Similarly, there are possible technical solutions to the problems created by peerto-peer networking. Technologies have been developed to recognize the "fingerprints" of copyrighted works, or to embed watermarks in those works, such that the unauthorized distribution of those works over the Internet can be recognized and either slowed or halted. Some universities and other Internet access providers are using software applications called "bandwidth shapers" that recognize peer-to-peer file sharing and can either stop or slow that activity. We saw some evidence of the success with which technologies can be used to address peer-to-peer file sharing in our litigation against Napster. During the early stages of the case, Napster vehemently protested that it would be impossible for it to screen for copyrighted works. Yet under the order of a court injunction, Napster blocked a substantial part of its former traffic in copyrighted music. What is required to develop and implement the potential solutions is a commitment from the technology industries to be partners in the process of promoting legitimate commerce in copyrighted works by restricting the unauthorized distribution of copyrighted content. I am excited about the opportunities that the Internet, personal devices and other new technologies offer for the distribution and enjoyment of music, and by the developing market for digital music. I hope that the market for digital music will develop into one of the strongest components of the music industry and prove rewarding for artists, record labels, technology companies and service providers alike. Thus, I believe that both the copyright and technology industries could benefit from a cooperative relationship to promote legitimate distribution of music and prevent piracy. We should be working together to develop technical standards that can be implemented in new devices and systems that will be secure and foster innovative business models, but avoid confusing or aggravating consumers through technical incompatibilities. Such standards could spur sales of both technology products and recorded music. At the same time, such standards would ensure that software and device manufacturers need only build certain technology into their products to provide access to works obtained through legitimate channels while helping control infringement. The recording industry believes that the free market is always the best choice for the development of any of these types of technological standards, and would never embrace government regulation lightly. Congress should analyze, however, and actively monitor, whether the marketplace is creating the incentive for technology companies to work with copyright owners to protect copyrighted works. The rampant and growing digital music piracy has reduced the incentives of technology companies to cooperate with copyright owners. Technology companies may see little reason to protect content when their products and services are already selling, even though those products and services are being used to acquire intellectual property illegally. Indeed, the growing sales of CD burners and blank CDs may actually provide a disincentive for technology companies to engage in constructive efforts to protect copyrighted material. Thus, digital piracy is likely to continue to flourish. So long as voluntary negotiations of security and digital rights management standards are not adequately addressing these problems, there may be a role for the government in restoring the incentives for the technology and copyright industries to work together. I again thank the Committee for its time and for the opportunity to address you on these important issues. Statement of Gary J. Shapiro The Home Recording Rights Coalition April 25, 2002 The Home Recording Rights Coalition has been working to protect consumer rights, practices, and expectations since October, 1981, when the first consumer VCR was declared illegal by a court. That decision's 1984 reversal by the U.S. Supreme Court marked a turning point in favor of innovation and consumer fair use. Today's hearing marks another potential turning point. Twenty years ago the question was whether product innovations such as the VCR should be suppressed, out of concern that recording within the home would damage content providers. Today the question is whether home-based consumer electronics and information technology products should be constrained in their operation, out of concern that non-home networks have become capable of delivering too much content. Ironically, as Congress, the courts, and the motion picture and recording industries have acknowledged consumer fair use as a principle, the threat to actual consumer practices has grown and spread, even beyond home recording. For example, any manufacturer that would offer a DTV receiver or set-top product capable of connecting directly to a cable system would have to sign the "PHILA" license, which gives content owners the power not only to prevent home recording, but also to cut off or degrade the resolution of programs flowing over particular outputs. This is no trivial matter -- the interfaces in question include the only high-resolution inputs available on most of the 2.5 million DTV receivers sold to date. Therefore, HRRC sees the task now before the Congress as twofold - first, to make sure that regulatory agencies such as the Federal Communications Commission (which acknowledges jurisdiction over the PHILA license) act to promote rather than to suppress competition, and second, to look carefully at any new private sector requests for legislative assistance, to assure that they are balanced and respectful of reasonable and legitimate