Are PCs next in Hollywood piracy battle?

The Federal Communications Commission took a historic step this week toward limiting piracy of digital television signals, enacting regulations that will affect not only consumer-electronics manufacturers, but Silicon Valley companies as well.

Starting in mid-2005, it will become illegal to sell or distribute any product that can receive certain digital TV streams--unless it includes government-approved copy protection.

FCC Chairman Michael Powell called Tuesday's decision "an important step toward preserving the viability of free over-the-air television." Commissioner Kathleen Abernathy said that "by protecting against digital piracy, we also encourage entertainment companies to deliver, via free over-the-air broadcast, (their) most valuable programs."

What FCC officials did not stress, but their regulations do, is that the product definitions are broad enough to cover not just TV tuners but also PCs. "This necessarily includes PC and (information technology) products that are used for off-air DTV (digital television) reception," the FCC's order says.

As convergence between media types accelerates and traditional divisions become more porous, the FCC's regulations will expand to sweep in far more than just the television sets in America's living rooms. Media center PCs, handheld devices with television receivers and other gadgets will also be affected and will likely have higher price tags.

This represents a landmark victory for the Motion Picture Association of America (MPAA), which had pressed the FCC to enact regulations that were broad enough to cover more than just digital televisions. The MPAA and TV networks had steadfastly argued that without some form of technological protection, they were unwilling to risk airing high-quality HDTV signals because the broadcasts would be pirated on the Internet. In a statement, the MPAA hailed the decision as "a big victory for consumers and the preservation of high value over-the-air free broadcasting."

Will Rodger, director of public policy at the Computer and Communications Industry Association (CCIA), said the rule is troubling because it means the FCC is encroaching on a technological sector that has flourished in the absence of regulation. (CCIA's members include America Online, Sun Microsystems, Nokia, Kodak and Fujitsu.)

"The immediate effect isn't so huge," Rodger said. "What it really affects is the tuner cards that go into your computer. But there's a real slippery slope here. This is going to draw the FCC into the Internet, unless it makes a conscious decision not to go there...It's difficult to see how the FCC and the government won't get more directly involved in designing hardware, routers and other devices."

From Hollywood's perspective, billions of dollars are at stake in the struggle, with peer-to-peer piracy threatening to erode video sales and make movie theaters a less-attractive option. Its strategy has been to seek anticopying technology in computer and electronics hardware, either through industry deals or government mandates--a move that's anathema to tech companies, which worry about problematic technology requirements and customer rejection.

Industry experiments with copy-protection schemes have faltered in the past. Copy protection was wildly popular among software vendors in the 1980s, but fell out of favor after hard drives replaced floppy drives, rendering anticopying technology less effective. In the late 1990s, Circuit City attempted a pay-per-view variation of DVD known as Divx, but quickly shuttered the experiment when customers failed to materialize. More recently, music labels have issued CDs with copy locks that have led to complaints from some customers over incompatibility with some CD player models and alleged damage to computers.

The FCC's order represents a rekindling of the cold war between Hollywood and Silicon Valley. Tempers flared early last year when Sen. Fritz Hollings, D-S.C., and the MPAA suggested forcibly implanting copy-protection technology in any device with a microprocessor--from digital watches to handheld devices and full-fledged multimedia PCs. After Silicon Valley CEOs stridently opposed the measure, reminding Congress and anyone else who would listen that technology companies flourish in a market without government-mandated protocols and designs, the measure stalled.

Hardware makers hurt
Three computer hardware makers contacted by CNET News.com on Wednesday said that the FCC's order would require them to redesign or stop selling their current products.

"This was designed to absolutely kill the computer," said Cliff Watson, a senior engineer at Digital Connection, a small business in Huntington Beach, Calif., which sells an HDTV PCI card. "It will kill the computer because the actual implementation of the ruling is so bloody restrictive."

According to the FCC's 72-page order, every product sold in the United States that can receive either DTV broadcasts or DTV streams must be able to recognize an ATSC DTV "broadcast flag." Broadcasters are not required to flag their content, and the FCC rejected suggestions that news shows and educational programming must be broadcast without the flag.

Watson, who says Digital Connection will stop selling its card after the FCC's deadline, said the order "totally eliminates the ability to send that (HDTV) data over a PCI bus to a Firewire port or to a digital VHS recorder--except in analog format." PC HDTV cards typically sell for between $150 and $350 each.

After July 2005, it will become illegal to "sell or distribute" any product capable of receiving broadcast-flagged shows unless the product complies with the FCC's regulations. Such products may only handle flagged broadcasts in specific ways set by the government. Those essentially include delivering analog output without copy protection, digital output to a few low-end displays, or high-quality digital output to devices that also adhere to the broadcast flag specification.

In general, consumers will be able to record broadcast-flagged shows and movies, but will only be able to play them back on the same device. The regulations specify that all devices must uniquely link "such recording with a single covered demodulator product, using a cryptographic protocol or other effective means, so that such recording cannot be accessed in usable form by another product."

Dewey Weaver, president of HDTV card-maker accessDTV, said he's still studying the FCC's order. But he warned that "now is the time to purchase PC-based HDTV receivers (before they are outlawed). Ultimately, the increased cost and inconvenience of broadcast-flag implementation will be borne by the consumer."

Hauppauge Computer Works will be forced to redesign its WinTV-HD product so it will no longer permit the recording of HDTV video to a computer hard drive, CEO Ken Plotkin said.

Plotkin said that, thanks to the FCC, consumers will enjoy fewer features as a result. "This will eliminate the ability to 'program pause' TV shows with the broadcast flag," he said. "And Electronic Program Guides might try to record a program, but if the program is broadcast with the broadcast flag, when the user tries to play the program back it will not be available.

The FCC explicitly precluded sending unencrypted video to a PC. Protected broadcasts may not be "passed in unencrypted, compressed form via a User Accessible Bus," the regulations say, where such a bus is defined as a PCMCIA or PCI card that "facilitates end user access."

Raise the flag and see who salutes
Under the FCC's 3-2 decision, which drew partial dissents from Commissioners Michael Copps and Jonathan Adelstein, covered products must comply with the requirements by July 1, 2005.

The future of the FCC's regulations is hardly certain, however. Some members of Congress say the commission has gone beyond its charter and is making decisions that should properly be handled on Capitol Hill.

The rules "may impact the Copyright Act and involve my subcommittee's jurisdiction," Rep. Lamar Smith, R-Texas, chairman of the House subcommittee that oversees copyright law, said in a statement Wednesday. "The subcommittee will reserve judgment until we undertake a complete review of the published rule and determine if the Copyright Act is affected." That echoes similar statements from Smith in June.

In a September interview with CNET News.com, FCC Chairman Powell said he has "actually had more pressure from Congress to act than not, partly because it's just really been something the industry has been unable to solve." On Wednesday, House Energy and Commerce Committee Chairman Billy Tauzin, R-La., applauded the FCC regulations as "yet another important step to bring digital television to American consumers."

CCIA and other opponents, such as the Consumer Electronics Association and the nonprofit group Public Knowledge, had urged the FCC to curb the rules' scope and also argued that existing copyright law limits the commission's ability to impose technological mandates on IT hardware makers. The FCC rejected those requests.