MPAA Unlikely to Push for Broadcast Flag in DTV Bill

“If the chairman doesn’t want it in there, it’s probably not going to be in there,” the spokesman said of a broadcast flag provision in the DTV bill. At the same time, the MPAA “hasn’t finalized any strategies how we're going to get this done, we just want to get this done,” he said. Meanwhile, the MPAA will keep briefing House and Senate members on a broadcast flag bill’s importance, he said.

CE makers such as Philips and Thomson have said they would support MPAA’s efforts to pursue “narrowly crafted” legislation granting the FCC jurisdictional authority to impose broadcast flag rules a May U.S. Appeals Court, D.C., decision ruled the Commission lacks. Consumer groups that won the Appeals Court case have vowed to oppose an MPAA broadcast flag bill in Congress, warning framers of DTV legislation not to “weigh down” their quest for a hard analog cutoff date by including a broadcast flag component.

A new Congressional Research Service report raises concerns that the broadcast flag’s technological limitations could hinder activities normally deemed “fair use” under copyright law. For instance, students might not be able to e-mail themselves copies of projects incorporating with digital video content because no secure system exists for e-mail transmission. “The goal of the flag was not to impede a consumer’s ability to copy or use content lawfully in the home, nor was the policy intended to ‘foreclose use of the Internet to send digital broadcast content where it can be adequately protected from indiscriminate redistribution,'” the report said, quoting from the FCC order.

First Amendment rights are another issue for the broadcast flag, the report noted, noting objections from consumer and civil liberties groups. The flag won’t work because it can easily be circumvented, attorney James Burger told a recent Progress & Freedom Foundation panel. Saddling DTV legislation and the FCC with broadcast flag regulations isn’t a sensible approach, he said.

But MPAA Exec Vp. Fritz Attaway stood up for the flag at the same conference. “This is all about redistribution of content over networks,” he said, saying the flag would put broadcasters onto a level playing field with cable and satellite by protecting digital transmissions from theft. “I hope Congress will reinstate it,” he said.

Nevertheless, at least 3 House Telecom Subcommittee members told a hearing last week in opening statements they're concerned about DTV hard date legislation advancing through Congress without adequate content protections in place. Two panel members, Reps. Blackburn (R-Tenn.) and Engel (D-N.Y.), referred to the Appeals Court decision vacating broadcast flag as justifying the need for a content protection fix, though neither specifically advocated including it as part of the DTV bill. Engel said nothing points up the need for DTV content protection more than the fact that, the morning after its May 19 premiere, pirated DVD copies of Star Wars: Episode III -- Revenge of the Sith were widely available for sale on N.Y.C. sidewalks.

Should Congress decide to put tuner subsidies into any DTV legislation, the basis would be estimates, cited often at last week’s hearings, that by Dec. 31, 2008, DTV converter box retail prices could fall to as low as $50. Much information on lower converter box pricing is from Zoran, which has demonstrated low-cost set-top boxes on Capitol Hill. Zoran itself doesn’t produce set-tops, but has developed the SupraHDTM 640 reference board that includes a DTV receiver on a chip and a complete ATSC DTV “reference design” OEMs easily could used “to build large quantities of low-cost converter boxes,” David Pederson, Zoran vp-corp. strategic mktg., recently told the FCC’s Office of Engineering & Technology.

Were an order placed today for the SupraHDTM 640, Pederson said, Zoran believes that by this fall, set-tops incorporating the board could be shipped at a factory cost of $50, reaching store shelves by winter for around $65 retail. Assuming demand rises to over a million boxes per month, Zoran estimates retail pricing at below $50 by early fall 2006, Pederson said. Besides use in standalone converter boxes, the SupraHD 640 also is being designed for incorporation into analog 13"-36” sets, he said. Since the board is about the size of an RF tuner module, Zoran believes it can be incorporated into existing set designs rapidly and “with little effort,” Pederson said.

At the start, Zoran believes integrated sets incorporating the SupraHD 640 would sell for $80-$100 more than sets without, depending on brand and model, he said. Again assuming a high-volume ramp-up, that differential would be below $70 at retail within 18 months, he said. “Ultimately, it is believed that a number of functions currently in analog sets could be incorporated into the SupraHD chip, further reducing the price differential, if not resulting in a lower-cost set after a few years,” Pederson told the Commission. Zoran’s estimates are credible because its chips were built into 42 million DVD players shipped worldwide last year and enable retail pricing as low as $39.88 for a Kenwood model with progressive-scan, Pederson said.

Zoran’s figures came as part of an FCC probe into a CE industry petition to eliminate the July 1, 2005, DTV tuner mandate deadline on 50% of 25"-36” sets and advance by 4 months to Mar. 1, 2006, the deadline when all such sets must have ATSC tuning. Broadcasters vehemently oppose scrapping the 50% deadline, urging the FCC to advance CE’s March 2006 deadline to Nov. or Dec. this year to take advantage of windfall TV sales during the holiday and Super Bowl selling seasons. July 1, 2007, is the deadline when all remaining TV sets and CE devices with TV tuners must include DTV functionality, but draft DTV legislation newly released in the House would accelerate that deadline by a year -- over the objections by CE makers and retailers.

* * * * *

If the intent of a tuner subsidy were “merely to replace what consumers would lose” in an analog cutoff, “the most efficient thing would be for the government to give away” DTV converter boxes, a Circuit City spokesman said, reacting to our report on last week’s hearing. “One would be surprised how few people would line up for boxes configured to do only that,” the spokesman said. CEO Alan McCollough didn’t mean to suggest Circuit City would give away the boxes, the spokesman said.