Broadcaster Wants to Use FM Receivers to Limit TV Signal Streaming

The Copyright Office seeks input for a report on compulsory licenses due in June 2008 to Congress. Such licenses let pay-TV providers carry broadcast signals without requiring that they individually license each piece of programming from varied content owners.

Capitol’s system has three levels of protection, Goodmon said. First, subscribers would provide a credit card with a billing address within the TV station’s market. They would get an FM radio receiver from their Internet service provider that attaches to a computer through a USB port. The device searches for specific radio signals; unless it finds them, it will not authorize viewing. The video will contain digital rights management (DRM) software, “as secure as the best banking circuits in the country,” Goodmon said.

The Copyright Office should endorse Capitol’s view that a pay-TV distributor putting video online and following rules governing cable operators should be deemed a “cable operator” under copyright law, Goodmon said. “I'm asking for your help and guidance,” he said. Broadcasters need to be able to reach every screen in their markets, particularly as younger people consume more TV programming online, he said. “It’s as if we've got all these TV sets in the market that can’t pick us up,” he said. “The way you get there is on the Internet. This is about our market and our ratings.”

Register of Copyrights Marybeth Peters seemed skeptical of some Goodmon claims, occasionally grimacing at his remarks and chuckling at some of his suggestions. She questioned the reliability of DRM. “We've never seen any DRM that can’t be broken and doesn’t have a problem,” she said.

The National Association of Broadcasters is open to new technologies using compulsory licenses but wants to make sure Congress and the copyright office examine the impact of including the Internet on local program exclusivity, said Tribune Senior Counsel Charles Sennet. He testified for NAB. “It is critical that the compulsory license system not be changed in a way that threatens broadcast exclusivity,” said Sennet. “We don’t take a position on Capitol Broadcasting’s proposal per se,” he said later.

Satellite carriage of distant network signals is a more pressing matter for NAB, Sennet indicated in his remarks. Congress should let the section of copyright law governing distant network signal importation expire as intended in 2010, he said. But Congress should move to protect broadcasters’ exclusivity between that expiration date and the analog broadcast shutoff in February 2009, he said. “A failure by Congress to address this issue would leave a 10 and a half-month gap in which a local station would have no protection against the importation of distant network signals,” he said.

Cable operators still could carry distant signals under NAB’s proposed regime, Sennet said. That raised questions from Tanya Sandros, Copyright Office chief counsel. Cable operators typically don’t carry many distant signals to begin with, Sennet said. Besides, Sennet said, “the cable license has developed where there has been a 30-year pattern of carriage that requires some deference.”

Capitol’s plan is untenable, said Preston Padden, Disney executive vice president of government relations. “Capitol is a respected broadcasting company… But its proposed service simply does not fit with what Congress had in mind in 1976 when it created the statutory licenses,” he said. “The public Internet cannot possibly be considered an analogous system” to a cable plant.

It should be “a given” that Internet broadcasts do not deserve compulsory licenses, said Fritz Attaway, executive vice president and special policy adviser at the Motion Picture Association of America. Copyright holders could not be compensated adequately, he said. Moreover, programmers are finding ways to license their programming online without the restrictions of a compulsory license. IPTV is different, Attaway and Padden acknowledged. Services like AT&T’s U- verse are more like cable, though they use Internet Protocol to transmit programming, they said. That does not mean cable-style compulsory licenses should be grafted onto IPTV, Attaway said. “The question whether they should be extended to new circumstances is one for Congress, and only for Congress,” he said.

The entire compulsory license system is out of date and unfair to content owners, Disney, MPAA and a group of sports programmers told the Copyright Office. The office should study whether compulsory licenses are still needed and look at the likely outcomes of moving toward a market-based approach to licensing TV signals, he said. “There is a lot of anecdotal evidence piling up that this market could function just fine without a compulsory license in it,” he said. Furthermore, IPTV services should play by all the rules governing cable operators if they hope to enjoy the benefits of compulsory licenses, he said. “I've looked at the new IPTV services and what they say about the compulsory licenses and what they say about complying with the FCC requirements and quite frankly, I'm confused,” he said. “I don’t know what their status is.” AT&T for instance, argues it should be considered a cable system under the Copyright Act, but not under the Cable Act because they have different definitions.

The rules are “an absolute anachronism,” Attaway said. Cable networks license their programming to distributors in the open market all the time without suffering excessive transaction costs, he said. “The world has changed since 1976, and it’s time for the compulsory licenses to reflect the world as it exists today.”

Short of taking compulsory licenses out of the law, the Copyright Office could urge Congress to make changes that would benefit sports programmers, said Thomas Ostertag, senior vice president and general counsel in baseball commissioner’s office. For one, cable and DBS operators should have to pay a fair market rate for the programs they carry, he said. And distributors should be subject to an audit to make sure they're paying correct royalties, he said. “Today, we have no enforcement option other than the expensive process of litigation,” he said.