consumer practices and expectations. Despite Welcome Public Disclaimers, Provisions To Control Consumer Devices Are Being Supported By Content Industries. In the last few months, representatives of the motion picture industry have purported to move away from recent agendas aimed at controlling consumer in-home recording and viewing. However, these new positions have not been reflected in either the legislative proposals supported by the MPAA (e.g., S. 2048 - Hollings / Stevens) or pending regulatory initiatives (the restrictive "PHILA" license under FCC consideration). Through license and regulation, industry representatives have sought the power to turn off for all purposes (including viewing) home interfaces that a studio may consider insecure, such as the widely used "component video analog output" from broadcast, cable, and satellite set-top boxes. In appearances before the Senate Commerce Committee in February, the heads of the MPAA and major studios purported to drop all attempts to do this. They: characterized prior home taping concerns as "history," said they have no present concerns over home recording so long as content is not uploaded to the Internet, and said they would no longer insist on the ability to shut off in-home product interfaces based on such concerns ("selectable output control" or "extended CCI"). While welcome, these positions are inconsistent with MPAA's subsequent endorsement of the broad and restrictive Hollings / Stevens bill (S. 2048). Nor have these positions been communicated to the cable industry, which still insists on such anti-consumer restrictions in its "PHILA" license (mandatory for attachment of competitive products), or to the FCC, which has direct oversight authority for the PHILA license. Until the motion picture and cable industries disclaim such impositions on consumers, the HRRC will continue to urge the FCC to publish the PHILA license for direct comment by the public. On April 8, CableLabs, the cable industry consortium that has offered the PHILA license to device manufacturers, sent a letter re PHILA to Senators Leahy and Hatch, the chairman and ranking member of the Senate Judiciary Committee. This letter responded to HRRC testimony submitted to the Senate Judiciary Committee. This letter contained numerous items that can only be characterized as inaccuracies, misstatements, and distortions. To illustrate the seriousness of the PHILA issues, and the unfounded beliefs and assumptions of those who offer it, HRRC attaches a detailed discussion of this letter as Appendix A to this Statement. HRRC Will Review All Proposals Carefully As to Fairness To Consumers And Impact On New Devices And Technology. Despite its official endorsement of Hollings /Stevens, MPAA has in fact set out a different, more specific and layered, three-part agenda: MPAA Agenda Items (1) Implement a system to prevent the redistribution to the Internet of free, terrestrial DTV (unencrypted) broadcasts. Products with an ATSC tuner, or receiving signals from one, would be required to respect a "flag" sent with the content. Home recording would not be targeted. FCC regulation and perhaps some legislation would be required. (2) Enable a means to secure "component video analog outputs" in ways similar to means available for digital video interfaces. Consensus "watermark" coding would be read by downstream analog-to-digital converters able to handle DTV content; the converted digital video would have to be handled "securely" in the same manner as digital interfaces for the same content. Legislation would be required. (3) Impose a burden on all CE and IT devices to participate in an undefined system to avoid playback of content pilfered from studio in-house channels and distributed by "peer-to-peer" (p-top) means over the Internet. An undefined technical, regulatory, and legislative burden would be added to virtually all consumer products. HRRC Positions HRRC's present position on each of these elements is as follows: (1) Internet redistribution of broadcast content. HRRC is participating in the multi-interest work group of the Copy Protection Technical Working Group (CPTWG). HRRC understands and shares concerns over mass Internet redistribution of content, but has not committed to endorse any specific measure to address it. HRRC remains open to fair, reasonable and balanced proposals, through narrowly targeted regulation or legislation if necessary, with the understanding that no limitations on consumer home recording rights, or on consumer expectations based on their reasonable and customary practices, would be imposed. (2) Addressing component analog video interfaces. HRRC believes these interfaces, on which millions of consumers already rely for DTV content, should not be subject to being turned off or degraded by movie studios, or by cable or satellite program distributors. HRRC has offered for several years to work with those seeking to address this "analog hole" issue, provided: [1] any approach is subject to reasonable "encoding rules" as per DMCA Section 1201(k), to protect consumer practices, and [2] the technology involved represents a private sector consensus and can be applied to devices without damaging their performance. (3) Undefined imposition on consumer electronics and computer devices. HRRC is unaware of any technical presentation defining or supporting this agenda, by MPAA or any member studio. Without knowing the precise objective, the means of implementation, or the necessary scope of regulation or legislation, HRRC cannot support this agenda. HRRC is skeptical that protection of pilfered content could be practicable, or fair to consumers, through a burden imposed on manufacturers of home