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October 14, 2009

William T. Lake
Chief, Media Bureau
Federal Communications Commission
445 Twelfth St., SW
Washington, DC 20554

Re: MPAA Petition for Expedited Special Relief: Waiver of 47
C.F.R. §76.1903
MB Docket No. 08-82

Dear Chief Lake:

Public Knowledge (PK) takes this opportunity to respond to recent ex
parte presentations made by the Motion Picture Association of
America (MPAA) in this docket, and to address certain other arguments
raised by Multichannel Video Programming Distributors (MVPD) in support
of the waiver.

The MPAA’s waiver application and recent presentations in support
of its waiver request provide the first real test of Chairman
Genachowski’s commitment to make the FCC a “data driven
agency” rather than one where powerful interests demand favors in
proportion to their political clout. Waiver applicants bear a heavy
burden of proof to show that granting an exception to an established
Commission rule will serve the public interest.^[1] The MPAA has submitted no proof that
grant of the waiver will serve the public interest at all. To the
contrary, what proof exists in the record shows that the
“problem” of a longer window for release of movies to MVPDs
than for release on DVDs is a business decision made by MPAA’s
members. Rather than shed crocodile tears for the poor shut ins and busy
parents who must either subscribe to NETFLIX to get the earlier window or
wait a whole thirty days, MPAA’s members could simply negotiate a
shorter release window.

Indeed, as DIRECTV admits in its most recent filing,^[2] the wash of MVPD support has
everything to do with NETFLIX and nothing to do with providing a
“new service” (which is, of course, merely the existing
service 30 days earlier). Shut ins and busy parents may subscribe to
NETFLIX or similar services to receive the same content on the thirty day
schedule without purchase of a new HDTV. Accordingly, to the extent there
is public interest value in an early window, it already exists without
doing violence to the Commission’s rules.

While PK has sympathy for MVPDs compelled by Hollywood to lobby for
regulatory favors as a precondition to negotiation or risk losing more
business to NETFLIX and other DVD distributors, the FCC cannot allow
itself to become a pawn in commercial negotiations. Given that a
representative from Paramount testified at a recent FCC workshop that
most movies hit the internet as illegal copies on or before opening
day,^[3] the
studios’ argument that they cannot release the content to MVPDs 30
days earlier without the ability to control selectable outputs makes even
less sense than when initially set forth in MPAA’s
Petition. The MPAA’s members should therefore follow in
the footsteps of other studios that make their content available to MVPDs
and DVD distributors simultaneously.

But even if the FCC ignores the fact that the waiver is unnecessary for
the MPAA to release the content, since this decision lies entirely with
the MPAA’s members, even if the FCC ignores the fact that grant of
the waiver will have zero impact on illegal copying, the FCC cannot
ignore the fact that 25 million television viewers would need to purchase
new equipment to even access this “new service.”^[4]

In short, nothing justifies grant of the waiver application. The
MPAA’s members can provide this “new service” without
the waiver. Grant of the waiver will not protect content from illegal
copying, as illegal copies are available well before the proposed
shortened window. Further, to the extent there is any value in
encouraging the MPAA to make content available to those unable to get to
the movie theater, the content is already
available from DVD rental services. Grant of the waiver will not
“level the playing field” between NETFLIX and MVPDs, as 25
million television viewers would need to purchase new equipment to
benefit from the “new service” offered by the waiver and, in
any event, it hardly serves the public interest for the FCC to eviscerate
its own rules a precondition for one set of industry players to negotiate
with another.

Finally, the MPAA’s claim that the FCC must act to rescue viewers
and MVPDs from the MPAA’s decision to hold them hostage is only the
latest in a series of demands that the FCC transform itself into the
“Federal Copyright Cops” or MPAA will take its marbles and go
home — none of which have actually come to fruition. For example,
despite dire predictions that without the “broadcast flag”
the networks would withhold content, the transition to digital television
managed to come off successfully and on schedule. Despite the insistence
that NTIA include copyright filtering in the stimulus package, the grant
application process appears to be rolling smoothly.

MPAA’s Non-Response.

After more than a year, the Motion Picture Association of America (MPAA)
responded to our ex parte filings from September of
2008.^[5] Despite
this considerable length of time to assemble a rebuttal, MPAA’s
fillings do little to respond to the substance of Public
Knowledge’s objections. Rather, after asking the FCC in 2008 to
grant expedited relief because it would encourage consumers to buy new
HDTV sets before the digital transition,^[6] the MPAA now pretends to astonishment that its
proposal would bring no benefit to the millions of Americans who continue
to use analog receivers and quibbles with precisely how many millions
would find its proposed “new service” useless without
expensive new equipment purchases. Further, rather than address the fact
that the “problem” the waiver addresses comes from the
refusal of MPAA members to negotiate a new release window with MVPDs, the
MPAA chides PK President Gigi Sohn for drawing attention to its own
inconsistency.

MPAA’s Non-Response On How Few Subscribers Could Actually Benefit
From The Waiver.

