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Broadcast Flag Smackdown: Video v. Audio

July 13, 2006 Broadcast Flag , DRM , FCC , Policy Blog

One of the memes repeated over and over again at the House Energy and Commerce broadcast flag hearing two weeks ago was that the audio broadcast flag is much different (read: worse) than the video version. This argument is made largely to explain why the consumer electronics, software and broadcast industries are neutral or support the video flag, while they vehemently oppose the audio flag.

Yes, there are some superficial distinctions between the two, but they are distinctions without a difference. Here are the justfications most often given for distinguishing the two flags:

  • The video flag was developed by "consensus." This one either makes me laugh out loud or furious. First, there was significant disagreement on a number of issues surrounding the flag when it was proposed to the Copy Protection Technical Working Group, including whether it would be effective, whether it would have adverse consequences for consumers, and how specifically to enforce the "compliance and robustness" rules. Second, CE, software and other companies heartily opposed the flag scheme at the FCC, as, did, by the way, every consumer group working on this issue (we don't usually count when determining whether there is a consensus, it seems). In fact, PK's filings in the broadcast flag court case were largely cribbed from Philips Electronics' FCC filings. But Hollywood's relentless pressure has paid off, and those companies who opposed the flag are either grudgingly supporting it, or neutral.

  • The audio flag scheme would prohibit personal copying, while the video flag scheme only prohibits "mass, indiscriminate redistribution" over the Internet. It is true that if you have the right equipment you should still be able to make personal copies with the video flag. (Remember, some old devices may not work with flag-compliant devices, and once you buy one brand of flag-compliant device, you must buy the same brand for all downstream devices). However, regardless of what the FCC claims that the broadcast flag scheme prohibits, all but one of the broadcast flag technologies approved by the FCC prohibit all Internet redistribution, not just "mass, indiscriminate" redistribution. So if I want to email a copy of my appearance on the local news to my mother, the flag prohibits me from doing so. Essentially, the video flag permits me to retain my fair use rights circa 1992. Not a significant improvement over the audio flag, if you ask me.

  • The video flag scheme has been vetted and debated, the audio flag scheme has not. It is true, and not insignificant, that unlike the video flag technology, no audio flag technology exists, although that certainly does not make the video flag scheme better policy. But it would be hard to argue that the concept of copy protection for digital and satellite radio has not been publicly debated. The FCC put the issue of broadcast radio content protection out for public comment, and Congress has had at least three hearings on various radio content protection proposals in this Congress. So the merits of radio content protection, whatever it might look like, has been and still is, being vigorously debated.

Regardless of these distinctions, what the flag schemes have in common should alarm anyone wants to promote innovation and competition. Both flag schemes would put the Federal Communications Commission in the position of technology gatekeeper – determining what devices can and cannot come to market. This determination of course, would be made under great pressure from the powerful and persistent content industry to limit approvals to only those technologies with which they approve. This alone, should be enough reason for technology companies to oppose both flag schemes.

So why are broadcasters, CE companies and software companies either supporting or neutral about the video flag yet opposed to the audio flag? It all comes down to politics, of course. Local broadcasters are not affected by the flag one way or another, but their Disney, Fox, Viacom & Universal-NBC brethren have put the thumbscrews to the National Association of Broadcasters (NAB) to support it. Some of the Hollywood studios, which also own broadcast stations, have quit the NAB before over media ownership battles, and one can only guess that their continued membership is contingent on NAB support of the video flag.

Several CE companies, including the aforementioned Philips have decided it is better to join 'em than beat 'em. Having bet wrongly that we would lose our court case, Philips and some others have started to manufacture flag compliant devices, and don't want competition from more consumer-friendly non-compliant devices. And the support of companies like Philips hamstrings trade groups like the Consumer Electronics Association from taking a position.

Tactically, I think it is a grave mistake to try and distinguish the two, since they are, at their core, exactly the same – ways for the content industry to have veto power over new devices. Even if the video flag somehow makes it into law without the audio flag (unlikely given Senator Frist's desire to help his former chief of staff, RIAA CEO Mitch Bainwol), cries of "regulatory parity" will be heard from the RIAA's corner. And that is an argument that is likely to carry a great deal of weight at the FCC and elsewhere.

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Heads Up for Tomorrow’s FCC Meeting!

