FCC’s ‘Broadcast Flags’ Won’t Faze Digital Pirates

The D.C. Court of Appeals recently found that the Federal Communications Commission does not have the authority to impose “broadcast flag” rules. The rules would have restricted technology on a wide range of consumer electronic devices after July 2005 to prevent unauthorized copying of new digital broadcast programming.The Motion Picture Association of America and others have called on Congress to immediately write a law to give the FCC authority to enforce broadcast flag rules.Congress is intent on forcing broadcasters to transmit only in digital form within the next few years. Ironically, soon-to-be obsolete analog broadcast technology is one of the few effective cures for broadcast piracy because each copy is worse than the original.The unlawful copying and distribution of digital programming are growing businesses on the Internet. Liability for this illegal activity is at the heart of the recent Grokster case heard by the Supreme Court. Cable, satellite television, and other subscription services can limit piracy through equipment provided to subscribers.Digital broadcast signals are particularly susceptible to piracy for many reasons, including: tens of millions of receivers in America (and hundreds of millions worldwide) without digital broadcast encryption technology; no digital broadcast encryption standard to prevent unlawful copying; countless thousands of clever hackers who see nothing wrong with copying digital programming; and unclear and largely unenforced liability rules for piracy of video programming.The FCC attempted to find a solution by regulating consumer electronic equipment. Of course, the broadcast flag rules would apply only to new consumer electronic equipment and would do relatively little to address many of the reasons listed above that digital broadcast signals will be susceptible to piracy.The FCC made little pretense of specific legal authority when it wrote the broadcast flag rules in 2003. It is not surprising, therefore, that Judge Harry Edwards, writing for the appeals court, found the FCC had no legal basis for the rule and held that the FCC cannot regulate the use or specification of equipment for purposes subsequent to the receipt of a broadcast signal.When courts found three years ago that neither the FCC nor the Federal Trade Commission had authority for the popular “Do Not Call” list to protect consumers from unwanted telephone solicitations, Congress promptly and nearly unanimously passed a law to give the FCC the legal authority to proceed.MPAA and manufacturers such as Thomson and Philips want Congress now to do the same for the broadcast flag rules. A prudent Congress would react carefully and look at the broader issue of piracy of digital broadcast signals.For all of their good intentions, the broadcast flag rules may do little to reduce piracy. The technology is clever, but probably not as clever as the combined efforts of thousands of hackers around the world who get their thrills from breaking through supposedly secure devices. In turn, the hackers can peddle their stolen wares – or more often, simply make them freely available – over the Internet with impunity.Government efforts to legislate technology rarely work as intended, if at all. The V-chip, unfamiliar to most Americans, is an example of mandated technology without consequences. Private contracts, standards set by industry, and clear and enforceable liability rules for piracy have protected most forms of intellectual property far more than government restrictions on technology.Creating clearer liability rules for piracy of digital intellectual property is more than just a narrow industry interest. Each year we seem to set a new record for trade deficits. In February alone, the deficit was $61 billion. Yet every year, more intellectual property, disproportionately American in origin, is pirated and made freely available around the world over the Internet.Our society punctiliously respects physical property and associated contracts. American economic growth is a consequence, not a coincidence. But in the parallel cyberspace universe, intellectual property has little respect.The FCC’s well-intentioned broadcast flag rules by themselves will likely do little good, and could do much harm by attempting to regulate technology. The economic growth opportunities of the Internet will not become a reality unless Congress writes simple but enforceable laws with respect to intellectual property, contracts, and liability on the Internet. It is time to make that effort a higher priority.A former FCC commissioner, Mr. Furchtgott-Roth is president of Furchtgott-Roth Economic Enterprises. He can be reached at hfr@furchtgott-roth.com.

FCC’s ‘Broadcast Flags’ Won’t Faze Digital Pirates

FCC’s ‘Broadcast Flags’ Won’t Faze Digital Pirates

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