FCC’s DRM ban may derail distribution of new-release films on cable TV

by on August 5, 2008 · 44 comments

There’s been a lot of FUD floating around about the MPAA’s plan to offer new release films for cable subscribers to watch at home on pay-per-view channels. Currently, movies come out on DVD about four months after their theatrical release, and are typically available on pay-per-view a month or two thereafter. As box office receipts have waned, Hollywood has warmed to the idea of letting consumers watch movies at home just a few weeks after being released in theaters.

Due to piracy concerns, new movies would be subject to an extra layer of copy protection. The movie studios want to use a technology called Selectable Output Control (SOC) to prevent new release films from being viewed on analog outputs. SOC makes it possible to seal the “analog hole” by disabling all unprotected paths.

Consumers are willing to pay to watch new movies at home, and content producers are willing to transmit them, but government is standing in the way. FCC regulations forbid multi-channel video programming distributors from activating SOC, but firms may apply for a waiver from these rules if they can demonstrate that consumers stand to benefit. The MPAA has applied for a waiver, arguing that “These new Services are exactly the type of ‘new business models’ that the Commission contemplated when it adopted the encoding rules.”

Under Section 304 of the Telecommunications Act of 1996, the FCC is tasked with “assuring commercial consumer availability of equipment used to access services provided by multichannel video programming distributors.” FCC regulations, therefore, mandate that all video transmitted on cable TV must be viewable on all outputs, including legacy analog connectors like RCA and S-Video. In a 2003 Notice of Proposed Rulemaking, the FCC stated that, “we are concerned that selectable output control would harm those ‘early adopters’ whose DTV equipment only has component analog inputs for high definition display, placing these consumers at risk of being completely shut off from the high-definition content they expect to receive.”

But it’s expected that early adopters will sometimes encounter technical hurdles. Why should Selective Output Control be any different? Just as HD-DVD players are effectively obsolete, and K56flex modems are no longer supported by most dial-up ISPs, people who bought HDTVs several years ago prior to the adoption of HDCP might have to live without the ability to watch new release movies at home.

HDCP—which stands for High Definition Copy Protection, a digital encryption standard built in to nearly all newer HDTVs—lets consumers watch high-def programming in full 1080p glory over digital, encrypted outputs (DVI and HDMI). The trouble is that some consumers own high-definition displays that aren’t HDCP capable, as the standard wasn’t widely implemented until early 2006. But that’s hardly a reason why those who do own HDCP-enabled devices should lose out on the opportunity to view high-value content that content producers are uncomfortable releasing on mediums vulnerable to piracy.

New-release films are a major target for pirates, so MPAA’s worries about copyright infringement make sense. Typically, high-quality versions of new release films do not become widely available on the usual piracy venues until the film is out on Blu-Ray and DVD. Transmitting brand new movies in high-def on analog component outputs would allow pirates to distribute high resolution releases captured with off-the-shelf equipment.

With a growing number of IP-based video options coming to the scene, the market will punish overly aggressive DRM technologies. Consumers enjoy an increasing menu of alternatives to cable for viewing high-def movies at home. This fall, Xbox 360 owners will be able to stream Netflix movies straight to their console. If cable companies offer an inferior product—say, one that “breaks” commonly used outputs—subscribers will simply switch to competing video services

Concerns about cable subscribers paying for movies only to receive a black screen are overblown. Why would any cable company make such a bone-headed move? Hollywood has voluntarily chosen not to activate the Image Constraint Token (which “downrezzes” 1080p content to 540p when played through an analog output) for fear of alienating users. Facing fierce competition, cable companies have a strong incentive to avoid angering their subscribers.

Several groups have argued that the FCC should reject the MPAA’s waiver on fair use grounds. But content owners aren’t required to ensure that all movies can be easily timeshifted and archived. There is no consumer right to unfettered, analog video programming. Fair use is an important exception to copyright law, but that doesn’t mean government should mandate crippled DRM just so consumers can exercise fair use. If movie studios wish to relegate certain films to being viewed only on encrypted outputs, then it’s up to the marketplace to devise methods to allow for timeshifting of protected content.

The real impediment to fair use isn’t Selectable Output Control, but the DMCA’s chilling anti-circumvention clause. Software capable of breaking DRM shouldn’t be banned, but robust DRM shouldn’t be illegal, either. Consumers will shun content that’s encumbered with intrusive DRM, and market forces will reward copy-protection schemes that balance transparency with robustness. In the ongoing battle over DRM, the best course for government is to stay out entirely.

If there’s a market for new release movies delivered straight to the home, it should be allowed to emerge, unfettered by federal regulation. Content owners should not be required to ask for the FCC’s permission to activate DRM technology. If the FCC rejects the MPAA waiver, Hollywood may simply decide that nobody will get a chance to watch new release films at home.

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