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Don't Buy Hollywood's Broadband Script

By Heather Green Here's the latest take on the broadband mess: High-speed Net access hasn't taken off in the U.S., according to Senator Fritz Hollings (D-S.C.), because entertainment companies are afraid to digitize their content due to the threat of digital piracy. Without compelling content online, consumers don't want to sign up for broadband. To break this supposed logjam, Hollings on Mar. 21 introduced the Consumer Broadband & Digital Television Act of 2002.

The bill is pretty sweeping. It would prohibit the sale or distribution of almost all computer devices and software that display copyrighted work unless they include government-mandated copyright-protection restrictions (see BW Online, 3/27/02, "Guard Copyrights, Don't Jail Innovation"). The logic goes like this: Once Hollywood is absolutely assured no one will ever be able to make illegal digital copies of copyrighted works, rivers of movies and music will begin appearing online.

Suddenly, consumers will understand the benefit of spending $50 a month for broadband, and we'll all crowd around our computer screens to watch movies, instead of on a TV. From a measly 11 million homes using high-speed access, things will explode.

BEHIND THE MYTH. The problem is, this scenario doesn't add up. For some reason, the myth continues that broadband finally makes it fun to watch movies on your PC. As anyone with a T1 line can tell you, that's just not true. Only Hollywood seems to believe the ultimate use for a computer is to watch videos.

Consumers aren't waiting for more digital-entertainment choices to sign up for broadband. They're waiting for better response from the phone and cable companies when they call to get high-speed service installed -- and for lower pricing. According to Forrester Research, 72% of existing Net users are willing to pony up only $25 a month for broadband, half of the average cost now.

Hollings' bill isn't about helping consumers. It's about protecting Hollywood. And using the broadband mess to address the digital-copyright issue is just a ploy. Hollywood has already shown it isn't interested simply in protecting digital versions of copyrighted works -- it also wants to control how those works are used.

FANATICISM. This year, music labels began selling copyright-protected CDs that can't be played on computers or used to make copies. So what's wrong with that? After all, only fanatics think copyrighted works shouldn't be protected. But Hollywood is equally fanatical in thinking it can dictate how people use the music and videos they purchase (see BW Online, 3/20/02, "Dear Music Biz: Unchain My Melodies!").

Hollywood has a history of trying to block people from using copyrighted works in ways it doesn't favor. But the courts time and again have protected "fair use," the right of consumers and enterpreneurs to use and exploit copyrighted works within certain limits.

Just look at cable TV and videos. Hollywood declared illegal each of these technological advances that found new uses for copyrighted content. It fought them bitterly in the '70s and '80s before being forced by the courts and Congress to live with them. Now, the video industry rakes in $11 billion in annual sales, about a third of the motion-picture industry's revenues.

HEAR THE TECHIES. The real question, then, is how long Hollywood should get to drive the digital-copyright debate. There are compelling reasons to step back and listen to what the tech industry has to say about mandated anticopying standards as the Hollings bill proposes.

In congressional testimony in February, Les Vadasz, a vice-president at Intel, pointed out the inherent problems in this approach. He talked about the drag such mandates would have on the innovative development of consumer uses for digital content and devices, as well as entrepreneurial-driven schemes for protecting digital copyrights. The tech industry certainly isn't a stranger to piracy: It's equally concerned about protecting intellectual property.

Just as interesting, though, was Vadasz' comment about how technology in the past has acceded too much to the entertainment industry. The example he chose was DVDs. In the mid-1990s, Hollywood worried that the ability to make digital copies of videos would be an invitation to widespread piracy. Again, Hollywood wanted to mandate technological fixes, but the tech industry balked and instead came up with an encryption solution that protected content distributed on DVDs from pirating.

However, the compromise the entertainment and tech industries finally came up with meant that consumers can't make any copies or even pull out short clips from DVDs. "While the consensus process yielded specifications that sped DVD to market, I have serious concerns that consumers were not fully served," Vadasz said in his testimony.

HIGH STAKES. And that's the real point. Little by little, Hollywood is calling the shots when it comes to the Digital Age. Standardization and legislative work is going on in bits and pieces, making it difficult to fully understand how much traditional consumer rights could ultimately be infringed upon. For instance, an organization called the Copy Protection Technical Working Group currently is hard at work hammering out plans for preventing piracy with digital TV.

Remember, though, Hollywood's notion of piracy has traditionally differed from consumers'. Studios want to prevent widespread digital distribution of TV shows, as happened with music à la Napster. However, they could actually end up barring viewers altogether from recording TV programs off the air.

Some very high-stake issues are on the table right now. The problem is that between the fear mongering and the sheer technical impenetrability, it's hard to predict how much decisions made today would eventually hamper the potential of digital devices and distribution.

STRIKE A BALANCE. What's great about digital content is that it can be moved around among many devices. That's why consumers are snapping up digital music players such as Apple's iPod, which lets them make up their own playlists of songs that can be copied from a computer. But what if iPod were relegated to being a sort of Sony Discman that simply plays a CD the way it's recorded? Then it's appeal is rapidly diminished.

Copyrights must be protected in the Digital Age. But it would be more beneficial all around if, instead of casting every consumer as a pirate, Hollywood worked with technology companies to figure out how to balance traditional rights to fair use with the risks of unlimited copying of digital content. Green covers the Internet and e-commerce for BusinessWeek

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