In September 2008, PK estimated that 11 million high definition
televisions would be unable to receive the content for which MPAA seeks
special treatment.^[7] In other words, even if the Bureau grants the
waiver, more than 11 million customers will not experience any benefit
unless they purchase additional equipment. Worse, to the extent the MPAA
embeds signals to control selectable outputs, it threatens the ability of
viewers to use lawfully purchased devices such as DVRs to time-shift
their viewing of the content. A year later, MPAA responds that
“grant of the waiver would not disenfranchise a single viewer
because it would not result in any consumer losing access to any of the
programming he or she receives today.” ^[8]

This utterly misses the point. MPAA has requested extraordinary relief
from an existing Commission rule, justifying this request on the grounds
that it will encourage MPAA members to release content to MVPDs sooner
and thus make this content available to MVPD subscribers a whole 30 days
earlier. The fact that at least 11 million of these subscribers would not
realize any benefit even if the Commission granted the waiver unless they
purchased new equipment substantially undermines the MPAA’s already
tenuous claim that the benefit to the public at large (rather than the
benefit to MPAA’s members) justifies grant of the waiver.

MPAA Ignores The Documentation That 25 Million Viewers Would Need To
Purchase New Equipment To Benefit From The “New Service”
Enabled By Grant of the Waiver.

MPAA also suggested that the 11 million number submitted by PK is
ill-sourced and overstates the number of consumers that will see no
benefit from a waiver without purchase of new equipment. In fact, despite
taking more than a year to respond, MPAA has failed to keep pace with the
record. In November 2008, PK submitted a new estimate from the Consumer
Electronics Association (CEA) demonstrating that 20 million consumers
would received none of the meager benefits promised by MPAA —
without purchasing new equipment — because their television sets
could not support programming with embedded SOC controls.^[9] Indeed, CEA explained that
even this estimate understated the number of consumers negatively
impacted by grant of the MPAA’s Petition.^[10] More recently, CEA stated
that “[i]f the FCC granted MPAA’s waiver request,
25 million HDTVs would become incapable of
receiving and displaying programming accessed via set-top boxes for which
a content owner or distributor invokes Selectable Output
Control.”^[11]

By contrast, other than speculation that certain populations might find
some benefit in shortening the window of release to MVPDs — which
the MPAA’s members could do without the waiver — MPAA has
introduced no evidence to show that anyone would prefer to buy new MPAA
approved equipment rather than simply continue to order new releases on
DVD. MPAA continues its linguistic gymnastics, insisting that
“grant of the waiver will provide American consumers with a
entirely new and exciting home viewing options…”^[12] and that “a waiver
would for the first time enable millions of Americans to obtain access in
their homes to high-value content…”^[13] Not only is this number pure
speculation, it ignores the fact that this “high value
content” that Americans will be able to access “for the first
time” is the exact same content as before at a slightly earlier
date. Further, nothing prevents MPAA members from following in the
footsteps of other studios^[14] and changing their release dates today
— it is their business judgment, and not a rule in need of a
waiver, which prevents them from doing so.

MPAA’s Waiver Does Not Represent A Natural Evolution of Technology.

To the extent that MPAA at all addresses the need to buy new equipment to
view SOC-embedded content and the potential direct costs to consumers of
disabling existing equipment, MPAA seeks to portray this as a natural
consequence of advances in technology. While incompatibility can and does
occur as a side-effect of technological change, we are not faced
with that situation here. This is not the case of the digital television
transition, where an improvement in television viewing technology is only
possible by forcing consumers to upgrade from one technology to another.
Instead, a small group of content owners are attempting to artificially
force the obsolescence of otherwise relatively new, highly capable,
expensive home electronics. Consumers may accept that some day, their old
black and white CRT will not work^[15] or they won’t be able to fit a DVD (which
provides higher resolution, digital quality, and navigation features)
into their VCR. But no consumer buys a TV thinking, “in a couple of
years, there will be channels which have the exact same content in the
exact same format at the exact same quality, but released at an earlier
date, and my TV will be unable to display them.”

This threat by content owners not to provide content should sound
familiar. In 2002, Viacom stated that it would not provide high
definition content the next year without the similar, but perhaps less
insidious, control that the Broadcast Flag would have granted
them.^[16] Yet
today, as in 2003, the public enjoys a broad offering of high definition
broadcast television, including content from Viacom, free of
anti-consumer restrictions. The Commission must not allow control of
devices and innovation to be held hostage for a change that petitioners
are free to implement today.

In this regard, it is worth noting that the MPAA originally justified its
request for “expedited” treatment with the argument that
grant of the waiver would encourage consumers to discard their analog
receivers for more expensive HDTVs before the digital
transition.^[17] A
year later, with the digital transition complete without the assistance
of the SOC waiver, the MPAA feigns umbrage when PK points to the logical
counterpoint — that the millions of consumers still using analog
television receivers will at best receive no benefit and at worst be
forced to purchase expensive new equipment they neither want nor need.
Granting the Petition will do nothing for these consumers, but
will give MPAA design control and veto power over the use of both secure
digital and analog outputs for some content. This petition is outright
anti-consumer and anti-innovation.

MPAA’s Foolish “Inconsistency.”

