work for a problem we don't yet have for a technology we haven't yet seen."
The MPAA's move is preemptive because even today's fastest broadband connections are too slow to make it feasible to transmit most full-length movies online, representatives of both sides agree. While this has deterred widespread movie piracy, no one expects it to last.
Also, industry-watchers are skeptical that enough consumers will switch to digital television by 2006, given the current pace of digital TV sales. So far, only about 7 million digital televisions have been sold, according to the Consumer Electronics Association, a trade group of more than 1200 electronics device manufacturers. It expects another 4 million digital television sets will be sold by the end of this year, bringing the number of U.S. households with digital TV sets to about 11 percent--far short of the 85 percent necessary before analog broadcasts can be abandoned.
Although vendors of computer and consumer electronics products helped develop the flag concept, some oppose the mandate. They complain that electronics products, including PCs, will become less innovative and less flexible when their capabilities must be restricted.
Also drawing fire is the collaboration between Hollywood and a consortium of five tech companies, known collectively as 5C, that are setting the standards for content protection technology. Critics say this exclusive circle promotes proprietary standards that lock consumers into certain product lines. The 5C companies include Hitachi, Intel, Matsushita (Panasonic), Sony, and Toshiba.
"If these companies are left in charge of the administration of the licensing for these technologies, the entire market will shift to a closed architecture, and consumers will be limited in their choices," says Jonathan Rubin, of the American Antitrust Institute. "They could be locked into new equipment that is not interoperable with other machines using other, perhaps better, technologies."
Not so, says the MPAA's Attaway. "The door is wide open for any technology vendor to accomplish this. The final determination is with the FCC."
The charges of anticompetitiveness are misleading, says Don Whiteside, vice president of legal affairs at Intel Corp. "Intel's desire is to have the broadest number of technologies get approved," Whiteside says, adding that 5C is only one of many ways to protect content. He expects the FCC to approve the 5C technology when it publishes the rules.
What of Fair Use?
Some electronics manufacturers and consumer groups say a mandate would put new limitations on consumers' fair use of copyrighted content, and prevent them from manipulating and modifying equipment they own.
The broadcast flag could stop use of digital TV content even in ways that don't strictly violate copyright, critics say. For example, a son might want to send family members an e-mail message containing a video clip of his mother being interviewed on a local newscast. But a broadcast flag-compliant PC could not transmit this e-mail if it contains flagged content. The receiving device would identify the flag, then encrypt the content to make Internet transmission impossible.
"The (industry's) goal is to control all digital content and that's where the harm is to the consumer," says Tom Patton, vice president of government relations at Philips Electronics, which opposes the mandate. However, Patton says Philips supports some type of technology to prevent unauthorized distribution of copyrighted content.
The FCC rule would also tie the hands of tinkerers, who couldn't change hardware or software as they see fit. "The protection scheme will make the architecture of the computer inaccessible to users," says Michael Godwin, a senior technology counsel with Public Knowledge, a consumer advocacy group.
Cost and Other Flaws
Critics also say the FCC's plan will cost consumers a bundle because they'll have to dump noncompliant equipment even though the new, compliant digital equipment provides no incremental benefit.
"Consumers are being asked to replace a generation of digital video equipment without receiving any tangible benefit," says Rubin, of the American Antitrust Institute.
And that replacement gear could be costly. As PC and electronics vendors pay to license content-protection technology and build it into their equipment, they're likely to pass along the costs to consumers.
And the most vociferous critics say the rule ultimately won't stop piracy at all.
The mandate does not plug the so-called "analog hole." Users can still record analog content--which is exempt from the broadcast flag--and convert it to digital form for transmission over the Internet.
Nor does the FCC's rule impose technical mandates on machines sold and used elsewhere, like Canada and Mexico. Outside the United States, users could continue to record digital broadcast content unencumbered by a technical mandate.
Some Vendors Wary
Some manufacturers of electronics devices have not opposed the proposal. However, Philips Electronics and a few others are speaking out against what they consider mandated proprietary standards and undue restrictions on use.
Patton of Philips asserts the technology will not work. "Encryption-based technology puts a lock on the front door but leaves the back door wide open," he says. He also contends the proposal puts Philips at a competitive disadvantage.
"The proposal would anoint a technology controlled by our chief competitors, under terms that are anticompetitive and unacceptable," Patton says. "We don't want the government to pick the technology winners at our expense."
The American Antitrust Institute is also voicing concern about anticompetitiveness.
"For one thing, you have the studios joining together in something like a group boycott threatening to withhold content if the flag rules aren't passed," Rubin says. "For another, you have the possibility of a small group of private firms controlling the criteria for what constitutes 'compliant' devices."
Despite some misgivings about government regulation, most hardware vendors say they'll go along. They're eager to enter the market in which the Internet converges with entertainment and personal electronics.
"Whenever we have government regulating how Intel and other companies design our product, it is a concern, but the narrow scope of the rule is reasonable," says Intel's Whiteside.
Some television makers have endorsed the mandate, conceding it is designed not for today's problems, but those a few years from now.
"If we don't do this, we'll end up like the music industry," says Dave Arland, director of trade relations for RCA.
FCC: On the Fast Track
Critics say the FCC is moving faster than necessary because of pressure from several fronts.
Congress is eager to reclaim and resell the analog spectrum now licensed to broadcasters that must switch to digital television. The Congressional Budget Office projects that auctions of spectrum licenses will yield another $18 billion from 2001 through 2010, with about a third of the revenue occurring in 2003 auctions.
The entertainment industry is also urging quick action, threatening to not support digital television without the FCC's rule.
The MPAA's Attaway says the mandate is necessary because television stations and networks rarely cover the costs of programming, and studios make most of their money in syndication. Today, most of the licensing fees come from overseas distribution. The borderless Internet with open networks of free online movies and television shows will "eliminate the aftermarket for the programs," Attaway says.
"If the rule isn't adopted, then it will force programming distributors to license to satellite and cable that can protect the content," Attaway adds.
But the entertainment industry is missing an opportunity, according to Rubin of the American Antitrust Institute. He suggests the industry instead embrace the Internet as a cheap medium to distribute its products.
Since digital television is not yet mainstream, the Electronic Frontier Foundation's von Lohmann considers the MPAA's aggressiveness a tactic to checkmate the consumer. "It's easier to take away from consumers the inventions they haven't seen," he says.
Nor is Congress treading water. Two congressional representatives who have been vocal on technology matters recently sent a letter to the FCC urging adoption of the rule, but with caution.
The FCC's approach erodes consumers' fair use privileges, but "it's a trade-off we have to make," says Rep. Rick Boucher (D-Virginia), who coauthored the letter with Rep. Paul Gillmor (R-Ohio).
"If we don't have a flag prohibiting downloads, (the industry) simply won't release their programming to the networks," Boucher says. "We are forced to weigh two sets of values. Is it more important the government mandates technology or people get their network entertainment? I have to side with the broadcast flag, properly written. And I emphasize properly written," Boucher adds.
Court challenges are likely to follow any FCC mandate of a broadcast flag. The main argument will focus on whether the FCC has jurisdiction to mandate the design criteria for receivers and other devices, critics say.
"The government should not decide how consumer electronics devices and computers must be designed," Rubin says. "There are existing standards, but these are aimed at protecting the health and welfare of consumers, such as limiting electromagnetic emissions. But when they start telling manufacturers how audio signals must be processed, and which outputs are legal and illegal--not for the benefit of consumers, but to protect the perceived copyright rights of program producers--they are entering uncharted waters."
- Chang writes for the Medill News Service.