Stevens Supports Legislation to Give FCC Broadcast Flag Authority

Stevens said he believes Smith “has the right idea by setting some sort of time limit to get to it,” Stevens said. Smith’s bill would require the FCC to form a federal advisory panel to draft a technical proposal within 60 days of the bill’s enactment. That document would be the basis for a further rule-making establishing an audio flag. The advisors then would have 12 months from the bill’s enactment to submit a proposal to the FCC.

“An industry-focused framework of this sort is absolutely essential to the development of fair and effective digital audio protection measures,” Smith said. “But if we don’t do something, we're going to kill creative content.” He welcomes input from industry, libraries and others as the bill takes form, he said, indicating willingness to make exceptions for content that won’t be flagged, as some education groups want.

While many committee members on both sides of the aisle backed the flag, Sen. Sununu (R-N.H.) defiantly stood against “such a dramatic step.” The hearing revealed many “complex” issues involving technology, plus discussions of exceptions and loopholes, he said: “That alone should act as a warning that this could have a lot of unintended consequences.”

Fears of choking creativity are exaggerated, since the technology that some seem to fear is driving that creativity, Sununu said, spurning recording industry arguments for content protection in regard to digital radio. “I could be wrong -- this could be the one time that the sky is really falling this time, but it may be worth a little skepticism,” Sununu said.

“The sky may not be falling, but sales are down 30%,” said RIAA Chmn. Mitch Bainwol, calling his industry’s business need “even stronger than the case of our video colleagues.” Recording industry sales since the advent of P2P file-sharing are down about a third, Bainwol said.

Radio “has always been a passive listening experience,” Bainwol said. In the old days, those who taped off the radio did so independently, and their dubs “stunk and degraded over time,” he said. Radio didn’t offer the automatic ability to make perfect recordings and “move them effortlessly into your library of music to play on your portable device wherever and whenever you chose,” Bainwol said. Portable satellite radio receivers have the potential to turn radio into “download services,” he said. “These devices potentially provide free ownership” of music content not paid for, he said.

The growing prevalence of devices “where consumers can replicate a purchase but bypass payment will undercut our property right, undercut our ability to invest and threaten the viability of the legitimate download market,” Bainwol said. Labels now agree encrypting digital radio is “not a viable option” because it would imperil over- the-air reception on legacy devices, Bainwol said. An audio broadcast flag “is not perfect, but it will work,” and the FCC “must be granted the necessary ability” to implement any private-sector agreement RIAA, NAB and others hash out, he said.

CEA Pres. Gary Shapiro told the committee that when it comes to an audio flag, “I'm not even sure what we're talking about.” Shapiro said the “differences are vast” between a broadcast flag for video and one for digital radio. The former was developed on an open, voluntary basis by technology companies, Shapiro said: “It took several years, used a well-known technology and was aimed at the mass indiscriminate redistribution of content over the Internet -- not private home recording.” But there’s “no industry consensus or agreed-upon technology” for an audio flag, he said.

“No audio flag proposal has been brought to a standards body or to CEA for discussion,” Shapiro said. At the multi-industry Copy Protection Technical Working Group, in whose formation the RIAA and other content industries played a role, “the RIAA dropped out 7 years ago and they haven’t been back since,” Shapiro said. Contrary to the video broadcast flag’s aims, the RIAA wants “to stop Americans from recording free over-the-air radio in their private homes for later enjoyment,” he said.

Broadcasters believe legislation “that promotes marketplace solutions and inter-industry agreements will produce the most positive result” on an audio broadcast flag, said Dan Halyburton, Susquehanna Radio group operations gen. mgr. He chairs the NAB Audio Broadcast Flag Task Force, now talking with its record industry counterparts on a flag solution for digital radio. Ranking Member Inouye (D-Hawaii) asked negotiators to reports every 3 weeks on their efforts.

Questioned by Stevens, Shapiro said Congress repeatedly has defended consumers’ right to record off the radio for private, non-commercial use. “What Mr. Bainwol is talking about is stopping private home recording and fair use of radio. That’s what he’s talking about,” he said. Bainwol, given a chance by Stevens to respond, said Shapiro’s claims weren’t true. “Gary is charming and compelling, but often misleading -- a dangerous combination,” Bainwol said. Shapiro has “a fairly fringe perspective on recording rights, and he’s applying that fringe perspective in this debate,” he said.

Bainwol said it’s “fine” with the recording industry to manually record programming off digital radio or even time-shift a block of programming. “But if you want to go in and program the device to automatically say, ‘I want that Bruce Springsteen tune,’ without listening to the programming when it’s live, that’s different than traditionally taping off the radio,” and the recording industry would object, he said. Sununu interjected, asking Bainwol if the RIAA would object to his recording a succession of 3 songs from XM for playback a day later. Bainwol said the recording industry does have “concerns about the disaggregation of a block of programming.”

A key issue at the hearing was whether Congress simply should pursue a narrowly crafted bill giving the FCC authority to impose a video broadcast flag the courts say it lacks, or to do so with specific exemptions sought by librarians and fair-use groups. Recalled Andy Setos, Fox Engineering pres., a co-inventor of the video flag, “Here I was aggressively participating in the rollout of DTV within Fox, yet had come to realize that, as formulated, it had a fatal weakness.” The broadcast flag regime that evolved has had “many critics,” Setos conceded: “Most of the concerns were due to misunderstandings. My favorite was that the broadcast flag would ban home recording of television. Of course, it does not.” Faster and faster broadband speeds underscore the crucial need for the flag, he said. Citing Verizon’s goal of broadband speeds of 100 Mbps, Setos said at that “blinding” speed one could download an hour episode of the popular Fox series 24 in a “convenient” 4- 1/2 min. “The legislation we're seeking ratifies the billions of dollars that local TV broadcasters have spent to do their part to make the DTV transition successful,” Setos said.

Philips backs enactment “this year” of narrowly tailored legislation to ratify the FCC broadcast flag rules, said Vp-Govt. Relations Tom Patton. Philips believes any such bill should require licensing of approved flag technologies and “must be on reasonable and nondiscriminatory terms,” he said. Congress should clarify that “non-assert” terms imposed on licensees by licensors are out of step with fair licensing practices, he said. “Philips supports statutory ratification of those rules for one simple reason -- the Commission basically got it right,” Patton said. He said broadcast flag “is not a perfect system, but it is a reasonable step on a longer path that balances appropriate content protection against consumer rights and product functionality.”

But Jonathan Band, counsel for the American Library Assn. (ALA), and Leslie Harris, exec. dir. of the Center for Democracy & Technology, asked Congress to approve broadcast flag limitations if it’s to give the FCC authority to impose the rules. Band, whose group was among those that sued the FCC to have the law vacated, said Congress should ensure the flag includes “appropriate exceptions for lawful uses,” such as not crimping the ability to do Internet retransmissions for distance- learning applications. “This could be achieved by prohibiting the flagging of certain kinds of content, such as public-domain materials, news and public affairs programs and educational shows.” Harris urged Congress to “take a fresh look” at broadcast flag for its tendency to stifle innovation. Harris agreed any bill that clears Congress must set “clear limits and safeguards.” For example, she said, any authority granted the FCC must be narrowed so that it only prevents “flagged content from being redistributed indiscriminately over the Internet.”

Band drew persistent and tough questioning by Sen. Burns (R-Mont.), who demanded to know if licensing would be better than a govt. mandate at establishing the “waivers” libraries and schools want. Band said licensing costs might be high. “Now, an institution is able to do that retransmission in essence for free,” he said. “Under a license regime, if I were a content provider, I would ask to be paid.”