ENSURING CONTENT PROTECTION IN THE DIGITAL AGE THURSDAY, APRIL 25, 2002 HOUSE OF REPRESENTATIVES, AND THE INTERNET, The subcommittee met, pursuant to notice, at 12:30 p.m., in room 2123, Rayburn House Office Building, Hon. Fred Upton (chairman) presiding. Members present: Representatives Upton, Barton, Stearns, Gillmor, Deal, Shimkus, Fossella, Davis, Bass, Terry, Tauzin (ex officio), Markey, Eshoo, Engel, Green, McCarthy, Luther, Harman, Boucher, and Sawyer. Also present: Representative Walden. Staff present: Jessica Wallace, majority counsel; Linda BlossBaum, majority counsel; Will Nordwind, majority counsel; Hollyn Kidd, legislative clerk; Andy Levin, minority counsel; and Brendan Kelsay, minority professional staff. Mr. UPTON. Today's hearing is on ensuring content protection in the digital age, and while our inquiry starts with the important question of how this impacts the transition to digital television, our subcommittee's interest is, of course, much broader. The DTV transition deadline of 2006 is fast approaching. So time is of the essence. This hearing follows on the heels of several lengthy DTV roundtables which Chairman Tauzin held with myself, Mr. Dingell, and Mr. Markey, at which representatives of the major, relevant industries discussed, sometimes fiercely debated, the obstacles which stand in the way of a successful and timely transition to digital television and how we can overcome those obstacles. Many issues, such as cable compatibility and must carry, have been touched upon in our roundtables, but perhaps the one issue that has dominated the agenda has been content protection. Clearly, this issue needs to be addressed if we are to succeed with the transition. I truly believe that the best solution is a private sector solution. Yet inter-industry agreements have been elusive to date. I know, through over 8 hours of roundtables, that these issues are complex both legally and technologically. But if we can put a man on the moon, then I am optimistic that, with the right amount of pressure from Congress, the industries, and consumers, which have the best (1) engineers and minds in the world, we can do anything that we set our minds to. So the questions I have are these. How long can, or should, we wait for those deals to be struck in light of the impending deadlines on the transition to digital? Do the industries have the right processes in place to come up with a fair plan to all, including consumers, and one that will not stifle technological innovation in the future? And what, if any, is the proper role of government? We have heard that three content protection issues have been identified in apparent order of degree of technical difficulty. From easiest to hardest, they are: (1) the broadcast flag; (2) the analog hole; and (3) peer-to-peer. Earlier I mentioned putting a man on the moon, and I am reminded of how our Nation achieved that objective. President Kennedy laid out the first challenge. Then the engineers came about solving the problem. First, we put chimps into orbit and, once that was done, we put men into orbit, and after that we finally put a man on the moon. The point is that it was not all done in one step. It was done step by step. In today's context, the question becomes: If we can get the broadcast flag done and maybe the analog hole, will that be enough, for the sake of the DTV transition, to unleash the content as we continue moving forward on the other content protection issues? And will, or should, Congress or the FCC be needed to ratify any such deals to ensure consistent compliance amongst all manufacturers? In all of this, we cannot lose sight of the fact that this is about the consumer. The consumer wants to continue enjoying great American movies, whether it be "Saving Private Ryan," "Lion King," "Band of Brothers," but if that content is continuously ripped off and illegally transmitted with one click to the rest of the world on the Internet, then we will see a decline in the studios' ability to make them. Consumers also enjoy great home entertainment equipment and certain expectations regarding "fair use" rights, and we, as Members of Congress, must vigilantly guard those rights as we make our way through this important debate. It is a delicate balancing act, but one which is as old as Article I, Section 8 of the Constitution itself. I am confident that even Ben Franklin, as he was exploring science with his kite and his key in the thunderstorm, never could have dreamed of the digital technology, let alone motion pictures, DVDs, the Internet, Morpheus, and the like. Hence, fast forwarding to today, it is this Congress' burden to help sort out how to rationally protect content in the digital age, and that is what I hope can be accomplished someday, if not today. I look forward to hearing from today's panel of witnesses to help us through these issues, and I am excited that our subcommittee will be the first to use our committee's latest technology to hear from one such witness remotely, Mr. Chernin of News Corp all the way from Los Angeles. I tip my hat to Chairman Tauzin and Ranking Member Dingell for their foresight in bringing our committee room into the 21st century. I yield to my friend and colleague, the ranking member of the subcommittee, the gentleman from Massachusetts. I am sorry we are not going to put up the Orioles-Boston game up here, but you can watch the Cubs at some point later on. The gentleman is recognized. Mr. MARKEY. I thank the gentleman very much, and that digital technology is so sensitive that we actually have to put black screen up there so that people know that it is not broadcasting some other more sensitive piece of information. I want to commend you, Mr. Chairman, for calling this hearing today on a variety of issues related to digital rights management. Today's hearing will enable the subcommittee to explore policy questions related to the digital television transition, and will also raise other issues regarding consumer rights related to the recording data, transferring data from device to device, and whether consumers will have the ability to upload information and transmit it on the Internet. Both of the general topics to be raised at the hearing today are important, and both probably warrant a series of hearings on their separate sets of questions, implications and possible solutions. Hopefully, by throwing them together today, we can get a quick check on the status of various industry segments as well as what other broader consumer implications exist. First, I want to talk about the digital television transition. It is readily apparent to even the casual observer that the DTV transition remains largely stalled, and even where progress is being made, it represents marginal progress at best. We are already a number of years into the transition with, frankly, little to show for it. It is clear that, if we keep up the current pace of transition, we are also years and years away from the digital denouement of this industrial policy for television, and I think that it is a key element of the transition simply acknowledging that it is, in fact, industrial policy, whether we want to say those words or not. We gave the broadcasters' spectrum worth billions of dollars for free. We linked the industry an additional six megahertz for a transition period, and we set benchmarks for when they had to get their