[Ecommerce] Washington Post story on broadcast flag

[Thiru Balasubramanian]

http://www.washingtonpost.com/wp-dyn/articles/A32173-2003Oct15.html

Copied for Fair-Use

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*FCC Targets Copying of Digital TV*
Hollywood Backs Rule That May Irk Viewers

By Jonathan Krim
Washington Post Staff Writer
Thursday, October 16, 2003; Page E01

The federal government is preparing for the first time to require that
personal computers and other consumer electronics devices contain
technology to help block Internet piracy of digital entertainment.

A rule being considered by the Federal Communications Commission is one
of a series of proposals pushed by the entertainment industry to help
thwart copying and online trading of movies and television shows that
increasingly are being broadcast in digital form with high-quality
picture and sound.

But the new rule also would force consumers to purchase new equipment if
they wanted to record enhanced digital-quality television programs and
replay them on other machines.

Opponents of the proposed rule, including many technology companies and
consumer groups, say it won't work. They are especially concerned that
the plan might lead to government regulation of how personal computers
and other devices are built, particularly if hackers crack the system
and further changes are deemed necessary.

Officials at the FCC, who spoke on the condition of anonymity, said they
expect the agency to settle on details of the "broadcast flag" rule by
the end of the month. The broadcast flag takes its name from the bit of
computer code that would be embedded in digital television signals and
would be read by "compliant" devices such as a television set or a
digital video recorder.

The rule would not affect consumers who record shows the old-fashioned
way, with VCRs. Nor would it affect programming received on a cable or
satellite system, in part because consumers pay for that content.

But the entertainment industry does not want digitally enhanced
"high-value" entertainment sent free over the air to be easily copied
and distributed on the Internet.

FCC officials said they expect the final rule to enable competition
among different means of deploying the flag system to protect
broadcasts, rather than the government anointing one in particular.

Unlike with recent FCC decisions on high-speed Internet access and media
consolidation that have deeply split the five-member commission, none of
the three Republicans and two Democrats has led a public campaign
against the broadcast flag.

"I'm optimistic we'll have a clean majority," said one senior agency
official. "The commission has acted in the area of digital television in
a very bipartisan fashion."

Promoting digital programming, especially high-definition television, on
regular broadcast channels has been a goal of the FCC since the Clinton
administration.

Regulators have long worried that if enhanced digital programming is
primarily offered on for-pay cable and satellite systems -- which
scramble their signals -- free "over-the-air" television could wither
and die.

So the FCC granted broadcasters additional spectrum to provide enhanced
digital signals, and set quotas for how much programming they must
offer, although those quotas have mostly gone unfilled.

Now the agency is addressing how programming can be protected so that it
cannot be easily copied and sent around the Internet, undermining the
lucrative aftermarket for videos and television syndication.

That puts the FCC in the middle of one of the most contentious issues of
the computer age: how to protect against unauthorized use of digital
entertainment when part of its appeal is the increased ability to
manipulate it, customize it and transfer it to different locations.

In theory, the broadcast flag system would thwart Internet distribution
by preventing computers from copying the files in a way that would allow
them to be sent to others.

Critics point out that the system could be easily circumvented. It would
still allow recording by non-digital devices, such as VCRs, though when
replayed the files would not have the enhanced digital qualities.

With the use of inexpensive equipment those programs can be
"re-digitized" and sent around the Internet just as music and other
video programming is today.

And, opponents argue, the proposed system would require every device
used by a consumer who wants to watch digital programming to recognize
the flag. Thus, a DVD recorded on a compliant recorder, connected to a
compliant television set in a family room, could not be viewed in an
office, den or bedroom unless devices there also were compliant.

That means buying new equipment. Critics say that in addition to forcing
consumers to shoulder the cost of protecting one industry's products,
the flag system undermines a consumer's right to "fair use" of
copyrighted works regardless of appliance or location.

The system "does not allow a consumer to transmit from his own home to
his office," said Lawrence Sidman, a lawyer for Royal Philips
Electronics NV. "That is established consumer fair use."

But the major lobbying group for device makers, the Consumer Electronics
Association, switched from early opposition to neutrality, saying its
members are split.

Of greatest concern to some opponents, including major technology
companies such as Microsoft Corp., is that device makers, tech firms and
the entertainment industry could not agree on the technology that would
be used in devices to recognize the flag and act accordingly.

Instead, the FCC has been working from a proposed rule drafted by the
Motion Picture Association of America, which gives the moviemakers a
strong hand in evaluating which technologies to use.

The MPAA agrees that the system only begins to attack the piracy
problem. Making analog copies is another huge problem that the industry
wants to prevent through legislation or regulation.

But the broadcast flag "will still diminish the redistribution of
digital broadcast content on the Internet," said Fritz E. Attaway,
senior vice president of the MPAA.

Attaway argued that on the issue of fair use, moving to a broadcast flag
system is not much different from what consumers face today if they want
to switch from analog VHS tapes to digital video discs: They need new
equipment.

And despite a lack of industry consensus, the MPAA does not want to wait
until it must deal with the volume of piracy that plagues the music
industry.

A senior FCC official said the agency would not adopt the rule as
written by the MPAA.

"We are aware of the dangers of letting any one industry segment control
innovation in this area," the official said.

Another FCC staff member, noting the agency's general reluctance to
mandate the use of particular technologies, said that "everyone is kind
of holding their nose on this one" but the rule will pass unless it
would give too much control to the entertainment industry.