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THE AUDIO AND VIDEO FLAGS:
CAN CONTENT PROTECTION AND
TECHNOLOGICAL INNOVATION

COEXIST?

TUESDAY, JUNE 27, 2006

HOUSE OF REPRESENTATIVES,

COMMITTEE ON ENERGY AND COMMERCE, SUBCOMMITTEE ON TELECOMMUNICATIONS AND THE INTERNET,

Washington, DC.

The subcommittee met, pursuant to notice, at 2:05 p.m., in Room 2322 of the Rayburn House Office Building, Hon. Fred Upton (Chairman) presiding. Members present:

Representatives Stearns, Gillmor, Cubin, Shimkus, Bass, Walden, Terry, Ferguson, Blackburn, Barton (ex officio), Markey, Engel, Wynn, Gonzalez, Inslee, Boucher, Towns, and Gordon.

Also present: Representative Bono.

Staff present: Neil Fried, Counsel; Will Nordwind, Policy Coordinator; Anh Nguyen, Legislative Clerk; Jaylyn Jensen, Senior Legislative Analyst; Johanna Shelton, Minority Counsel; and Davis Vogel, Minority Research Assistant.

MR. UPTON. Good afternoon. Today's hearing is entitled “The Audio and Video Flags: Can Content Protection and Technological Innovation Coexist?” I would like to think that the answer to the question posed in the title of this hearing is: “yes, they can coexist.” In fact, the marketplace is replete with examples of that fact, which is a good thing since one of our Nation's most precious resources and exports is the creative genius and artistic ability of her citizens, otherwise known as intellectual property.

This then begs the question of where, if at all, is it wise or appropriate for the Government to intervene in the marketplace and mandate specific content protection technologies, like the audio and video broadcast flags which are at issue in today's hearing. In my view it is those who advocate intervention in the marketplace and federal technology mandates that bear the burden of the persuasion in this debate.

Today's hearing is divided into two panels, one on the audio flag and the other on the video flag. This subcommittee has a long record on the video broadcast flag since it was a major issue in the subcommittee's

(1)

examination of the transition to digital TV. We held a number of hearings in which the broadcast flag was addressed, and under former Chairman Billy Tauzin's leadership we held many, many, numerous multi-party roundtables which were, in part, responsible for industry consensus on a video broadcast flag.

It was that consensus that helped pave the way for the FCC's video broadcast flag order, which was ultimately struck down by the D.C. Circuit on the grounds that the FCC lacked authority to issue such rules, not on substantive grounds. So, today's hearing will help refresh our record on this important issue, which, at its heart, was always about preventing illicit mass distribution on the Internet of digital over-the-air broadcast content, a goal that I strongly support.

However, this will be the first hearing that we have held on the audio broadcast flag. I want to commend Mr. Ferguson for his motivation and for focusing our attention on it. As I stated at the outset, I believe it is those who advocate intervention in the marketplace and Federal technology mandates who bear the burden of persuasion in this debate. I believe that digital TV transition, which is government driven with a hard date now set into law, is very different than the digital radio transition which is purely market driven. It does not require a separate spectrum and does not require the shut-off of analog service. As such, I believe that the radio marketplace will be much more sensitive to government intervention and Federal technology mandates than the TV marketplace, and that is of great concern to me.

In any event, my understanding is that the NAB and the RIAA have been engaged in a productive dialogue over the audio flag issue, and I commend those organizations for their diligence. I would hope that the parties to that dialogue could be expanded to include other interested parties to ensure that, if there is ever to be a consensus on audio flag, that it is a broad-based consensus. I know from our experience with the video broadcast flags that these issues are highly technical. There are important consumer issues at stake and ample time needs to be given to careful consensus building before the Government intervenes, if a case is to be made that it intervenes at all.

With that, I look forward to hearing from our witnesses today, and with perfect timing I recognize the Ranking Member of the subcommittee from Massachusetts, my friend, Mr. Markey.

[The prepared statement of Hon. Fred Upton follows:]

PREPARED STATEMENT OF HON. FRED UPTON, CHAIRMAN, SUBCOMMITTEE ON

TELECOMMUNICATIONS AND THE INTERNET

Good afternoon. Today's hearing is entitled: The Audio and Video Flags: Can Content Protection and Technological Innovation Coexist ?

I would like to think that the answer to the question posed in the title of this hearing is: “YES, they can coexist." In fact, the marketplace is replete with examples of this fact, which is a good thing since one of our nation's most precious resources - and exports

- is the creative genius and artistic ability of her citizens, otherwise know as intellectual property.

This then begs the question of where, if at all, is it wise or appropriate for the government to intervene in the marketplace and mandate specific content protection technologies, like the audio and video broadcast flags which are at issue in today's hearing ? In my view, it is those who advocate intervention in the marketplace and federal technology mandates that bear the burden of persuasion in this debate.

Today's hearing is divided into two panels, one on the audio flag and one on the video flag.

This Subcommittee has a long record on the video broadcast flag, since it was a major issue in the Subcommittee's examination of the digital television transition. We held a number of hearings in which the broadcast flag was addressed, and, under former Chairman Billy Tauzin's leadership, we held numerous multi-party roundtables which were, in part, responsible for industry consensus on the video broadcast flag. It was that consensus that helped paved the way for the FCC's video broadcast flag order, which was ultimately struck down by the D.C. Circuit on the grounds that the FCC lacked authority to issue such rules, not on substantive grounds. So, today's hearing will help us refresh our record on this important issue, which, at its heart, was always about preventing illicit mass distribution on the Internet of digital over-the-air broadcast content a goal I strongly support.

However, this will be the first hearing we have held on the audio broadcast flag. I want to commend Mr. Ferguson for his motivation and for focusing our attention on it. As I stated at the outset, I believe it is those who advocate intervention in the marketplace and federal technology mandates who bear the burden of persuasion in this debate. I believe the digital television transition, which is goverment driven with a hard date now set into law, is very different than the digital radio transition which is purely market driven, does not require separate spectrum, and does not require the shut-off of analog service. As such, I believe the radio marketplace will be much more sensitive to government intervention and federal technology mandates than the television marketplace - and this is of great concern to me.

In any event, my understanding is that the NAB and RIAA have been engaged in a productive dialogue over the audio flag issue, and I commend those organizations for their diligence. I would hope that the parties to that dialogue could be expanded to include other interested parties to ensure that, if there ever is to be a consensus on audio flag, it is a broad-based consensus. I know, from our experience with the video broadcast flag, that these issues are highly technical, there are important consumer issues at stake, and ample time needs to be given to careful consensus-building before the government intervenes, if a case is to be made that it intervenes at all.

With that, I look forward to hearing from our witnesses today, and I thank them for their participation.

MR. MARKEY. Thank you, Mr. Chairman, and I want to commend you for calling this hearing today on content protection technologies for broadcast audio and video content. Protecting copyright in the digital era is unquestionably important for content owners. The inability of content owners to safeguard their financial and creative interests in digital versions of their copyrighted products could have an adverse impact on

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