reception or playback devices. But, if MPAA comes forward with a specific plan, HRRC will consider it in accordance with its well-established principles as to protecting consumer rights. HRRC agrees with the views expressed by Senators Leahy and Hatch, and by some in the IT and content industries, that the private sector process should yield consensus before government should be prepared to act. Before Congress acts with respect to any of the measures on the MPAA agenda, HRRC also urges the Subcommittee to follow the advice of Representative Rick Boucher, who said in a recent Dear Colleague: [A]t a future time some limited government action may be necessary to ensure that all digital recording and playback units recognize and respond to the technical solutions agreed upon by these private sector parties. At that time, Congress can play a vital role by assuring that consumers receive the full benefit of all the bargains struck by content owners, consumer representatives and the manufacturers of digital equipment. As Congress demonstrated in developing Section 1201(k)..., it is possible to enact narrowly tailored legislation that resolves an identified problem in a way that preserves longstanding consumer expectations to engage in appropriate home recording, does not disrupt the development of new technology and fully protects the intellectual property rights of copyright owners. Congress Should Ensure That Consumers Are Being Treated Fairly In Ongoing Regulatory Proceedings Before Launching New Ones While consumer rights and expectations are winning increasing respect in the Congress, they are under immediate threat via the PHILA cable industry license governed by the Federal Communications Commission. In testimony before the Senate Judiciary Committee, HRRC explained how this came about: Ironically, the FCC today is in a position to enforce anti-consumer license Shortly thereafter, under pressure from Chairman Tauzin, CableLabs lifted the veil of secrecy from PHILA, revealing that all of the its anti-consumer provisions are still in tact. Here is how they were described by HRRC to the Senate Judiciary Committee on March 14: Why HRRC Opposes The Imposition In The technology that some studios supported at the FCC would allow them, or cable or satellite operators, to exercise direct, remote control over all product-to-product connections in the home. Once given this power, a movie studio, or cable or satellite operator, could simply turn off any interface at will, effectively making the consumer home network a part of its own distribution system. Today, there are two standard all-digital interfaces being readied for widespread use in the home. One, known as IEEE 1394, iLink, or "Firewire," provides a bi-directional means of connecting TVs, VCRs, and other standard consumer products within a home network. This connection allows home recording to be either supported or disabled. The other digital interface, called "DVI," is a one-way, broader digital connection originally designed to hook personal computers to digital monitors. The DVI signal used in this interface is simply not recordable by any known consumer technology. The "DTCP" license, referred to in the attached chronology, spells out when this technology may be used to block home recording of certain content, based on "encoding rules" that protect current consumer practices -- again, based on Section 1201(k) of the DMCA. There are no such encoding rules for DVI. consumers Each of these interfaces offers different advantages. Some consumer electronics companies envision home networks in which each interface connection would be available to some TV receivers might be designed to rely on the "1394" inputs, some on DVI, some on both. Connections to digital VCRs, for example, would be made through the 1394 interface, meaning that copying would be controlled, but subject to balanced "encoding rules." Mandated responses to "Extended Copy Control Information" coding, however, would allow commercial entities outside the home to remotely control, on a program by program basis, which one of these interfaces would be active in a home, and which would be switched off for all purposes. A studio, cable MSO, or satellite provider that did not want to permit any home recording on VCRs would simply turn off the "1394" interface, and the "encoding rule" protections for consumers, painfully negotiated over several years, would become irrelevant. Even more disastrously for consumers, a consumer who had bought a state of the art HDTV receiver, with a copy-protected digital 1394 interface, would lose the signal from this interface for all purposes, including viewing the program. So even consumer high resolution viewing, on the newest frontline, digital products of the DTV transition, could be cut off at the discretion of the studio, cable, or satellite company. Unfortunately, the damage to consumer living rooms from "selectable output control" would not stop even at the choice of digital interfaces. Neither of these digital interfaces is yet in general use. Most HDTV displays in the market today, and sold over the last three years, rely on the same sort of broadband interface that is used to deliver signals from PCs to computer monitors. (In computer terminology it is called "RGB." Its consumer electronics cousin is component video, also known as "Y, Pb, Pr".) A duty in the "PHILA" license to respond to such "Extended Copy Control Information would mean that the DTV-quality, broadband signals to the pioneering Americans who have purchased these 2.5 million displays would simply be cut off and the screeen would go dark. (Only the standard analog, low-definition, signal would still be available.) |