THE AUDIO AND VIDEO FLAGS: CAN CONTENT PROTECTION AND TECHNOLOGICAL INNOVATION COEXIST? HEARING BEFORE THE SUBCOMMITTEE ON TELECOMMUNICATIONS AND THE INTERNET OF THE COMMITTEE ON ENERGY AND COMMERCE HOUSE OF REPRESENTATIVES ONE HUNDRED NINTH CONGRESS SECOND SESSION JUNE 27, 2006 Serial No. 109-112 Printed for the use of the Committee on Energy and Commerce Available via the World Wide Web: http://www.access.gpo.gov/congress/house U.S. GOVERNMENT PRINTING OFFICE 30-218PDF WASHINGTON : 2006 For sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC area (202) 512-1800 Fax: (202) 512-2250 Mail: Stop SSOP, Washington, DC 20402-0001 COMMITTEE ON ENERGY AND COMMERCE JOE BARTON, Texas, Chairman RALPH M. HALL, Texas JOHN D. DINGELL, Michigan MICHAEL BILIRAKIS, Florida Ranking Member Vice Chairman HENRY A. WAXMAN, California FRED UPTON, Michigan EDWARD J. MARKEY, Massachusetts CLIFF STEARNS, Florida RICK BOUCHER, Virginia PAUL E. GILLMOR, Ohio EDOLPHUS TOWNS, New York NATHAN DEAL, Georgia FRANK PALLONE, JR., New Jersey ED WHITFIELD, Kentucky SHERROD BROWN, Ohio CHARLIE NORWOOD, Georgia BART GORDON, Tennessee BARBARA CUBIN, Wyoming BOBBY L. RUSH, Illinois JOHN SHIMKUS, Illinois ANNA G. ESHOO, California HEATHER WILSON, New Mexico BART STUPAK, Michigan JOHN B. SHADEGG, Arizona ELIOT L. ENGEL, New York CHARLES W. “CHIP” PICKERING, Mississippi ALBERT R. WYNN, Maryland Vice Chairman GENE GREEN, Texas VITO FOSSELLA, New York TED STRICKLAND, Ohio ROY BLUNT, Missouri DIANA DEGETTE, Colorado STEVE BUYER, Indiana LOIS CAPPS, California GEORGE RADANOVICH, California MIKE DOYLE, Pennsylvania CHARLES F. BASS, New Hampshire TOM ALLEN, Maine JOSEPH R. PITTS, Pennsylvania JIM DAVIS, Florida MARY BONO, California JAN SCHAKOWSKY, Illinois GREG WALDEN, Oregon HILDA L. SOLIS, California LEE TERRY, Nebraska CHARLES A. GONZALEZ, Texas MIKE FERGUSON, New Jersey JAY INSLEE, Washington MIKE ROGERS, Michigan TAMMY BALDWIN, Wisconsin C.L. “BUTCH” OTTER, Idaho MIKE ROSS, Arkansas SUE MYRICK, North Carolina JOHN SULLIVAN, Oklahoma TIM MURPHY, Pennsylvania MICHAEL C. BURGESS, Texas MARSHA BLACKBURN, Tennessee BUD ALBRIGHT, Staff Director DAVID CAVICKE, General Counsel REID P. F. STUNTZ, Minority Staff Director and Chief Counsel SUBCOMMITTEE ON TELECOMMUNICATIONS AND THE INTERNET FRED UPTON, Michigan, Chairman MICHAEL BILIRAKIS, Florida EDWARD J. MARKEY, Massachusetts CLIFF STEARNS, Florida Ranking Member PAUL E. GILLMOR, Ohio ELIOT L. ENGEL, New York ED WHITFIELD, Kentucky ALBERT R. WYNN, Maryland BARBARA CUBIN, Wyoming MIKE DOYLE, Pennsylvania JOHN SHIMKUS, Illinois CHARLES A. GONZALEZ, Texas HEATHER WILSON, New Mexico JAY INSLEE, Washington CHARLES W. “CHIP” PICKERING, Mississippi RICK BOUCHER, Virginia VITO FOSSELLA, New York EDOLPHUS TOWNS, New York GEORGE RADANOVICH, California FRANK PALLONE, JR., New Jersey CHARLES F. BASS, New Hampshire SHERROD BROWN, Ohio GREG WALDEN, Oregon BART GORDON, Tennessee LEE TERRY, Nebraska BOBBY L. RUSH, Illinois MIKE FERGUSON, New Jersey ANNA G. ESHOO, California JOHN SULLIVAN, Oklahoma BART STUPAK, Michigan MARSHA BLACKBURN, Tennessee JOHN D. DINGELL, Michigan JOE BARTON, Texas (EX OFFICIO) (EX OFFICIO) (II) CONTENTS Page Testimony of: Bainwol, Mitch, Chairman and Chief Executive Officer, Recording Industry Association of America................................................................................................. 17 Levin, Andrew W., Executive Vice President and Chief Legal Officer, Clear Channel Communications, on behalf of National Association of Broadcasters.......................... 22 Harris, Stewart, Songwriter, on behalf of Songwriters Guild of America ......................... 29 Ziegler, Ruth A., Deputy General Counsel, Sirius Satellite Radio, Inc. ............................ 32 Attaway, Fritz, Executive Vice President and Special Policy Advisor, Motion Picture Association of America.................................................................................................. 72 Shapiro, Gary, President and Chief Executive Officer, Consumer Electronics Association ..................................................................................................................... 78 Sohn, Gigi, President, Public Knowledge........................................................................... 