Washington, D.C. (May 9) -- The U.S. Court of Appeals last week overturned a federal rule that future electronics devices, such as Digital Video Recorders, include anti-piracy technology.
The rule, which was to go into effect on July 1, was designed to prevent pirates from making copies of High-Definition TV shows on off-air "free" stations and illegally distributing them on the Internet. But opponents said it would stifle innovation and limit the average consumer's ability to share a small number of program dubs with friends.
The court agreed, ruling that the Federal Communications Commission exceeded its authority when it passed the so-called "Broadcast Flag" in 2003.
Despite the court's ruling, I predict that Congress will pass a similar anti-piracy measure during the current session. And here's why:
Congress is anxious to pass legislation that would set a firm deadline for the U.S. transition from analog TV signals to digital. Why? Lawmakers want to auction off the analog signals to help reduce the federal deficit. Congressional analysts say the auction could generate as much as $20 billion.
But if the studios believe that future Digital TVs could lead to an increase in illegal copying, they are less likely to make HDTV programming available on the new sets. (The studios are concerned that illegal copies will reduce the value of their shows on DVDs, VOD and other revenue-generating services.)
"If the broadcast flag cannot be used, program providers will have to weigh whether the risk of theft is too great over free, off-air broadcasting and could limit such high quality programming to only cable, satellite and other more secure delivery systems," says Dan Glickman, chief executive of the Motion Picture Association of America, which supports the flag.
This could create a major obstacle for the transition to digital. Many consumers are already saying they haven't purchased a new digital set because of limited programming available in HDTV.
Congressional leaders know that if they pass a law mandating the transition to digital in 2007 or 2008, there better be a dramatic increase in HDTV shows to justify the decision. If not, consumers will blame Congress for forcing them to buy a digital set -- or a converter box -- without getting much in return. And if there's limited HDTV programming on the "free" off-air stations, such as CBS, ABC and NBC, people will howl.
So, lawmakers know they have to act because it's in their political interest. The Appeals Court ruling said that the FCC overstepped its authority, suggesting that it's up to Congress.
I predict that Congress will pass a new law that sets a 2007 or 2008 deadline for the digital transition. And, as part of the law, Congress will require future electronics devices to include a "Broadcast Flag" feature that limits copying and distribution of recorded shows.
The new measure should be enough to persuade the studios to get on board and provide more shows in HDTV. And that will help make the transition to Digital TV a smooth one.
As far as this issue is concerned, that's all Congress cares about.
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