July 12, 2006 FCC , Policy Blog

Barring a last minute delay to work out messy details, the FCC will hold its regularly scheduled monthly open meeting tomorrow, July 13. Two items are likely of interest to readers here.

First, the FCC will decide whether to approve the proposed acquisition of Adelphia cable by Time Warner and Comcast and accompanying system swaps between Time Warner and Comcast. Approval will give Comcast and Time Warner control of the majority of cable lines in the country, and will create regionally concentrated blocks of cable companies on par with the regional control traditionally exercised by the baby bells.

That the FCC will approve the merger appears certain. That it will impose some conditions (no mean feat after the Federal Trade Commission refused to take action last January) also seems certain. Exactly what conditions it will impose remains unclear. The press has reported that the draft version of the order circulated by FCC Chairman Kevin Martin contained only a limited condition requiring Comcast and Time Warner to make some of its regional sports network (RSN) programing available. Commissioners Copps and Adelstien, the two Democrats, continue to press for network neutrality conditions greater to, or at least equal to, what the FCC imposed in the Bell mergers last year. Other issues up for grabs include the long-standing complaint by MASN, which owns the TV rights to the Washington Nationals, that Comcast has refused to carry Nationals games because it wants an ownership stake, complants by RCN that Comcast has used its market power to deprive it of PBS Kids/Sprout video on demand programming (see my previous entry on the subject), complaints by the America Channel (a would-be network) that Comcast and TW killed its deal with Adelphia for carriage because Comcast and TW only want to run affiliated programming networks, and general complants by independent programmers.

How this comes out has huge implications for how Americans watch TV and get residential broadband. This is the first major merger with a full Commission since Kevin Martin took over as chair. Will they continue to deregulatory approach of Michael Powell? Or will they be more willing to impose conditions to protect competition? You can bet folks will read the tea leaves from this meeting pretty thoroughly to guess what is likely to happen with the proposed AT&T/BellSouth merger. Strong conditions seem likely to discourage future major deals as an indicator that the FCC has reached a limit on the levels of concentration it will easily approve, while weak conditions will likely invite further consolidation.

The other issue of relevance to folks here is the Digital Audio Broadcast (DAB) Radio item. For those new to this, the FCC has begun a process of transitioning AM and FM radio to digital, similar to the TV trasition — but under its own authority rather than Congressional authority and giving an even bigger windfall to terrestrial broadcasters.

Jim Snider of New America Foundation has a pretty good summary of what is going on and how it constitutes a huge giveaway of spectrum to full power terrestrial broadcasters here.

Some folks may remember DAB from two years ago, when the FCC proposed adding a radio broadcast flag to complement the television broadcast flag. Happily, in light of the DC Cir. decision last year, that won't happen. But we can still expect to see a lot of happy radio broadcasters at the end of the day.

Folks interested in listening to the Commission's meeting can go to the FCC's video/audio events page at 9:30 a.m. on Thursday, July 13 and stream the meeting. Because the FCC has pathetic capacity, you may wish to view the archive afterwards (or even attend in person, if you are in the DC metro area; the FCC is at 445 12th St., SW, and you will need a drivers license or some other government i.d. to get inside).

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Intel’s Investment in Clearwire Likely To Impact Spectrum Policy Generally

July 10, 2006 FCC , Policy Blog

Last week, Clearwire dropped its plans for an initial public offering and got $900 Million in funding from Intel ($600M) and Motorola ($300M). This may have a significant impact on spectrum policy in DC.

Clearwire holds licenses and leases for spectrum in the 2.5-2.69 GHz band, what we now call Broadband Radio Service (BRS). The BRS band (and its non-commercial set aside lesser cousin, Educational Broadband Radio Service, from whom the commercial folks lease spectrum) have never amounted to much, despite a nice chunk of spectrum and continued high hopes of the FCC and licensees. The band was poorly allocated in the 1970s and 1980s, and FCC policy has continued to "fix" the band just a little too late to get used for its intended purpose.

Most recently, the FCC agreed to a transition plan for the band geared toward the current nirvana of licensed spectrum: fixed point-to-point and mobile broadband. Also by this time, the once crowded field of commercial operators in the band has basically winnowed down to Sprint-Nextel, AT&T/BellSouth (assuming merger approval), and Clearwire. The remaining handful of operators have stayed pretty marginal.

