OPEN STANDARD VS. MARKET SOLUTION DRIVES BROADBAND DEBATE

Federal govt. is “looking for answers from industry” on how to speed deployment of broadband, Asst. Secy. of Commerce Bruce Mehlman said. Mehlman, who heads Commerce’s Technology Administration, hosted workshop last year on DRM technology in which most participants said they wanted industry to lead in setting standards for DRM technologies, but asked govt. to facilitate dialog. Mehlman said he saw govt.’s role in DRM as supporting broadband deployment, enforcing intellectual property laws, supporting technological developments and industry-led standards, encouraging market development.

Disney is “a huge supporter of broadband,” Padden said, but until copyright owners are assured of “reasonably secure environment” in which to release their content, takeup of technology will continue to lag. Disney’s “best suggestion” for promoting broadband is development of “open and ubiquitous standard for a common content protection system,” he said, so whatever content consumers want -- via whatever delivery systems -- will function together, he said. Other critical component for creating adequate demand for broadband, Padden said, is to “keep our eye on the end-to-end architecture of the Internet” so any server connected to Internet can communicate with any other.

End-to-end Internet architecture is important, said Electronic Frontier Foundation (EFF) senior staff attorney Fred von Lohmann. However, he strongly disagreed with Padden on need for DRM standard. There needs to be balanced solution among creators and technology innovators, von Lohmann said. Options for accomplishing that include considering same sort of marketplace solution that ultimately drove success of VCRs. Despite movie industry fears, he said, U.S. Supreme Court’s decision in Sony Betamax case not to halt deployment of VCR technology created “great engine of profits” for studios. Now, he said, Napster and its progeny, far from being end of world for content owners, is killer app driving broadband takeup. There may be need to some limited govt. intervention, perhaps along lines of compulsory licensing, von Lohmann said.

“Early and dramatic federal mandates on technology” is what Disney, Fox and others want, von Lohmann said. But this so-called “lockware” isn’t way to foster broadband deployment, he said. Copyright protection is at all-time “watermark,” he said, because of Digital Millennium Copyright Act (DMCA) and various lawsuits against innovative technologies. Now, he said, “ghostly representatives” of Disney and other copyright owners sit in on meetings of engineers, causing them to worry about being sued for every new technology they create.

Industry is pressing for open standards, von Lohmann said, but negotiating process is flawed because it omits both public, which may have input on issues such as fair use and time shifting, and new companies that are building the next generation technologies. Disney has no desire to undermine fair use or prevent time shifting, Padden said, and his company would fight legislation that does either. Moreover, he said, anyone who thinks standard-setting involves “back- room deals” that leave out consumers and small innovators should join Disney in calling for govt. standards.

Govt. shouldn’t make people sign up for broadband, Mehlman said, but can help make its adoption something consumers want to do. It’s too early to tell who is holding all cards in continuing dispute between content owners and technology creators, he said. Until Disney and others feel they can rely on digital copyright protection -- and until they come up with business model that works -- they'll be reluctant to put their content online, he said. There are DRM solutions that should be able to achieve security content owners desire, he said, but those owners aren’t comfortable with them yet. Govt. should make sure both sides continue to talk, Mehlman said.

Movie industry’s business models for Internet delivery are “ready to go,” Padden said, but piracy continues to be problem. While govt. should intervene only when there’s market failure, Disney wants least restrictive govt. action it can think of -- simply facilitating open, common standard so consumers and content owners aren’t confronted with “50 different” technology standards. “I think it’s damn near self-evident” that if promoting development of broadband is wanted, Padden said, single standard is better way to do it than to baffle end-users and content owners with welter of different standards.

National Institute of Standards & Technology (NIST) is scheduled to hold conference this spring on technological aspects of DRM, Mehlman said. NIST “can, should and will” continue to foster discussion between content owners and technologists, he said. However, von Lohmann warned that “a little caution” was needed in encouraging intraindustry standards-setting. Various industry groups may arrive at solutions that serve their interests but hurt consumers and innovators, he said.