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Ms. Marlene H. Dortch, Secretary
Federal Communications Commission
445 12th St., SW
Washington DC 20554

October 21, 2003

Dear Chairman Powell:

Subject: Digital Broadcast Copy Protection, MB Docket No.
02-230

We are writing to urge the Commission to carefully consider the consumer
effects, the anticompetitive impacts, and the extensive costs that a
Broadcast Flag scheme will impose on a wide-range of consumer-electronics
devices and personal computers. Despite our efforts to raise these
questions about the Broadcast Flag approach—efforts that predate
even the Commission’s decision to create a Broadcast Flag
docket—they remain unanswered to this day, except by unsupported
generalizations that the scheme will cost “pennies.”

Because the proponents of the Broadcast Flag scheme have yet to address
these issues—issues that may not only affect consumer pocketbooks
but also may slow or even halt the transition to digital
television—we believe the Commission does not yet have the complete
record necessary to decide whether and how to implement this scheme.
Below we suggest potential remedies to these deficiencies.

Here are three of the major questions that remain unanswered in
the existing record:

1. After the flag is adopted, will consumers have the same
   reasonable and customary uses with their digital television content
   that they enjoy in today’s analog world? The proposal
   offered by the Motion Picture Association of America makes clear that
   the Flag scheme will tether user-recorded content in new ways. It will
   not allow consumers to watch that content on machines other than new,
   compliant devices (but it is unclear if it will permit recordings to be
   shared within a user’s own “personal digital
   network”). Not only will current DVD players not be able to play
   the recording, but if someday more than one encryption technology is
   approved, recordings made with one technology probably will not play on
   players licensed to decrypt the other, absent an interoperability
   requirement from the FCC. Let’s be clear: while the MPAA has
   offered assurances that users will have the same flexibility they
   currently enjoy, they have demonstrated no technology which shows this
   is indeed possible.

2. If the Flag scheme does not effectively prohibit internet
   transmission of recorded programming doesn’t it follow that the
   scheme may fail to prevent the problem at which it aims? For
   example, if users can play flag-protected content on any compliant
   device, it may be possible to transmit the encrypted data recorded on a
   DVD for a recipient to use on a remote compliant device. Or it may be
   possible to post a complete “compliant” DVD image on a
   website. Certainly, an individual could record on broadcast content
   from an analog output, and then simply distribute that content to
   another user over the internet. So much for defeating Internet
   copyright infringement.

3. Because the Flag is ineffective without mending the
   “analog hole,” then is it perhaps not worth its
   costs? Shouldn’t the Commission consider the costs and
   benefits of closing the analog hole in the context of this proceeding
   rather than some future proceeding. As Chairman McCain noted in his
   letter to the Commission on Oct. 16, the Broadcast Flag is an
   incomplete, and therefore ineffective solution, absent a solution to
   the “analog hole.” We agree that we cannot let the perfect
   be the enemy of the good, but lack of any analog-hole solution means
   that the broadcast flag scheme doesn’t even qualify as
   “good.” Nor can such a non-solution be worth the costs it
   would impose broadly on the consumer electronics and computer
   marketplaces.

Those who wish to distribute unauthorized copies of HDTV programming on
the Internet are undoubtedly aware of the how easy it is to use the
analog output on a TV to “redigitize” HDTV programming.

While some may claim that this extra step of redigitizing analog content
is a disincentive that will “keep honest people honest” and
provide a measure of protection, this is also misleading. Before one
could redistribute high-definition digital TV on today’s or even
tomorrow’s Internet in any reasonable amount of time, the
resolution would first need to be dramatically reduced. Using an analog
output and reducing resolution is the same number of steps as using a
digital output and reducing resolution and could even be the same
equipment one would use to capture a digital signal. In other words, it
will be no harder for a would-be infringer to redistribute content on the
Internet with the Flag in place than it would be without the Flag.

A solution for the analog hole remedy is absolutely necessary for the
Flag scheme to achieve its purported goals. But mending the analog hole
may slow the DTV transition.

