A Flag On the Play: Gigi Sohn Commits a Copyright Foul

Geoffrey Manne & Kristian Stout —  14 September 2016

As Commissioner Wheeler moves forward with his revised set-top box proposal, and on the eve of tomorrow’s senate FCC oversight hearing, we would do well to reflect on some insightful testimony regarding another of the Commission’s rulemakings from ten years ago:

We are living in a digital gold age and consumers… are the beneficiaries. Consumers have numerous choices for buying digital content and for buying devices on which to play that content. They have never had so much flexibility and so much opportunity.  

* * *

As the content industry has ramped up on-line delivery of content, it has been testing a variety of protection measures that provide both security for the industry and flexibility for consumers.

So to answer the question, can content protection and technological innovation coexist?  It is a resounding yes. Look at the robust market for on-line content distribution facilitated by the technologies and networks consumers love.

* * *

[T]he Federal Communications Commission should not become the Federal Computer Commission or the Federal Copyright Commission, and the marketplace, not the Government, is the best arbiter of what technologies succeed or fail.

That’s not the self-interested testimony of a studio or cable executive — that was Gigi Sohn, current counsel to Chairman Wheeler, speaking on behalf of Public Knowledge in 2006 before the House Energy and Commerce Committee against the FCC’s “broadcast flag” rules. Those rules, supported by a broad spectrum of rightsholders, required consumer electronics devices to respect programming conditions preventing the unauthorized transmission over the internet of digital broadcast television content.

Ms. Sohn and Public Knowledge won that fight in court, convincing the DC Circuit that Congress hadn’t given the FCC authority to impose the rules in the first place, and she successfully urged Congress not to give the FCC the authority to reinstate them.

Yet today, she and the Chairman seem to have forgotten her crucial insights from ten years ago. If the marketplace for video content was sufficiently innovative and competitive then, how can it possibly not be so now, with audiences having orders of magnitude more choices, both online and off? And if the FCC lacked authority to adopt copyright-related rules then, how does the FCC suddenly have that authority now, in the absence of any intervening congressional action?

With Section 106 of the Copyright Act, Congress granted copyright holders the exclusive rights to engage in or license the reproduction, distribution, and public performance of their works. The courts are the “backstop,” not the FCC (as Chairman Wheeler would have it), and section 629 of the Communications Act doesn’t say otherwise. All section 629 does is direct the FCC to promote a competitive market for devices to access pay-TV services from pay-TV providers. As we noted last week, it very simply doesn’t allow the FCC to interfere with the license arrangements that fill those devices, and, short of explicit congressional direction, the Commission is simply not empowered to interfere with the framework set forth in the Copyright Act.

Chairman Wheeler’s latest proposal has improved on his initial plan by, for example, moving toward an applications-based approach and away from the mandatory disaggregation of content. But it would still arrogate to the FCC the authority to stand up a licensing body for the distribution of content over pay-TV applications; set rules on the terms such licenses must, may, and may not include; and even allow the FCC itself to create terms or the entire license. Such rules would necessarily implicate the extent to which rightsholders are able to control the distribution of their content.

The specifics of the regulations may be different from 2006, but the point is the same: What the FCC could not do in 2006, it cannot do today.

2 responses to A Flag On the Play: Gigi Sohn Commits a Copyright Foul

  1. 

    To say that the proposed broadcast flag merely “required consumer electronics devices to respect programming conditions preventing the unauthorized transmission over the internet of digital broadcast television content” is a gross mischaracterization.

    The broadcast flag would have imposed on MVPDs and consumer electronics manufacturers a requirement to implement new, not-yet-existing capabilities. It would have forced consumers to bear significant costs, while at the same time limiting consumer rights—it would have effectively granted a new exclusive right under copyright: a right to control private performances (i.e., individual transmissions that were unauthorized only in that they require no authorization, under copyright!). And it would have done all this without even a hint of Congressional intent, or authorization, to so extend the scope of copyright. (And perhaps most absurdly of all, it would have done such for content that is specifically broadcast to the public for free!)

    It would come as no surprise to anybody that the proposal was “supported by a broad spectrum of rightsholders.” Of course, it was. Rightsholders are always more than happy to expand the scope of their rights, especially when all the costs are borne by others.

    It should also surprise nobody that it was an astonishingly bad policy proposal, which the subsequent decade has unequivocally demonstrated was, in fact, completely unnecessary.

    Whether the FCC could have, or should have, adopted such a policy clearly has no relationship, whatsoever, to the question of whether it may, or should, adopt the present “Unlock the box” policy proposal.

    On the other hand, I would agree that Ms. Sohn’s remarks you excerpt (which pertain to what the FCC should do, not what it may do) are applicable to the present policy proposal.

    Let me once again be clear that I share the view that the present and prior “Unlock the box” policy proposals are deeply misguided, counterproductive, and in it’s most recent iteration, obviously unnecessary given what’s already happening in the marketplace, absent regulation. That’s about where our agreement ends.

    Unlike the broadcast flag, while recent proposals may well exceed the FCC’s authorization in their details, they do actually bear a real relationship to a clear Congressional intent and authorization (to promote competitive navigation devices).

    Furthermore, your copyright-based objections continue to be wholly contrived. I can’t help but wonder whether you actually understand the nature of the “standard license” being discussed. You seem to speak of it as if it were a standard license for content distribution, whereas it seems clear to me that this “standard license” actually has only indirect and very limited impact on content licensing. Rather, its role would be akin to the DFAST license in the Plug and Play/Cablecard regime, except that its impact on content licensing is likely to be even more limited, owing to the new MVPD-only app approach of the current proposal.

    The problem with the notion of a standard license has nothing to do with its impact on content, but rather, with the relationship between MVPDs and OTT device makers. There is no standard OTT device interface for apps. Generally speaking, each device is a platform of its own, requiring completely different development vs. other devices. What does a standard license mean in the absence of a standard interface?

    How does the FCC propose to implement this policy? Is it going to pick winners and losers in the marketplace, dictating which OTT devices must be supported by MVPDs, and which need not? If so, that’s obviously extremely problematic and troubling. Yet if not, then how would the policy actually achieve anything?

    What’s more, if the detailed rules are to be similar to what was previously proposed, then this new proposal will still raise a host of technical issues for MVPDs, that would be likely to very significantly increase provider, and therefore consumer, costs. Such rules would strongly tend to force content delivery away from broadcast delivery to much less efficient and more expensive unicast delivery, on a schedule largely outside of MVPD’s ability to reasonably manage. Such a change would provide very little consumer benefit (and possibly even consumer detriment), at very high cost (sure to be passed through to consumers, out of necessity, since MVPDs today have very thin margins).

    So the current FCC proposal is indeed badly misguided, and quite possibly beyond the scope of the FCC’s authorization to promote competitive navigation devices, but I fail to see how the copyright arguments you (and others) continue to make are anything but contrived. And while Ms. Sohn should certainly heed her own advice from 2006, the failings of the present proposal aren’t even remotely comparable to those of the broadcast flag proposal.

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