Why the broadcast flag won't work

A federal appeals court earlier this month killed FCC rules that would have forced TV gear to use copy protection technology known as a "broadcast flag."

For Hollywood's studios, which have sought to limit unauthorized Internet redistribution of over-the-air TV broadcasts, the ruling was a big setback. But it also was a reprieve for makers of HDTV sets, PC tuner cards, and USB and FireWire tuners.

CNET News.com invited Motion Picture Association of America head Dan Glickman and media attorney Jim Burger to debate the broadcast flag issue and explain how they think the decision will affect consumers.

Broadcasters transmit video into our homes on a public spectrum worth many billions of dollars. The Federal Communications Commission lent broadcasters additional valuable spectrum to transition the 65-year-old analog system to digital by 2007.

In the midst of this transition, the motion picture studios asked the FCC to impose broadcast flag rules. The "flag" is 16 bits that broadcasters would have inserted into a digital television (DTV) transmission to "signal" protection; the content would not have been encrypted or otherwise made secure.

Instead, the FCC rules would have required content protection technology to be designed into all devices receiving DTV signals and into any downstream devices--such as monitors, recorders and home networks--to prevent "indiscriminate redistribution" of the content on the Internet. Not only did the rules require devices to protect the content, but only FCC-approved technology could be used to output and/or record such content.

The studios correctly noted that under current law, the transition from analog to digital broadcasts by 2007 was not achievable. The FCC adopted the flag rules after the studios claimed the transition would be further delayed if the FCC didn't adopt the broadcast flag scheme, because the studios threatened to move "high value" HDTV programming from broadcast DTV to "secure systems" such as cable.

A coalition of information technology companies opposing the flag rule made three points.

First, the FCC didn't have authority to impose the flag rules on such a wide range of devices. A federal appeals court recently agreed, overturning the rules.

Second, beyond self-serving statements, the studios failed to prove (a) that there was a real threat posed by indiscriminate redistribution of HDTV programs or (b) that if the FCC didn't protect "high value" programming studios and other producers would stop broadcasting such content on over-the-air TV.

Finally, the IT companies pointed out that because the content was not encrypted when transmitted, the flag offered little protection, would increase the cost of consumer devices and create incompatibilities between devices using different FCC-approved protection systems.

The flag scheme violates a fundamental content protection maxim--content must be protected at the source. Rather than encrypting the transmission, a 16-bit flag would be put in the data stream to advise the receiver to protect the content. Thus, unencrypted DTV content would be available to anyone with an antenna and tuner--neither of which could reasonably be regulated. The scheme depends upon regulating demodulators--the component inside the receiver that turns radio waves into bits--and every device after the receiver touches the content.

This might have worked in a world without software, because demodulator manufacturers are relatively easy to find and shut down. But today's powerful PCs can demodulate DTV signals using readily available, free software. A software-based system simply would ignore the 16-bit flag in the 19.4 million bits received every second. Without successfully regulating software--a virtually impossible task, but requested by the studios--the flag system could not have worked.

Before the broadcast flag rule-making, most FCC regulators had virtually no experience with encryption technology. Nonetheless, they did a phenomenal job of approving complex protection technologies for transferring and recording DTV-flagged broadcasts as the rules required.

Before the flag rules, however, the FCC had regulated consumer equipment design only when Congress had given it specific, narrow authority--for example, ensuring that TVs receive all broadcast channels, that computers and TVs don't interfere with broadcasts, and that TVs receive closed-caption and V-chip information. Nevertheless, during the appeal of the flag regulations, the FCC argued it had the authority to regulate any device connected to any telecommunications system. So Judge Harry Edwards asked: If my washing machine were attached to the Internet, you'd have jurisdiction over it? The FCC answer: yes.

Digital consumer products have become more powerful, more flexible and much cheaper in part because technology has not been weighed down by government regulation. Yesterday's supercomputers are now $500 desktop PCs. A DVD player that cost $1,000 in late 1997 costs $40 today. The broadcast flag would have been the first step down the slippery slope of pervasive regulation. Because transmissions would not have been encrypted, the flag would not have worked. Thus, more draconian rules would have been demanded to protect DTV content. Adding more lawyers to technology design teams can't be good for the economy.

Technology is both a perceived threat and a real opportunity for the content industry. DVDs are a good example of where government intervention was rejected. Instead, the industries created an encryption system to protect DVD content without government rules. In only seven years, DVD revenue went from zero to $25 billion. The question isn't how do we impose an ineffective broadcast flag, but how do we take advantage of the online market to satisfy the demand of consumers that didn't watch/record a TV broadcast and want to see the missed episode.

Industries should continue working together to emulate the DVD success story. Government intervention like the broadcast flag is no answer. What DVD has demonstrated--and iTunes, Yahoo Music and MovieLink are demonstrating--is that Recording Industry Association of America President Cary Sherman was right when he said that there are three things needed to combat P2P file-sharing: We need to get into the market. We need to get into the market. And we need to get into the market.

Imposing the broadcast flag scheme would have been a substantial and increasing burden with little return; moreover, it would have imposed government's heavy regulatory hand on heretofore largely unregulated devices, thus slowing progress, increasing cost and adding unnecessary complexity to consumer products.

This is the opinion of media attorney Jim Burger concerning broadcast flags. For an opposing opinion, read MPAA chief Dan Glickman's column.