Now the digital-entertainment revolution can begin. Over the past couple of years, the technological pieces needed to bring high-quality digital video into your home have been falling into place, but there has been little worthwhile content for people to show on the fancy new equipment. That, in turn, has discouraged sales of high-definition television (HDTV) gear.
The reason for the content drought is simple. Hollywood studios, horrified by the sharing of music files on the Internet, wouldn't make movies and shows available in HDTV format without some protection against a video version of Napster that might sap their profits.
In a Nov. 4 decision on content protection for HDTV, the Federal Communications Commission may have found the elusive middle ground between the studios' demand for protection and consumers' desire to watch movies any time, anywhere, on the devices of their choice. There is still a huge amount of work to do in implementing the new rules, but a framework now exists that should promote the growth of digital video. While the regs don't take effect until 2005, compliant equipment could come to market next year.
THE ISSUE AT HAND FOR THE FCC was a regulation regarding bits of code known as broadcast flags. These are invisible messages embedded in digital broadcasts telling TV gear to give special protection to certain programs. The flag itself wasn't very controversial; debate centered on what sort of protections it would provide and what technologies would be used to make those protections work. The FCC made it clear that the right of consumers to copy shows for their own use was going to be preserved. The rules only aimed to prevent unauthorized distribution of content over the Internet.
In its November ruling, the FCC considered just one proposal for the handling of flagged content. It was submitted jointly by the Motion Picture Association of America and a consortium known as the 5C group, consisting of Sony (SNE), Matsushita (MC), Toshiba (TOSBF), Hitachi, and Intel (INTC). Under this proposal, if a 5C digital-TV tuner detected a broadcast flag, it would refuse to pass the show or movie on to another device -- say, a personal video recorder -- unless that gizmo also complied with the 5C rules. TiVo (TIVO)-type personal video recorders, for example, could store a program but not transmit it to the Internet or save it on an unprotected high-definition recorder. (Incidentally, none of the PVRs and DVD players on the market now are affected by the rules, which apply just to devices that handle high-definition content.)
The FCC accepted most of the joint proposal but made two changes crucial to consumers. First, the FCC rejected Hollywood's request that the content protection must be robust enough to defeat an expert hacker. Intel Vice-President Donald Whiteside, who worked closely with the 5C group, says the intent of the regulation will be "to keep law-abiding people honest." This lower standard means that devices can be simpler and cheaper.
Second, the FCC rejected a proposal that would have given the studios and the 5C companies tremendous power over what additional technologies will be approved under the broadcast flag. This should help make sure that competing antipiracy technologies have a fair chance -- but it is vital that all technologies work together.
Many groups claiming to represent consumers, including Consumers Union, are hostile to the broadcast flag rules on the grounds that they will restrict freedom. But given the growing clout of content owners, consumers will have to live with curbs or do without the benefits of HDTV. Considering all that, I think the FCC is steering a reasonable course.
Steve Wildstrom's Tech & You also can be seen every weekend on BusinessWeek TV. Check local listings for details. By Stephen H. Wildstrom