posted 05-08-2005 12:39 AM                       

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Media
Red Flags Over Hollywood
David M. Ewalt and Daniel Fisher, 05.06.05, 5:55 PM ET

NEW YORK - Flags were flying at half-staff across the movie industry on Friday.

That's when a U.S. federal appeals court overturned government rules that would have forced electronics manufacturers to build anti-piracy devices--known as Broadcast Flags--into many digital televisions, video recorders and other devices.

The ruling is a setback for the motion-picture industry, which pushed hard for the rules in an effort to control distribution of its content. But some hardware manufacturers are hailing it as good for future sales and product innovation.

The Broadcast Flag technology would have been mandatory on all digital television devices sold in the United States beginning in July, and it was intended to keep consumers from copying broadcast TV signals and transmitting them over the Internet.

The Broadcast Flag rules were mandated by the U.S. Federal Communications Commission and largely promoted and written by the Motion Picture of Association of America. The MPAA contends that now, without the technology in place, content providers will be unwilling to broadcast their programming for fear of it being copied and redistributed, and that consumers who don't subscribe to more secure cable and satellite TV won't be able to get certain digital programming.

"This is a disappointing decision and could create a digital television divide by slowing or eliminating access to high-quality digital programming for some consumers," the MPAA said in a statement. "Television audiences--whether they subscribe to cable or satellite service or not--are benefiting from the higher-quality picture of digital programming. If the Broadcast Flag cannot be used, program providers will have to weigh whether the risk of theft is too great over free, off-air broadcasting and could limit such high-quality programming to only cable, satellite and other more secure delivery systems."

But critics of the Broadcast Flag say it would have torpedoed innovation and would hurt consumers by limiting the ways they could make lawful copies of digital content.

"We're very happy about it," says Miriam Nisbett, legislative counsel for the American Library Association, which served as one of the petitioners in the case. "It's a very strong decision."

The ALA sought to overturn the rule in an effort to protect schools and libraries, which use broadcast content for educational purposes. If broadcast flag rules and technology were in place, it could keep a university from playing part of a news program for a distance-learning course taken over the Internet, or even impose restrictions on a teacher who records a documentary to show in class, she says.

Big businesses have also been critical of the regulations. "Our take is that the marketplace ought to be setting the standard," says Bob Cohen, a spokesman for the Information Technology Association of America, a trade group for computer, telecommunications and high-tech companies. "We didn't like the idea of the motion-picture industry or copyright owners having that role."

The ITAA and its member companies contend that the Broadcast Flag would hurt their business by closing out new markets and limiting the kinds of appliances and software they can sell to consumers. "We want to maintain the broadest possible set of opportunities to bring into to the marketplace," says Cohen. "We think that the constructive approach would be to look at the example of VCRs and realize that new markets open up when new technologies are fostered and allowed to grow"

"Consumer electronics companies will be quite happy about this ruling," says the ALA's Nisbett. "My impression has been that they have been pushed along and made to get into this whole business of how they're going to have to reconfigure their business, and that's not appealing to them."

But some electronics vendors are upset with the decision. "We have worked hand in hand with Hollywood to get some form of broadcast protection," says Dave Arland, a spokesperson for Thomson Consumer Electronics (nyse: TMS). "We're disappointed in today's ruling."

Without a broadcast flag in place, content providers might decide not to release new programming in digital format, thus reducing consumer demand for Thomsons' digital set-top boxes, according to Arland. "We want to have a rich selection of content on them to interest consumers, otherwise they're just doorstops," he says.

Arland contends that companies who object to the rule haven't had to deal with copyright issues before and are overreacting to the threat. "The sky is not falling. Consumer electronics companies have had to deal with this for 25 or 30 years," he says. "Computer companies have never had to live with those same requirements."

Even though the court struck down the FCC's Broadcast Flag rules, it's unlikely the technology is completely dead. Many observers now expect the MPAA and other supporters to push Congress to pass legislation enacting the rule. "We would support an effort to have congress give the [Federal Communications Commission] authority to maintain this rule," says Arland.

But the electronics industry--which was fairly quiet when the broadcast flag was initially devised--might be more vocal the next time around, says Cindy Cohen, a lawyer with the Electronic Frontier Foundation, an online civil liberties group. "I think you're going to see more companies involved in this now that there's a straight ahead debate in Congress, instead of the sneaky ways it was conducted before."

Mainstream manufacturers supported the broadcast flag because it required new devices to be reviewed by the FCC, putting new competitors like TiVo (nasdaq: TIVO) at a disadvantage, according to Cohen. "A scheme that limits what your competitors can bring to market helps the entrenched competitors," she says.

The court's ruling has put aside, for the short run, a more potent challenge of the FCC's ability to mandate so-called software-defined devices, which use open-source software to define how a signal can be sent or received. But eventually this issue will come to the fore, possibly as a First Amendment challenge. "You cannot just regulate code without going thru the first amendment type of balancing tests that are used for any other type of speech, because code is speech," says Cohen.

And so the content industry may go to Congress to try and obtain the explicit authority to overturn the court's decision but will run smack into the forces who support open-source software like Linux, including Microsoft (nasdaq: MSFT) competitors such as IBM (nyse: IBM) and Sun (nasdaq: SUNW). "Open source is not just guys in garages any more," says Cohen. "It's big operations in big districts."

Still, a law and its implementation could now take years, during which any variety of new technologies could continue to open up the digital entertainment industry.

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posted 05-08-2005 02:01 AM                       

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it was intended to keep consumers from copying broadcast TV signals and transmitting them over the Internet.

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posted 05-08-2005 10:56 PM                    

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Without a broadcast flag in place, content providers might decide not to release new programming in digital format, thus reducing consumer demand for Thomsons' digital set-top boxes, according to Arland. "We want to have a rich selection of content on them to interest consumers, otherwise they're just doorstops," he says.

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posted 05-09-2005 01:38 PM                       

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And they're worried about "broadcast flags". Not even John Pytlak can defend these guys!

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What kind of American are you??? I always enjoyed watching the "broadcast flag" when a TV station signed off by playing the National Anthem with a picture of a waving flag!