AT&T Joins Verizon in Web-Piracy Fight to Preempt U.S. Crackdown

A voluntary agreement by Internet- service providers to admonish subscribers who appear to be using pirated movies and music may stave off stiffer U.S. enforcement of intellectual-property rights.

AT&T Inc. (T), Verizon Communications Inc. (VZ) and Comcast Corp. (CMCSA) are among Internet providers that vowed yesterday to send as many as six electronic alerts to customers whose accounts are suspected of illegally downloading or distributing content. The program, aimed at file-sharing networks that circulate pirated material, was unveiled jointly with film and music industry groups.

The alert system is part of an effort to curb digital piracy of movies, music and software, which cost businesses from $30 billion to $75 billion in 2008 in the Group of 20 leading global economies, according to a February report commissioned by the International Chamber of Commerce from Frontier Economics, a London-based consulting firm.

“They probably hope that by coming up with this voluntary arrangement they can prevent legislation in this area,” Jonathan Band, a Washington-based copyright attorney, said in an interview. “I could see the ISPs saying, ‘OK, if this buys us a few months or a year of quiet, it’s worth it.’”

Internet-service providers including AT&T Inc. promised to take a more active role in fighting online piracy. Photo: Daniel Acker/Bloomberg Close

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Internet-service providers including AT&T Inc. promised to take a more active role in fighting online piracy. Photo: Daniel Acker/Bloomberg

The agreement coincides with efforts by the Obama administration and U.S. lawmakers to combat online piracy. In March, the White House issued 20 recommendations that included tougher penalties for stealing intellectual property. Members of Congress are developing legislation to expand the government’s ability to pursue websites that sell pirated content.

Reduced Internet Speeds

The copyright alert system “will have a significant impact on reducing online piracy” and is “consistent” with White House efforts to promote voluntary industry enforcement, Victoria Espinel, the U.S. Intellectual Property Enforcement Coordinator, wrote in a White House blog post yesterday. She said the administration will continue to pursue “increased law enforcement and educational awareness” around Internet piracy.

The Internet-service providers’ alert system outlines possible consequences for customers who are repeatedly warned about content theft, including reduced Internet speeds. Providers may also limit Web access until the subscriber in question reviews “educational information” about copyright.

Verizon General Counsel Randal Milch said the program is “designed to notify and educate customers, not to penalize them” and is aimed at informing customers about copyright laws and encouraging them to obtain content from “the many legal sources that exist.”

‘Propaganda Machines’

The Electronic Frontier Foundation, a San Francisco-based digital-rights group, is concerned that “ISPs have agreed to serve as propaganda machines for big media” under the program, Corynne McSherry, the group’s intellectual property director, said in an interview.

Copyright information contained in the customer alerts may be “skewed toward a draconian view of how copyright law works” and not inform people about the “fair use” doctrine allowing use of copyrighted works for limited purposes, McSherry said.

Internet subscribers can pay $35 to request an independent review before any restrictions are imposed on their accounts, according to the program. The filing fee may be waived by the reviewer.

“This broad industry effort builds on existing agreements with several copyright owners to forward their notices of alleged infringement to ISP subscribers,” Milch said in a statement. Other participants include Time Warner Cable and Cablevision Systems Corp. (CVC)

Funnel Profits

The program is backed by media and entertainment industry groups including the Motion Picture Association of America, the Recording Industry Association of America, and the National Cable & Telecommunications Association.

“This agreement will help direct consumers to legal platforms rather than illicit sites, which often funnel profits to criminals rather than the artists and technicians whose hard work makes movies, television, and music possible,” Michael O’Leary, executive vice president for government relations at the Motion Picture Association of America, said in a statement.

Illegal streaming of movies represents a growing threat to Netflix Inc. (NFLX), which rents licensed movies and TV programs to subscribers, David Hyman, the company’s general counsel, said in a May 30 letter to the House subcommittee on intellectual property, competition and the Internet.

“Theft of copyrighted content, euphemistically called ‘piracy,’ threatens our business,” Hyman said in the letter. “It’s hard to compete against free.”

Google Concerns

The Senate Judiciary Committee approved a bill May 26 targeting so-called “rogue” websites, which sell or distribute illegally copied music, movies and consumer products. The measure would allow the U.S. attorney general to seek court orders requiring U.S.-based Internet-service providers to block access to infringing sites, among other things.

Senator Ron Wyden, an Oregon Democrat, has said he would use a procedural move to block the “rogue” website measure from reaching a vote in the full Senate.

Google Inc. (GOOG), the world’s largest search engine, has said it has “real concerns” about provisions of the “rogue website” bill, known as the Protect IP act, including the impact that blocking websites would have on free expression. Yahoo Inc., EBay Inc. (EBAY), Visa Inc. (V) and American Express Co. (AXP) have also objected to aspects of the bill.

To contact the reporter on this story: Eric Engleman in Washington at eengleman1@bloomberg.net

To contact the editor responsible for this story: Allan Holmes at aholmes25@bloomberg.net

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