stations up and running. After the transition, we expect to receive back spectrum from the broadcasters. Having embarked upon this policy, policymakers have not put in place the relevant and necessary rules to ensure that the transition is both timely and successful. As important as it is to exhort the industry to do more, and as welcome as it is to call upon industry leaders for voluntary efforts, such hortatory rhetoric is no substitute for real action, because voluntary efforts alone will not achieve our important policy objectives. That is because, at its core, the DTV transition represents a government driven policy, not a purely market driven phenomenon. Therefore, it is imperative that government do more to create the conditions and environment for policy success. Failure to do so is unfair to consumers, taxpayers, and to the various high tech industries with a stake in the future of television. With respect to the other half of today's hearing related to digital rights management generally, I welcome today's glimpse at some of the issues raised by the increased digitalization of content and the repercussions raised by the success and growth of the Internet. Content creators have not only an understandable interest but also a right to the protection of their creative works from theft and infringement. Our society has long recognized and respected this right. In the post-NAFTA, post-GATT economy, we have made an economic decision as a country that, as the many low wage, low tech manufacturing jobs migrate abroad, we should compete for high end, high tech, knowledge based jobs and markets in a global economy. Because such products are often ephemeral, we must protect such content from piracy, because our economic future depends in part upon such protection. When content creators and owners are fearful of putting content into digital form and distributing it for fear of infringement and theft, the marketplace is unnecessarily depressed, and consumers either pay far too much for such content or can't receive it at all. Reassuring content creators and owners that the risk of such illegal conduct is minimal will help make such digital content more available. We must recognize, however, that not all consumers are potential pirates, and not all subsequent use of digital content by consumers represents infringements. I think it is important to underscore the principle of fair use, and note at the outset that it is called fair use, not home use. If I have a right to record information consistent with the fair use doctrine, I would hope that, for purposes of education especially, we ensure that information for the classroom and for academic research is not so encoded and locked up that libraries or schools cannot utilize such material efficiently to educate and enlighten. I also hope that, while technologists work on broadcast flags or other content protective measures, we anticipate and construct a policy that is Internet friendly. If the digital era of the future will permit me to record certain content in digital form on a digital disk, it will seem quaintly analog to tell consumers that they then cannot use the broadband Internet to transmit that information instantly to a brother-in-law out in Seattle. Instead, they will have to put that disk in a FedEx envelope and spend $15 to get it out overnight. The broadband Internet of the future should not be envisioned solely for commercial downloads. It must be interactive, and it must permit law abiding consumers the right to speak and communicate digitally as well. I understand that current technology may not yet permit such a policy, but current discussions should not close the door on such Internet friendly, copyright respecting conduct and conduit. We must put faith in technology to solve some of the problems that technology itself poses. I thank the chairman very much for allowing me the opportunity at a little extra length to make my opening statement. Mr. UPTON. Recognize the chairman of the full committee, Chairman Tauzin. Chairman TAUZIN. Thank you, Chairman Upton. Let me deeply express my appreciation to the witnesses today who will again help us to understand the gaps that still need to be closed in resolution of the very serious and complex issues of protecting digital content in this new age. I want to particularly thank Chairman Upton, Mr. Dingell, Mr. Markey, and Mr. Boucher who has been participating with us, for their assistance in the roundtables. I think it is important that I go on the record and explain what we have been doing in these roundtables. These roundtables have not been an opportunity for people to come and tell us what they think we ought to pass into law, quite the opposite. The roundtables have been our effort to help facilitate a discussion over the many disciplines involved in this transition to a digital television age to see if, in fact, we can encourage and help frame some of the debate going on in the marketplace where the agreements have to be reached and the technologies have to be developed and the standards have to be agreed upon and the actual industry-to-industry conversations need to occur if, in fact, many of these thorny issues are going to be settled outside of Congress having to mandate technologies and standards. The roundtables have been extraordinarily successful, and I thought it was time, as did Chairman Upton, that we go on the public record to talk about just how much progress has been made, how close we are to finding resolutions on some of these thorny issues in the marketplace rather than through legislation, with the notion that, if agreements can be reached, if understandings on content protection and simultaneously protecting the right of consumers, who happen to be our constituents, in the exercise of their fair use of digital products in the same, although the vague way, they appreciate their capacity to copy products in the analog world and to use them in their home systems, etcetera, and that we can reach agreements on interoperability standards and agreements on transmission of the new digital signals in a way that when consumers buy these products, they are not going to wake up to find out that everything has been down-res'ed, which is an interesting term meaning intentional degrading of the resolution of the signal. If consumers can be assured that, when they purchase equipment, they can plug it in and play it anywhere in America and that it is interoperable, whether it is a satellite system or a cable system or a telephone system or wireless broadband system that is delivering the signal, and the signal will reach them in the same quality form it was being produced-If all those agreements can be reached and we are left with the simple task of codifying some agreements, where necessary, and/or providing enforcement for those agreements so that all the players agree to live by the terms of those agreements, that will be the ideal best world. The worst world will be if progress at these roundtables stops and the interdisciplinary, inter-industry discussions end without agreement, and we are asked instead to legislate on standards and technologies and content protection agreements. The roundtables have been successful to date. They have been successful, because they have allowed members of industry to challenge one another and to do it in front of their own peers. They |