'Napster factor' blamed for DTV delay

3/16/01

Washington - Free over-the-air digital programming is suffering from what a congressional panel Thursday dubbed the "Napster Factor." Broadcasters get twitchy at the prospect of having to deliver high-quality digital content all day without a means to protect that programming from being easily stored, stolen and streamed onto the Internet, similar to the current nightmare scenario the music industry is facing with Napster.

Cable and satellite companies have a proposal in place with content providers that would allow severe restrictions to be placed on the recording of digital programming. Besides setting copy limits, the proposal requires cable operators and broadcasters to "down resolution" of specified digital programming delivered to conventional TV sets so consumers can't make high-quality copies, according to a report in the trade publication Communications Daily.

But that same technology isn't yet capable of being applied to over-the-air TV signals and broadcasters have proposed encrypting over-the-air TV signals to protect them from piracy.

"If broadly applied, such a doctrine would contravene and nullify public policy as to the reasonable and customary practices [of home recording] of consumers," Gary Shapiro, chairman of the Home Recording Rights Coalition said in a letter to the Federal Communications Commission about the encryption plan. Encrypting free, over-the-air television would create little incentive for consumers to transition to digital television, Shapiro said.

"We need to get our hands around the delicate issue of providing digital copyright protection while preserving long-standing consumer expectations about taping in the privacy of their homes for non-commercial, personal purposes," said Rep. Billy Tauzin, R-La., chairman of the House Energy and Commerce Committee.

Without adequate protection, Tauzin noted, there will be no content. With no content, no consumer market. "I do not want the transition to digital television to mean the end of quality free, over-the-air programming," he said, adding that his committee will hold an entire hearing on subject of copy protection in the digital age later this year.

The hearing Thursday put the broadcasting industry under a harsh spotlight for slouching toward the transition to digital television in a "chicken-and-egg" atmosphere that Rep. Fred Upton, R-Mich., called a "current conundrum."

In 1997 Congress handed the television industry Faustian bargain: you can have a fat slice of valuable digital TV spectrum which some experts estimate to be worth $70 billion for free, if you promise to give up all your current (analog) TV channels by 2006. And by 2002 all commercial TV stations must be transmitting a digital signal. The TV industry took the deal, even as broadcasters carped about a "totally arbitrary deadline."

Critics of that deadline, including some members of Congress, wryly note that the deadline for the return of the analog was indeed arbitrary and driven by budget policy, not public policy.

The returned analog spectrum will be auctioned off for use by wireless companies with the proceeds-which experts believe will be in the tens of billions of dollars-used to balance the government budget.

But progress to that 2006 deadline is expected to slip due to a sluggish consumer market.

"I am willing to consider exploring the idea of imposing a hard deadline of 2006 to reinvigorate everyone to work together to bring about the transition," Tauzin said.

But consumer acceptance of DTV has lagged, owing to a dearth of programming and expensive TV sets, which can cost $3,000 or more.

Some in Congress want a law to force TV makers to make their sets "DTV ready." This would allow any TV set sold to receive either analog or digital signals and be instantly compatible with all cable systems without the need of a set-top box.

TV maker's bristle at the idea, saying such a move would raise the cost of the already expensive sets by at least $200.

"I've heard that before," Rep. Edward Markey, D-Mass., said Thursday. "When I proposed adding the V-chip to each TV, the industry said it would cost $25 now it actually costs about 25 cents," he said. Markey floated a bill last year that would have required digital ready circuitry in new TVs, but it never got out of committee.

Some 33 million TV sets were sold last year, compared with 648,429 DTVs, according to the Consumer Electronics Association. Though the market for DTVs woefully lagged that of conventional sets, sales in 2000 were 400 percent higher than the previous year, the trade group said.

Another hurdle standing in the way of a healthy digital TV industry is the "must carry" squabble between broadcasters and cable operators.

By law cable companies "must carry" the analog signals of broadcasters. Broadcasters say that law also includes an obligation for cable operators to carry their digital signals as well. "Digital must carry is the most important, yet unresolved issue for the digital transition," Ben Tucker, president of Fisher Broadcasting and chairman of the National Association of Broadcasters told the congressional panel Thursday.

No way, snorts the cable industry in reply.

"Our customers do want redundant duplicates of broadcast signals at the expense of new and innovative channels or at the expense of new broadband services," said Michael Willner, CEO of Insight Communications and vice-chairman of the National Cable Television Association.

Willner dubbed the demand of broadcasters to carry their digital signals as a policy of "dual must carry that is neither pro-consumer nor would it spur the purchase of digital TVs." In addition, Willner told Congress that the cable industry has ponied up $42 billion to transition its networks to digital, while the broadcast industry has spent only about $1 billion and implied that broadcasters shouldn't be given a free ride on the investments of the cable industry.

The lawmakers, however, were clearly upset with the industry's infighting. Rep. Anna Eschoo, D-Calif., said the differences reminded her of "a food fight."

A few of the congressmen held out the threat of the regulatory velvet hammer if the issues weren't satisfactory resolved and resolved quickly.

"I suggest you all lock up the lawyers and get together in some conference room and come up with some compromise," said Rep. John Shimkus, R-Ill. "Otherwise you're just inviting intervention by Congress and probably re-regulation."


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