CE GROUPS ATTACK BILL TO MANDATE DIGITAL COPY PREVENTION

Swift and harsh criticism from CE industry was predictable reaction to legislation introduced in Senate Thurs. that would require entertainment, CE and PC industries to craft standards for digital copy protection -- or have govt. do it for them (CED March 22 p5). Meanwhile, long-expected and controversial proposed “Consumer Broadband and Digital Television Promotion Act of 2002” (S-2048) brought cheers from content owners. Bill was filed by Commerce Committee Chmn. Hollings (D-S.C.) and co- sponsored by Sens. Stevens (R-Alaska), Inouye (D-Hawaii), Breaux (D-La.), Nelson (D-Fla.) and Feinstein (D-Cal.), with strong backing from all Hollywood studios except for Warner Bros., owned by AOL Time Warner.

Bill and digital rights in general have been focus of spirited committee hearings on Capitol Hill in last month, with Senate Judiciary Committee Chmn. Leahy (D-Vt.) adamantly insisting Hollings bill wouldn’t pass Congress this year. S-2048 would require industries to develop copyright protection standards, technologies and encoding rules within one year. Technologies would be incorporated in all digital media devices. Content delivered over Internet and in broadcast signals would include instructions to curb or permit copying and would bar illegal transmission of material. Devices such as TVs, cable boxes and PCs would have to be manufactured to recognize and respond to those instructions.

If private sector failed to come up with standards and rules, S-2048 would require FCC to implement technologically feasible solutions in consultation with same industries. Rules to be developed would have to preserve fair-use rights for educational and research purposes and legitimate consumer copying, Hollings said. But broad definition of “digital media devices,” rulemaking role for FCC and vague assurances of consumers’ rights drew fire from CEA Pres. Gary Shapiro, who said bill presented “dangerous delegation of broad, unfettered regulatory authority, which could have severe, adverse long-term consequences for consumers.”

Shapiro said “S-2048 lacks a clear objective for all of the regulation that it mandates, or any defined goal for the process it would start,” alluding to what CEA called “undefined” and “subjective ’security’ goals” and “broadly defined ‘digital media devices’.” Shapiro said bill “does not describe any particular objective other than ’security,’ nor does it guide the regulatory agency (now the FCC) as to when or how such ’security’ should be applied, or to what effect.” As for role bill would impose on FCC, Shapiro said: “This is a breathtaking delegation of authority to a regulatory agency that lacks the jurisdiction and the resources to even think about performing it.”

Among other criticisms, CEA said it was unclear whether S- 2048 was intended to apply solely to CE and PC products that deal with video entertainment, or to all products that could handle music, computer programs, games, and data as well. Assn. said bill’s definitions “embrace the broader categories, but the limited exemptions are defined only in terms of video entertainment.” CEA said bill’s assurances on fair-use rights and legitimate consumer copying, although welcome, were vague. “However, S-2048 appears to recognize only a right to make a single, ‘personal’ copy, and then only of certain defined television programs,” Shapiro said. CEA spokesman told us group was concerned that bill didn’t discuss music copying or whether “single personal” copy meant consumers could space-shift content among devices, for example music from PC to portable digital player.

Music industry said it appreciated S-2048, RIAA Pres. Hilary Rosen saying it “sends an unmistakable signal about the importance of protecting digital music and other content from piracy. Without stringent protections, online piracy will continue to proliferate and spin further out of control.” In dissenting view, International Technology Assn. of America Pres. Harris Miller said content piracy was confined to “a few bad actors.” He denounced S-2048 as “anticonsumer and antiprogress pure and simple. As we move into the 21st century, movie chieftains want to gallop back toward the 19th.”

Bill “defers to the private sector, protects legitimate consumer home copying expectations, preserves fair use and provides for upgrading standards to avoid freezing technology,” Disney Chmn. Michael Eisner said. More important, he said, S- 2048 would provide “needed discipline” by setting deadline for industry negotiations. MPAA hopes to float proposals that reflect progress of industry talks, Pres. Jack Valenti said. If govt. assistance is needed, MPAA hopes to “narrow the scope of any legislation or regulation to enforce the various (or individual) solutions,” he said. Discussions should focus on 3 key matters related to digital piracy, Valenti said: (1) Establishing “broadcast flag” to stop unauthorized Internet redistribution of digital broadcast programming, use of which won’t affect consumer “time-shifting.” (2) “Plugging the ‘analog hole'” that exposes digital programming to potential piracy. (3) Limiting “rising tide” of illegal peer-to-peer file sharing of copyrighted works.

Hollings found 5 senators willing to co-sponsor his bill, including Democrats Inouye (Hawaii), Breaux (La.), Nelson (Fla.) and Feinstein (Cal.), as well as Sen. Stevens (R-Alaska). That group hasn’t issued formal statement on Hollings’ bill, but its chmn., Sen. Allen (R-Va.), said on digital rights management that “my preference and HTTF’s preference is the private sector -- the 3 industries [content, IT and CE] -- work together for a watermark or flag or whatever solution so content producers feel comfortable transmitting” content online. He dismissed criticism of some in IT and CE industries that content providers don’t respect fair use: “They don’t want to restrict that.” He said HTTF members -- there are 15 total -- fear federal govt. solution. Hollings, however, said in his floor statement that he felt that might be the only recourse: “At every stage in the process, the private sector, not the government, has [had] the opportunity and the incentive to grab the reins. To date, however, this has not happened. The legislation we introduce today seeks to change that.”

IT and Internet groups predictably came out in opposition to bill. Assn. for Competitive Technology Pres. Jonathan Zuck called bill “wrongheaded. It’s no secret that the federal government has difficulties creating standards for cutting-edge technology… It makes no sense to have the government supplant the efforts of the IT industry.” “It is difficult to imagine something further beyond the competence of the Federal bureaucracy than the design of technology products,” Computer & Communications Industry Assn. Pres. Ed Black said: “Nor should new products and innovations be dependent on the approval of Hollywood.”

Some of those IT and CE experts will participate today (Mon.) in workshop sponsored by Commerce Dept.’s Technology Administration (TA) titled “Understanding Broadband Demand: Broadband & Business Productivity.” Seminar focuses more on impediments to broadband adoption among businesses than consumers, but is part of ongoing series sponsored by TA to identify issues such as intellectual property that could serve as broadband barriers, and what role both industry and govt. has in removing those barriers.