Intel's huge bet on Clearwire, and its accompanying huge bet on WiMax, will have a significant effect on DC spectrum politics. Intel had initialy come out heavily in favor of unlicensed. Over the last few years, however, as Intel has chased the WiMax rainbow in search of a pot of gold at the end, Intel's advocacy has moved away from favoring unlicensed uses. To the extent Intel still backs unlicensed uses, such as the TV white spaces, it does so with an eye toward increasing spectrum for consumer devices rather than with an eye toward broadband services.

Last week's investment seems likely to complete this transition of Intel from a general supporter of unlicensed to a supporter of licensed services for any newly opened or available spectrum. Worse, Intel appears to be heading a block of manufacturers like itself and Alvarion that have one foot in the unlicensed camp and one foot in licensed (read WiMax) spectrum. Intel and Alvarion are part of a broader "WiMax posse" seeking to roll back the rules for non-exclusive use of the 3650-3700 MHz band adopted last year, on the grounds that the FCC's requirement for non-exclusive use and adoption of a contention-based protocol make the band unsuitable for WiMax.

Intel's gradual defection does not leave unlicensed spectrum without corporate allies. In addition to companies such as Tropos, that manufacture broadband equipment using unlicensed spectrum, Microsoft and Dell have become increasingly supportive of unlicensed spectrum as a potential "third pipe" into the home not controlled by a regional monopoly. But Intel's likely departure as as strong advocate for unlicensed spectrum outside the TV white spaces will certainly shape spectrum politics. With Michael Powell of the FCC and Michael Gallagher of NTIA gone, no strong champion of unlicensed spectrum remains within the current administration. Other than the TV white spaces, which remains open as a consequence of Congressional interest, not much is happening in unlicensed spectrum at the moment.

Nor is it likely too happen, without a strong push from the outside. While I have never advocated having corporations speak for us, I have certainly appreciated the extra muscle when they speak with us — particularly in a Republican administration. Intel's growing silence as an advocate for unlicensed, and gradual shift to the side of licensed, will certainly have repercussions for the future of spectrum policy.

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PBS Helps Comcast Crush Competition

June 30, 2006 FCC , Policy Blog

RCN, a broadband and cable overbuilder, has filed very disturbing documents in the FCC review of the Adelphia transaction. RCN recounts how PBS has apparently signed an exclusive deal with Comcast for video on demand distribution of its PBS Kids Network and Sprout Network (oriented toward younger children). Comcast has wassted no time leveraging this exclusive distribution deal to disadvantage RCN — which competes with Comcast in Boston, Philadelphia, and Washington DC.

Last year, PBS Kids pulled access to its programming from RCN. The effect on RCN's video on demand (VoD) service was immediate and dramatic. According to RCN, use of VoD dropped by 85%.

While stunning, it seems obvious in retrospect. Parents will use VoD to keep the kids entertained, and PBS Kids has trusted programming. Folks who dislike the crass commercialism of Nickelodeon or Disney, or who want to provide educational programming rather than just entertainment, will want PBS programming.

Ultimately, RCN agreed to terms that provided it access to PBS' VoD programming. But it has now hit a new wrinkle. PBS has signed an exclusive distribution deal for PBS Kids and Sprout with Comcast's VoD distribution platform, Comcast Media Center. Unsurprisingly, Comcast wants RCN to pay through the nose, including for content it already gets through its chosen VoD provider, TVN. Anyone familiar with the history of Microsoft and how it leveraged its desktop dominance by requiring distributors to pay licensing fees even when they didn't take the product — or risk exclusion from all MS products — understands how this kind of deal kills competition. No one wants to pay twice. Heck, if they want to stay in business and offer products to customers at competitive prices, they can't afford to pay twice.

What makes this particularly outrageous, in my opinion at least, is that the PBS Kids and Sprout programming at issue is developed in no small part with public money and donations from viewers and businesses that had no intention of giving Comcast a club to beat competitors over the head.

In the short term, the FCC should address this issue as part of any program access conditions it imposes. PBS Kids programming for VoD appears, at least on the basis of RCN's experience, as much "must have" programming as regional sports. In addition to fighting the "last war" by making sports programming available, the FCC should also stop anticompetitive practices in the merging VoD services — particularly when the "must have" programming got financed by tax dollars and donations.

