DIGITAL RIGHTS MANAGEMENT CALLED KEY TO BROADBAND GROWTH

One message was clear at roundtable: Neither content nor technology community wanted govt. intervention in creating technical standards for digital rights management (DRM). Govt. can preach against piracy, benchmark progress of private-sector solutions, get various stakeholders talking, foster spread of content on Internet through e-govt. initiatives and conduct testbeds on new technologies, participants said. But marketplace must be free to craft technical standards for content protection, most said.

Disney Exec. Vp.-Govt. Relations Preston Padden said his company wanted to put Lion King and other popular content out “today” in digital format over Internet but wouldn’t do so because lack of open, govt. standards would allow that content to be pirated. He warned that without govt. standards for security and interoperability, “you're going to have chaos” and “we'll be having meetings in the Jenna Bush Administration” because private industry couldn’t come up with uniform standards for delivering content with appropriate copyright and licensing protections. CEA Vp Gary Klein said he believed govt. should mandate 200 gigabit standard because consumers didn’t want to pay more to spend more time downloading content when it was quicker just to drive to local movie rental store. But Klein also worried that govt. standards in some areas could make some consumer electronic devices obsolete, stranding millions of customers. Joel Wiginton, vp-govt. affairs, Sony Electronics, also called for standard higher than current 200 kilobits.

Only role govt. should have, most speakers said, was to provide “tweaks” in laws in small areas where private industry failed to find solution. John Potter, exec dir. of Digital Media Assn., said marketplace had worked “phenomenally.” He said U.S. never would achieve deployment of digital media online through broadband “if we let government scientists divine where we're going.” IBM Public Policy Dir. Timothy Sheehy said his company was “deeply wary” of any sort of govt. attempt to “legislate innovation.” AOL- Time Warner Domestic Public Policy Vp Elizabeth Frazee, told Commerce Dept. officials that industry already was working to set standards and that content en masse would be rolled out in coming months as agreements were reached. Mark Bohannon, vp of Software & Information Industry Assn., warned that interoperability standard was not “the holy grail… One person’s definition of government facilitation, is another person’s definition of foreclosing options.”

Jenny Toomey, pres., Future of Music Coalition and self- described “rocker,” asked govt. not to lose sight of creators and whether they were paid. Napster Vp Manus Cooney also was minority on panel, saying that none of the issues would be resolved unless and until govt. provided guidance on “fair use” standards so it was clear where one person’s or entity’s rights stopped and another’s began. Cooney, whose company’s model was criticized by some of companies in room, said: “There’s been more spent on litigation than any of these companies have spent on innovation.” Disney’s Padden at one point said Cooney’s company name was “synonymous with theft.”

Major hitch discussed was “broadcast hole” that troubled some, most notably News Corp. Vp Rick Lane, who said content wouldn’t be released until protection problem was resolved. News Corp. likes free over-the-air broadcast model because company is making money at it, he said, and it intended to protect rights using that model. “Free over-the-air cannot be encrypted,” Lane said, and company couldn’t have its viewers watching programs without commercials. Another question was standards themselves, as Potter suggested that search for perfect standards was what was holding digital content back. However, Disney’s Padden said his company wasn’t looking for perfection and would settle for simply “reasonably good” standards.

Responding to question about what technological hurdles remained to online content protection, MPAA Pres. Jack Valenti said market must get together and decide what DRM standards were, as it did with DVDs. In Sept., Valenti said, he met with digital representatives to try to create technical platform from which many different applications could launch. “Unhappily,” he said, several companies refused to meet, perhaps out of fear of govt. intervention. Only alternative to private-side solution, Valenti said, is Congress, though he opposed govt. intervention.

Valenti pressed several industry representatives to set deadline for developing DRM standards, saying that without time limit nothing would get done. Information Technology Information Council Pres. Rhett Dawson said it wouldn’t work and industry wouldn’t agree to it. Standards must stand or fall on their technical merits, not because there’s noose around industry’s neck, he said. It’s better to have good decision in marketplace at right time than bad decision that will frustrate consumers, Dawson said. Standard-setting must work through all stakeholders’ interests, he said, including movie studios, consumer electronics makers, others. If Congress had passed DVD standards legislation in 1996, he said, it would have had debilitating effect on marketplace. Valenti countered that Rep. Tauzin (R-La.) and Sen. Hollings (D-S.C.) “do believe in deadlines” and their trumps carrier heavier weight than “yours and mine.”

If issue can be boiled down to small subset of content protection systems as trampoline for other applications, industry could agree that it isn’t basis for competition, said David Cheriton, Cisco Technical Leader, Gigabit Switching Group Engineering. Brendan Traw, Intel dir.- content protection technology, said range of technologies was needed to protect content going to a home, but more was required to protect content moving from home to different devices. Microsoft Dir.-Technology Policy Andrew Moss said it was important to look at telecommuting and other uses in addition to movies. It’s not so much that people say, “I gotta watch a movie,” as it is “I want to do something useful” he said, and focus should be on interoperability of technologies, not creating static system.

How good is good enough content protection? Mehlman asked. It depends on application, said Dawson. In academic community preventing online piracy isn’t as important as knowing who registered and read the materials, while at other end, govt. wants to keep classified materials as hacker-proof as possible. Valenti said nothing was 100% hacker-proof, but most people weren’t hackers if given interesting content at reasonable price. Way to contain breaches is to build a system with no “master key” but which allows only localized intrusions, Dawson said. System must include constant monitoring to find breaches of digital devices, watermarking or some other form of tracking to find hackers, he said.

Business Software Alliance Pres. Robert Holleyman said software makers didn’t accept notion that any level of piracy was acceptable. However, he said, they also recognized that no technology was foolproof and each required widespread consumer acceptance. People have to begin thinking about “risk management” versus “ultimate security,” said Victor McCrary of National Institute of Standards & Technology. DRM must be useable or consumers will reject it, he said.

Are DRM technologies adequate to protect all online content or only content that moves from single point to another point? Mehlman asked. Michael Miron of ContentGuard said business models must be designed to meet consumer demand, whether that means identifying every device consumer is using or letting user download content at home and then send it to friends for limited use. That model hasn’t been built yet because no one knows yet what standards to build it to, he said.

For content creators, in many cases, technology isn’t here, McCrary said. Problem is, he said, that each industry wants to use its own encapsulation. What’s needed is “recombinant multimedia,” McCrary said, where users can mesh various technologies. Content owners are holding back, however, until DRM technologies work together, he said. Cheriton said that from technical standpoint, “movies are the big enchilada.” Consumers want to watch them on consumer electronic (CE) equipment, he said, but cost and interoperability are issue. Industries haven’t had network- connected CE devices before, he said. In CE world, said Peter Fannon, Panasonic vp-technology policy & regulatory affairs, and consumer confidence “is what you live and die by.”