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FCC’s digital TV rule creates panic

To hear consumer advocates tell it, Hollywood execs are about to barge into your living room and take control of your home-entertainment center — with help from the feds, no less.
/ Source: BusinessWeek Online

To hear consumer advocates tell it, Hollywood execs are about to barge into your living room and take control of your home-entertainment center — with help from the feds, no less.

THE FEDERAL COMMUNICATIONS Commission’s Nov. 4 decision to protect digital-TV broadcasts from rampant copying across the Internet has set off a five-alarm panic among watchdogs such as the Consumers Union and the Electronic Frontier Foundation, who charge that the Hollywood-backed scheme will quash consumer rights and technological innovation.

Before American TV viewers rise up from their couches in protest, however, they need to pause for the following message: The FCC’s plan is the right step. The agency’s move to allow encryption-like protection for digital shows takes away one more excuse from the broadcasters to delay the rollout of high-definition TV. When the next West Wing won’t be ripped off Napster-style, producers will likely air more HDTV programs. Moreover, nothing in the FCC’s scheme will limit viewers’ freedom to make a copy of Friends for their personal use, just as they do now.

So what’s the fuss about? For the first time, the FCC is regulating computers and other devices by requiring them to carry encryption-related technology. The scheme works like this: TV broadcasters would be able to insert a marker — a piece of code known as a “broadcast flag” — into digital programs. The flag will alert any new TV, cable set-top box, VCR, or PC that the tagged program must not be redistributed on the Web.


Starting on July 1, 2005, all new TVs and other devices will have to include encryption-like technology to prevent flagged content from being sent on the Web. The FCC hopes that will be in time to prevent an onslaught of pirating from faster Web connections. Today, it can take 30 hours to download a two-hour high-def film. In a few years, it could take a matter of minutes.

Critics think the FCC has rolled a Trojan horse into the communications arena. For consumers who want to record shows for personal use, the rule is a nuisance, forcing them to upgrade to new equipment, one complaint goes. Moreover, critics charge, regulators have given Hollywood a wedge to push for further explicit restrictions against copying in the future. “Most important is the precedent this rule sets,” says Alan Davidson, associate director of the Center for Democracy & Technology, a tech-policy watchdog group.

Some of these fears are overblown, however. Viewers don’t have to buy new equipment. Current-generation devices will still be able to receive digital TV shows and record them for personal use. And even the new flag-compliant devices can record shows. The problem comes when a program taped on an old VCR can’t be replayed on a next-generation VCR. So consumers may experience some compatibility problems between machines as they upgrade.


The bigger worry is that Hollywood now has momentum to lobby for even more copy restrictions in the future. The studios are pushing their own encryption-based technology for makers of TVs, PCs, and other devices to adopt. That technology could easily be upgraded to include instructions to prevent copying in any form.

However, the FCC or Congress will have the last word — and they could simply spell out what consumers can or can’t do. Regulators already have an eye on other encryption-related technologies that are potentially more copy-friendly as alternatives to the studios’ solution.

Finally, critics say loading PCs with content-protection rules will prevent new innovations, such as the next TiVo. But as the PC and media worlds meld, such regulations may become unavoidable. True, the feds must use a light touch to avoid interfering unnecessarily with innovation.

All in all, the FCC has taken a reasonable first step. If consumers want their HDTV, they have to accept limits on the ability to redistribute TV shows on the Web. Shelter from pirates will help broadcasters venture into the digital era. And that will benefit everyone except the pirates.

Copyright 2003 The McGraw-Hill Companies Inc. All rights reserved.