Industry Near Deal for Anti-Pirate Broadcast Flag

WASHINGTON (Reuters) - Most of the hurdles to protecting copyrighted digital broadcasts from being illegally redistributed over the Internet have been

WASHINGTON (Reuters) - Most of the hurdles to protectingcopyrighted digital broadcasts from being illegally redistributedover the Internet have been overcome and a report is slated to beissued on May 17, industry players told lawmakers on Thursday.

The step would be incremental, because other issues likestopping unauthorized copying of songs and other digital media onthe Internet are still unresolved and the subject of heated debate,but it would still represent a breakthrough, executives of majormedia companies told a congressional panel.

"There are many issues that are basically solved" forestablishing a so-called broadcast flag, though there was someopposition, said Paul Liao, chief technology officer forPanasonic/Matsushita Electric Corp., the North American arm ofJapanese consumer electronics giant Matsushita Electric IndustrialCo. Ltd. .

"It's going to take some more discussions," he told the U.S.House Energy and Commerce subcommittee on the Internet. "We're veryoptimistic that by the deadline of May 17, that there will be anissuance of a final report."

The transition to digital has been slowed in part because oflimited digital programming available, high-priced equipment neededto receive the signals, and the particularly prickly issue ofpotential piracy of content.

News Corp. Ltd. President Peter Chernin said the broadcast flag,which would serve as a watermark to prevent unauthorizeddistribution, is a major hurdle to moving ahead with the digitaltransition.

"Specifically related to the digital transition on terrestrialtelevision, I think the broadcast flag is the single biggest issueand I think hopefully its solution will allow us to rapidly speedup this transition," he said.

"We should be able to come out with a recommendation in at themost a matter of weeks," Chernin said.

An agreement for the broadcast flag was reached on Wednesdayamong a small coalition of electronics makers, entertainment groupsand computer companies who will now take it to a larger group ofinterested parties with the goal of the final report being issuedin three weeks, Liao told reporters.


Philips Consumer Electronics North America Chief ExecutiveOfficer Lawrence Blanford complained to lawmakers that thedecision-making process was being done by a small, closed group andwas potentially overlooking certain technologies.

"We are optimistic that these problems can be resolved,"Blanford told lawmakers. "Other technologies that could be helpfulare not being considered." He called on Congress to authorize aforum to address the controversial issue of how consumers canrecord and reuse content.

One of his concerns was whether consumers would be allowed tomake a digital copy of a television show on one machine and thentake it to watch it elsewhere on another older machine that may nothave the flag technology but still be able to watch the show in thesame quality.

Rep. Rick Boucher, a Virginia Democrat, said that with such anagreement, which would also allow home users the fair right torecord and make copies for personal use, Congress could moveforward with legislation to codify the agreement.

"I'm wondering if the time to legislate is upon us at theconclusion of that agreement," he said. Many members of the panelsaid they would prefer only to pass legislation to codify suchdeals and not set standards.

News Corp.'s Chernin as well as incoming AOL Time Warner Inc.Chief Executive Officer Richard Parsons said during the hearingthey would be receptive of legislation for the broadcast flag.


"We need to make sure what you pass, regardless of when you passit, has fair use provisions in it," said Joe Kraus, co-founder, referring to the ability of individuals torecord shows to watch later or elsewhere or transfer a musiccompact disc to another format to play in a car or on a portableplayer.

In contrast, Sen. Ernest Hollings, chairman of the SenateCommerce Committee, proposed one solution but kicked up a stormwhen he introduced a bill that would prevent new computers, CDplayers and other consumer-electronics devices from playingunauthorized movies, music and other digital-media files.

The bill has been embraced by the various recording studios andother content producers because of concerns that they are losingmillions of dollars in revenue, though it has received littlesupport from consumers and electronics manufacturers.

RealNetworks Inc. President and Chief Operating Officer LarryJacobson told Reuters on Wednesday that, contrary to assertions byrecording companies and big media firms like Walt Disney Co.,current copy-protection technologies are working on their own.

The company has signed up 600,000 customers who pay foreverything from TV programs to downloadable songs.