from: Hollywood Reporter [1]

Senate Panel Clears Broadcast Flag

From Hollywood Reporter, June 28, 2006
By Brooks Boliek

A key Senate committee approved legislation that ultimately will give the FCC authority to promulgate regulations designed to protect content delivered by digital broadcasts.

Approval of the so-called broadcast and audio flags came Tuesday (June 27) as the Senate Commerce Committee worked through a veritable mountain of amendments to its rewrite of many of the nation’s telecommunications laws.

One of the broadcast flag provisions gives the FCC specific authority to write regulations that protect digital TV content delivered over the airwaves.

The federal court ruled that the commission doesn’t have the authority to set up the copyright-protection regime without express direction from Congress.

The rules were challenged by consumer groups, including library associations that claimed the FCC requirement would prevent consumers from recording programs in ways permitted under copyright laws.

Entertainment companies claim the technology is needed to block viewers from recording shows and films and distributing them free online. Without the protection, copyright holders claim they would refrain from selling high-value content to broadcast outlets, quickening the migration of many programs from free TV to pay television. The copyright industries contend that the video flag won’t prevent consumers from doing what they do now in the analog world.

The committee also approved legislation that sets up a process for digital radio. Under the committee-approved provision, a digital audio review board that would recommend rules to prevent indiscriminate redistribution of audio content. The board, comprised of representatives of the various industries and groups concerned, will have a maximum of 18 months to develop the regulations. The commission then will have 30 days to bless the deal. If the board failed, the FCC would then have a year to initiate its own digital audio protection regime.

While the committee approved the flag language, it still faces hurdles. Sen. John Sununu, R-N.H., had planned to offer amendments gutting those provisions, but withdrew them. Sununu, however, said he might offer them on the floor.

The audio flag also faces problems in the House. A stand-alone bill has been introduced, but the language is not part of the telecommunications bill the House approved this year.

Rep. Fred Upton, R-Mich., who chairs the House Commerce Committee’s telecommunications panel, told industry executives Tuesday that it was up to them to convince lawmakers of the need for the audio flag.

“I believe it is those who advocate intervention in the marketplace and federal technology mandates who bear the burden of persuasion in this debate,” he said. “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.”

The House’s telecommunications bill is much narrower than the Senate’s version as it deals mainly with video franchise reform. On a 321-101 vote the House approved the Communications Opportunity, Promotion and Enhancement (COPE) Act, which sets a national video franchise for the phone companies. It also eases the regulatory burden for cable companies when they face competition in the video marketplace.

The bill being worked on by the Senate Commerce Committee includes franchise regulation changes similar to the House, but also includes a raft of other provisions like the broadcast flags and reforms of the telephone universal service fund.

While the Senate Commerce Committee is working through the legislation, it is unclear if the bill will get a vote on the Senate floor or, if it wins approval there, if the differences between the House and Senate can be worked out.

The committee plans to take up one of the most controversial proposals in its consideration of the bill today. Committee chairman Sen. Ted Stevens, R-Alaska, said he plans to consider the “network neutrality” issue today.

Proponents of the concept, mostly Democrats, contend that the government should prevent the network companies from favoring one person or companies’ programming or data over another. They are backed by many of the nation’s Internet and high-tech companies, including Google, Amazon and Microsoft.

Opponents of the idea, mostly Republicans, contend that a network neutrality requirement is an unnecessary government intrusion. They are backed by such big network companies as AT&T, Verizon and Comcast.

A move to address the network neutrality issue in the House failed.