Here’s why: blocking or inhibiting equipment with analog interfaces
will likely force all consumers to buy all new components for their home
entertainment systems. Essentially, this closes off the most inexpensive
alternative for consumers to receive digital TV signals—buying DTV
tuner box that can be hooked up to existing analog TV sets and other
equipment. Such a DTV converter box would have to have analog interfaces
to connect with existing TV receivers block the analog hole, and you
destroy the converter-box path to DTV.

The MPAA proposal under consideration by the Commission fails to provide
a process for approving alternatives to the Flag in the Order with a set
of functional objectives that clearly delineate the road to approval. The
practical result of this failure is that the proposal’s process for
approving other protection technologies is simply fig leaf covering a
Commission decision that will lock in the Flag scheme based on a
particular set of vendors and technologies. By approving the flag without
simultaneously showing a clear, credible way for potential flag
substitutes, the Commission will create path-dependency—ensuring
not only that the next several product cycles will be Flag-based only,
but causing yet another legacy problem should it become apparent that the
Flag is an inferior technology. Expensive for consumers today, the flag
scheme becomes expensive all over again for consumers tomorrow.

Furthermore, in the absence of objective criteria for the approval of
substitute technologies (and rules that mandate interoperability between
all approved technologies), consumers will be swiftly
“locked-in” to devices that are compliant with only one
technology. This is likely to cause the market to tip early on to the
first mover, whatever its limitations and flaws are, to the detriment of
competition and innovation. It may also give a leg-up to one particular
DVD recording format favored by the Broadcast Flag proponents and a
competitive disadvantage to competing formats. Competing consumer
technologies should win because the consumer market favors them, not as
the unintended consequence of governmental action. The agency should be
cautious before proceeding with any scheme that gives advantages to any
private party or group of private parties that own a particular
protection technology.

Here we offer several ways to minimize the consumer harms of the
Broadcast Flag proposal. We hope they will not be received as recognition
that such a proposal is necessary or wise, but rather as our attempt to
address the debate where it stands today. Any digital broadcast content
protection scheme promoted by the Commission should offer the following:

Consumer guarantees ensuring that users will enjoy the same reasonable
and flexible fair use they enjoy today, and an assurance that this scheme
will not merely ossify current consumer uses, but instead will preserve
the same dynamism seen in today’s consumer electronics marketplace.
It is especially important that the Commission guarantee that the
Broadcast Flag will not tether content to the device a user recorded it
on, or tether such content to one’s home network in a way that
disallows, e.g. a user’s ability to take that content to a
relative’s or friend’s house.

Objective criteria—spelled out with specificity when the order is
released—for how alternatives to the Flag (and alternative
technologies within the Flag scheme) will be approved and what the
specific functional objectives are that they must meet.

A guarantee that consumers who do not want to buy new television sets
(once the digital migration occurs) will not have to do so. In other
words, the FCC should guarantee that were the agency to mend the analog
hole, consumers would have an inexpensive option for making the switch to
digital (e.g. a converter box).

The Broadcast Flag scheme is not a case of a crafty camel poking its nose
into the regulatory tent. The camel is coming in from tip to
tail—from the Broadcast Flag to the analog hole—and sound
public policy is already being pushed out. It is disturbing to see the
Commission fast-track a policy proposal that will likely have harmful
effects on consumers, manufacturers, and on the DTV transition itself. We
believe a better approach is for the Commission to take the time to
arrive at a complete solution for broadcast protection, otherwise
consumers will pay twice for the Broadcast Flag once a more comprehensive
solution is deemed necessary.

We stand ready to help the Commission take the better path to better DTV
policy; we are as committed as the Commission itself is to getting the
DTV transition right.

Respectfully submitted,

Chris Murray, Legislative Counsel
Consumers Union

Mark Cooper, Dir. of Research
Consumer Federation of America

Mike Godwin, Senior Technology Counsel
Public Knowledge

Jonathan Rubin, Research Fellow
American Antitrust Institute

cc:
Commissioner Kathleen Abernathy
Commissioner Jonathan Adelstein
Commissioner Michael Copps
Commissioner Kevin Martin
Johanna Mikes
Jordan Goldstein
Paul Margie
Anthony Dale
Stacy Fuller
Bryan Tramont
Paul Gallant

See, e.g., Letter of Jon A. Baumgarten to Rick Chessen, Oct. 8, 2003, in
this proceeding.