MPAA also suggests that it is “inconsistent” for Public
Knowledge’s President, Gigi Sohn, to “criticize the release
window”^[18]
while Public Knowledge advocates against the waiver. MPAA’s
“inconsistency” is based on the false choice the MPAA tries
to present: that its members will not even consider shortening the
release window to MVPDs without grant of the waiver.^[19] Gigi Sohn’s testimony at a
recent FCC workshop calling on the MPAA to end this mock standoff of its
own creation by negotiating a shorter window
without a regulatory bribe^[20] is perhaps an inconvenient truth
from the MPAA’s perspective, but hardly “inconsistent”
with PK’s position that a waiver is not merely unnecessary but
contrary to the public interest.

Ironically, the MPAA’s argument that it “must” have the
SOC waiver to protect itself from piracy was refuted by one of its own
members at the same workshop. According to data presented by Paramount,
infringing copies of movies are already widely available on the Internet
on the day of theatrical release — months before the proposed home
release.^[21]
Granting this waiver would do nothing to limit the availability
of these infringing copies. Use of Selectable Output Control is therefore
equivalent to closing the barn door after the horses have escaped.

In conclusion, “waiver of the Commission's rules is therefore
appropriate only if special circumstances warrant a deviation from the
general rule, and such a deviation will serve the public interest.
Moreover, in demonstrating whether a waiver is warranted, the burden
ofproofrests with the petitioner.”^[22] As petitioners have not provided a single
shred of evidence that the waiver is necessary or would be anything other
than a ransom for the release of content, the Commission should deny the
petition.

Respectfully submitted,

Harold Feld
Legal Director

cc:
Chairman Genachowski
Commissioner Copps
Commissioner McDowell
Commissioner Clyburn
Commissioner Baker

^[1] Northeast
Cellular Telephone Co. v. FCC, 897 F.2d 1164, 1166 (D.C. Cir. 1990)
(“a waiver is appropriate only if special circumstances warrant a
deviation from the general rule and such deviation will serve the public
interest.”)

^[2] DIRECTV Ex
Parte Letter, MB Docket No. 08-82 (dated Sept. 16, 2009).

^[3] See
Paramount, Chart, FCC Workshop: The Role of Content in the
Broadband Ecosystem, (Sept. 17, 2009), available at http://broadband.gov/docs/ws_bb_ecosystem/huntsberry.pdf.

^[4] See
CEA, Ex Parte Letter, MB Docket No. 08-82 (dated Sept. 15,
2009).

^[5] See
MPAA, Ex Parte Letter, MB Docket No. 08-82 (dated Aug. 31,
2009); MPAA, Ex Parte Letter, MB Docket No. 08-82 (dated Sept.
28, 2009).

^[6] MPAA
Petition at 9.

^[7] Public
Knowledge, Ex Parte Letter, MB Docket No. 08-82 (dated Sept. 17,
2008)

^[8] See
MPAA Aug. 31 Letter 2; MPAA Sept. 28 Letter 2.

^[9] See,
e.g., Public Knowledge, Ex Parte Letter (dated Nov. 18,
2008) (two letters filed on that date); Public Knowledge, Ex Parte
Letter (dated Nov. 18, 2008).

^[10] See
CEA, Ex Parte Letter, MB Docket No. 08-82 (dated Nov. 18, 2008).
See also CEA, Ex Parte Letter, MB Docket No. 08-82
(dated Sept. 15, 2009) (explaining why the 20 million number likely
underestimates the size of the problem).

^[11] CEA, Ex
Parte Letter, MB Docket No. 08-82 (dated September 15, 2009)
(emphasis added).

^[12] MPAA
Sept. 28 Letter 1.

^[13] MPAA
Aug. 31 Letter 2.

^[14] See,
e.g., Public Knowledge et al., Comments 14, MB.
Docket No. 08-82 (dated July 21, 2008).

^[15] Old
black-and-white televisions which can attach to an antenna generally
do still work with cable or a DTV converter box.

^[16] Viacom,
Comments, MB Docket No. 02-230 (dated Dec. 6, 2002).

^[17] MPAA
Petition at 8-9.

^[18] MPAA
Sept. 28 Letter 2.

^[19] PK notes
that no MPAA member has submitted any evidence that it has negotiated a
shorter window with any MVPD that awaits only grant of the waiver.
Indeed, nothing in the record suggests that any such deal is imminent. To
the extent grant of the waiver would convey any benefits to those MVPD
subscribers with equipment capable of receiving he MPAA’s promised
content, consumers will have to wait some indefinite period while the
parties negotiate.

^[20] See
Gigi B. Sohn, Transcript of Testimony, FCC Workshop: The Role of
Content in the Broadband Ecosystem, (Sept. 17, 2009), available
at http://broadband.gov/docs/ws_24_role_content.pdf.

^[21] See
Paramount, Chart, FCC Workshop: The Role of Content in the
Broadband Ecosystem, (Sept. 17, 2009), available at http://broadband.gov/docs/ws_bb_ecosystem/huntsberry.pdf.

^[22]
Centennial Cellular Tristate Operating Partnership, 21 FCC Rec
9170, 9172 (2006).