But the PBS situation highlights a broader problem. We have disserved our public institutions and centers of knowledge terribly, with the result that they remain vulnerable to this kind of exploitation. The PBS-Comcast deal flows from the same problems and attitudes that created the Smithsonian-Showtime deal (under which Showtime acquires exclusive rights to an as yet undisclosed amount of Smithsonian material) and the numerous examples of drug companies using public grants and grants to universities to develop medications they market for billions.

For too long, we have moved from treating the non-commercial community, folks like PBS, the Smithsonian, etc. with contempt. Gone are the Progressive and Great Society ideals that all citizens should have access to a common treasury of culture, education, and innovation. For years, Congress and society at large have scorned these publicly supported endeavors while praising the private sector. We have repeatedly cut funding for these institutions, required them to find funding on their own, and chastised them for living as "permanent dependencies" rather than supporting them.

Small wonder that these institutions increasingly drift away from their missions and ideals. Worse, the non-stop denigration of their contributions to our art and culture causes them to undervalue the resources they have. If we keep saying that Nickelodeon and Disney can do a better job than PBS, that Kim Possible is just as good as Cyberspace and that Rugrats is interchangeable with Between the Lions, we should not be surprised to find that these financially strapped institutions not only sell themselves, but sell themselves cheaply.

I call this the "Magic Bean" problem. Cash strapped non-profits, with no appreciation for the value of what they hold, trade their milk cow to a big corporation for a handful of "magic beans" that supposedly grow into a giant beanstalk leading to the pot of gold of self-sufficiency. Unfortunately, this isn't a fairy tale. At the end of the day, the public and the public institutions get a bunch of scawny bean plants while the private sector companies milk the public.

In the short term, the FCC should put a stop to Comcast's ability to leverage its exclusive deal with PBS Kids and Sprout by imposing a suitable condition on the Adelphia transaction. In the longer term, however, we must deal with the "magic bean" problem before all our non-commercial cultural institutions have made similar bad deals.

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One flag debate down, another to go

June 28, 2006 Broadcast Flag , FCC , Policy Blog

Today, the Senate rejected by one vote, a constitutional amendment to ban flag burning. At the very same time, another flag debate was raging in the House of Representatives. The Telecommunications and Internet Subcommittee of the House Energy and Commerce Committee held a hearing on the audio and video broadcast flags.

The hearing was divided into two panels – the first, on a proposed audio flag for digital broadcast and satellite radio, was very well attended and the subject of much debate between the panelists. There weren't any arguments we hadn't heard before. Mitch Bainwol of the RIAA argued that a satellite radio receiver which records radio programming and then disaggregates that programming into individual songs is akin to a download, and therefore requires a separate license. Stewart Harris, a country songwriter, claimed that without such a license, he and other songwriters will go broke. Andy Levin of Clear Channel (on behalf of the National Association of Broadcasters) argued that imposing a content protection scheme on digital broadcast radio (misnamed "HD Radio") would kill that nascent technology, since unlike digital TV, consumers need not transition to digital radio. And Ruth Ziegler of Sirius Satellite Radio said that the RIAA's effort was part of a larger plan to limit consumers' rights to make personal home recordings, in violation of the Audio Home Recording Act.

What was different, however, was the hostility of a Subcommittee of the Commerce Committee to the industries that it regulates, namely broadcasters and satellite radio broadcasters, which both argued against the audio flag. The content industry usually does not fare as well in the Commerce Committee as it does in the Judiciary Committee, but you wouldn't have had that impression today. With perhaps four or five exceptions of the eighteen who attended, the members were overwhelmingly in favor of an audio flag technology mandate.

What this says is that the recording industry worked the subcommittee hard, and our side has an awful lot of catching up to do. While the full Committee Chairman Joe Barton joked about marking up an audio flag bill next week (not possible since Congress will be in recess at time), the debate over the audio flag is really just starting in the House. But don't forget, the Senate telecom bill has an audio flag provision in it, and should the Senate pass the bill and seek to conference it with the House version, all bets will be off.

Oh, and the second panel, on the video flag? I testified on that one. Because the first panel ran so long, only three members saw fit to stick around when it started at 5:00. Clearly, the audio flag was the topic of the day.

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