88 (III) THE AUDIO AND VIDEO FLAGS: CAN CONTENT PROTECTION AND TECHNOLOGICAL INNOVATION COEXIST? TUESDAY, JUNE 27, 2006 HOUSE OF REPRESENTATIVES, COMMITTEE ON ENERGY AND COMMERCE, SUBCOMMITTEE ON TELECOMMUNICATIONS AND THE INTERNET, Washington, DC. The subcommittee met, pursuant to notice, at 2:05 p.m., in Room 2322 of the Rayburn House Office Building, Hon. Fred Upton (Chairman) presiding. Members present: Representatives Stearns, Gillmor, Cubin, Shimkus, Bass, Walden, Terry, Ferguson, Blackburn, Barton (ex officio), Markey, Engel, Wynn, Gonzalez, Inslee, Boucher, Towns, and Gordon. Also present: Representative Bono. Staff present: Neil Fried, Counsel; Will Nordwind, Policy Coordinator; Anh Nguyen, Legislative Clerk; Jaylyn Jensen, Senior Legislative Analyst; Johanna Shelton, Minority Counsel; and Davis Vogel, Minority Research Assistant. MR. UPTON. Good afternoon. Today’s hearing is entitled “The Audio and Video Flags: Can Content Protection and Technological Innovation Coexist?” I would like to think that the answer to the question posed in the title of this hearing is: “yes, they can coexist.” In fact, the marketplace is replete with examples of that fact, which is a good thing since one of our Nation’s most precious resources and exports is the creative genius and artistic ability of her citizens, otherwise known as intellectual property. This then begs the question of where, if at all, is it wise or appropriate for the Government to intervene in the marketplace and mandate specific content protection technologies, like the audio and video broadcast flags which are at issue in today’s hearing. In my view it is those who advocate intervention in the marketplace and federal technology mandates that bear the burden of the persuasion in this debate. Today’s hearing is divided into two panels, one on the audio flag and the other on the video flag. This subcommittee has a long record on the video broadcast flag since it was a major issue in the subcommittee’s (1) 2 examination of the transition to digital TV. We held a number of hearings in which the broadcast flag was addressed, and under former Chairman Billy Tauzin’s leadership we held many, many, numerous multi-party roundtables which were, in part, responsible for industry consensus on a video broadcast flag. It was that consensus that helped pave the way for the FCC’s video broadcast flag order, which was ultimately struck down by the D.C. Circuit on the grounds that the FCC lacked authority to issue such rules, not on substantive grounds. So, today’s hearing will help refresh our record on this important issue, which, at its heart, was always about preventing illicit mass distribution on the Internet of digital over-the-air broadcast content, a goal that I strongly support. However, this will be the first hearing that we have held on the audio broadcast flag. I want to commend Mr. Ferguson for his motivation and for focusing our attention on it. As I stated at the outset, I believe it is those who advocate intervention in the marketplace and Federal technology mandates who bear the burden of persuasion in this debate. I believe that digital TV transition, which is government driven with a hard date now set into law, is very different than the digital radio transition which is purely market driven. It does not require a separate spectrum and does not require the shut-off of analog service. As such, I believe that the radio marketplace will be much more sensitive to government intervention and Federal technology mandates than the TV marketplace, and that is of great concern to me. In any event, my understanding is that the NAB and the RIAA have been engaged in a productive dialogue over the audio flag issue, and I commend those organizations for their diligence. I would hope that the parties to that dialogue could be expanded to include other interested parties to ensure that, if there is ever to be a consensus on audio flag, that it is a broad-based consensus. I know from our experience with the video broadcast flags that these issues are highly technical. There are important consumer issues at stake and ample time needs to be given to careful consensus building before the Government intervenes, if a case is to be made that it intervenes at all. With that, I look forward to hearing from our witnesses today, and with perfect timing I recognize the Ranking Member of the subcommittee from Massachusetts, my friend, Mr. Markey. [The prepared statement of Hon. Fred Upton follows:] PREPARED STATEMENT OF HON. FRED UPTON, CHAIRMAN, SUBCOMMITTEE ON TELECOMMUNICATIONS AND THE INTERNET Good afternoon. Today's hearing is entitled: The Audio and Video Flags: Can Content Protection and Technological Innovation Coexist ? 3 I would like to think that the answer to the question posed in the title of this hearing is: “YES, they can coexist.” In fact, the marketplace is replete with examples of this fact, which is a good thing since one of our nation's most precious resources - and exports -- is the creative genius and artistic ability of her citizens, otherwise know as intellectual property. This then begs the question of where, if at all, is it wise or appropriate for the government