A New Ref for the Tinseltown-Techie Tiff

Can a white-haired South Carolina senator get Hollywood and technology companies to reach a deal on digital content protection?

Senate Commerce Committee Chairman Ernest F. Hollings knows that nothing gets the attention of corporate executives like being summoned before a frosty congressional panel. So, the 80-year-old South Carolina Democrat is hauling some big names before the cameras on Feb. 28 to highlight a simmering dispute over digital copyrights. Viewers of this spectacle may be reminded of the movie Gladiator, with Disney CEO Michael D. Eisner and News Corp. President Peter Chernin crossing swords with tech-industry reps, while the white-maned senator plays the role of emperor.

What's all the fuss about? In a word: Broadband. Hollings believes that the lack of an agreement among tech companies, studios, and networks over copyright protections for digital shows and movies is keeping Americans from widely embracing broadband technology.

New Economy boosters insist that broadband's expansion is the key to jump-starting the job market and reviving the tech industry's fortunes. A broadband connection provides a superfast hookup to the Internet, allowing huge amounts of data to be downloaded in a blink. That could open a pipeline to all sorts of entertainment products now mostly available in stores -- everything from first-run movies to the latest digitally mastered album from Kid Rock.


  However, while broadband connections are available to 80% of U.S. households through cable-TV systems, only 10% have signed up because of unreliable service and the lack of must-have content over these relatively expensive links.

Broadband can't truly blossom until content providers -- spooked by the upstart Napster phenonemon -- are assured that they can protect their profits when their shows are downloaded by consumers. The big problem: After six years of talks in Burbank, Calif., Hollywood and the tech types still haven't reached an agreement on how to protect digital content from copyright infringement. They've made some progress, but studios such as Disney and Fox say the tech industry has been dragging its heels.

Enter Hollings. Last fall, the chairman's staff drafted legislation ordering the Commerce Dept. to devise a digital protection standard if the two industries were unable to agree on one within 18 months. The proposed bill generated a firestorm as tech lobbyists fumed about bureaucrats setting technology standards.


  While few on K Street expect the Hollings bill to become law, it has certainly accelerated the Hollywood-Silicon Valley talks. "There's a reason why cases are settled on the courthouse steps," says Preston Padden, Disney's chief lobbyist. "Companies can haggle forever, but that imminent appointment in front of the judge so often produces a breakthrough."

He has a point. Still, until recently Tinseltown and the techies were haggling over protections just for cable and satellite programming. Now, Disney, Fox, Paramount, Universal, and MGM are demanding that the tech industry create copy protections for digital broadcasts of network-TV programming as well. The content providers won't sign on to any final agreement until they get their way on broadcast protections.

Hollywood, however, is far from united. Warner Bros. and Sony have agreed to the cable and satellite copy-protection technologies pushed by the techies. Eager to launch digital content on the Web, they want to embrace whatever copy protections are available now. "It is far more important to get all the digital sets coming into market to have some copyright protections than to wait for the absolutely perfect solution," says Warner Chief Technology Officer Chris Cookson.


  Hollings' hearing comes at a pivotal time. If the warring parties convince him that they can resolve their disputes this year, he may smile on the proceedings -- and back off from his threats of a legislative solution. And if they do reach a deal, Hollings has another card to play. The senator may propose that the Federal Communications Commission compel makers of consumer electronics and computers to adopt the new digital copyright-protection standards.

Then, the industry can find out whether delivering TV shows like Friends and movies like The Lord of the Rings via the Net really is the key to starting the oft-promised broadband revolution.

By Catherine Yang in Washington

Edited by Douglas Harbrecht

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