Pay-TV Companies Support MPAA’s FCC Waiver Request

Cable operators and DirecTV said they're interested in distributing movies to their subscribers before they come out on DVD. DirecTV said the petition gives the FCC a chance to promote digital TV because, “as the Commission has observed, the availability of unique, high-definition services drives consumer adoption of digital television sets.” Pay-TV subscribers wait up to 165 days after movies are in theaters to watch them on video-on-demand or pay-per-view, a month or more after the DVDs come out, the MPAA said in seeking the waiver in May.

The NCTA said MPAA’s petition “provides an opportunity to offer consumers unprecedented early access to programming that they do not have today and could not have without the requested waiver.” If the FCC approves the exemption, “consumers would no longer need to wait for the DVD release, or release to pay-per-view, subscription television, or television broadcast services which today are normally delayed by many months or longer after theatrical release,” said NCTA.

TiVo isn’t “persuaded” MPAA’s proposal represents a new business model, the company said. It said the proposal had few details about how the service would work and doesn’t say when movies could no longer be shown using selectable output controls. “Read literally, the requested waiver would last indefinitely if a particular movie is never released on DVD or other media without the ability to disable audiovisual outputs,” said TiVo. It sought “a waiver limited to the 120- day period between theatrical release and home media release.”

Theater owners said they'd be hurt if the FCC approves the MPAA’s petition. “A business model that threatens to collapse the theatrical window -- whether by selling DVDs, or streaming movies into the home, too near theatrical release - - imperils a sequenced distribution system,” that works well, said the National Association of Theater Owners. The Independent Film & Television Alliance said consumer access to independent films would be reduced if the FCC issues a waiver.

The Consumer Federation of America, Electronic Frontier Foundation, U.S. PIRG and other groups said releasing movies on pay-TV earlier doesn’t constitute a new business model. The FCC also shouldn’t grant the studios’ request because it would force millions of consumers wanting to watch the films to buy “costly new equipment to view content that their current equipment is quite capable of displaying,” said the groups. “Some customers will be able to receive this content, while others will not, simply because of what kind of cable they happen to use between their set-top box and their television.”

Sony Electronics, once a backer of the ban on selectable output control, now thinks it “could bring benefits to consumers that on balance would outweigh any potential drawbacks” in “certain, very narrow, circumstances,” the company said, endorsing the MPAA petition for an SOC waiver. In so doing, Sony broke with CEA and the Home Recording Rights Coalition, which argued for continuing the all-out SOC ban.

Sony has “long supported” the SOC ban for fear that “the wide and unfettered use of SOC would prevent consumers from receiving lawfully obtained content that they have a reasonable expectation of enjoying,” the company said. Left “unchecked,” SOC also “could significantly reduce the value” of the CE equipment on which consumers have spent thousands of dollars to buy, Sony said.

Now Sony thinks the commission should permit, and “only permit,” SOC for the cable, satellite or IPTV distribution of HD movies to consumers for in-home viewing before movies’ DVD or Blu-ray release dates, as the MPAA seeks, the company said. “Allowing this exception will not harm consumers, as long as it does not eliminate or delay the release of these movies on fixed media,” like DVD or Blu-ray, Sony said. “Rather, the exception would permit consumers to receive a service that they otherwise would not receive.” Sony didn’t say why it reversed field, but its sister Sony Pictures subsidiary, an MPAA member, supports the MPAA petition.

Still, “limited implementation” of SOC demands “certain safeguards,” Sony said. Among other restrictions, Sony wants the FCC to allow consumers to file complaints, on which the agency should act “in a timely manner,” if a service provider uses SOC in a manner “inconsistent” with the waiver MPAA seeks, it said. The FCC also should bar service providers and content owners “from misusing SOC to discriminate against retail devices in favor of proprietary devices,” Sony said. The commission should require providers to tell consumers when, how and why they deploying SOC for particular content, Sony said. “Perhaps the worst case scenario for all involved would be if consumers do not truly understand when, how and why SOC is employed in a particular case,” it said.

Like Sony, the Digital Transmission Licensing Administrator “would not oppose in general” an SOC “limitation” that’s “narrowly applied,” it said. But if not used carefully, SOC “has the potential to disenfranchise millions of consumers” buying new DTV sets, DTLA said. “SOC therefore must be applied only in those narrow circumstances where the benefit of services enabled by SOC clearly outweighs the potential imposition on consumers,” it said. Any waiver must have conditions, DTLA said. “SOC should be applied only to a new service of early delivery direct to consumers on demand” of new HD movies “for a limited time,” it said. DTLA also wants the commission to deny content owners and service providers “the sole authority to choose technologies that can protect content as to which SOC has been applied,” it said.

CEA still supports an all-out SOC ban on grounds that the MPAA bears “a heavy burden” in justifying a waiver, especially when the waiver it seeks is permanent, CEA said. The MPAA petition “neither acknowledges or accepts any such burden,” CEA said. SOC is “ a blunt instrument,” it said. It’s not a content protection technology, but “a last resort” technology “whose use must be balanced against the harm inflicted on innocent consumers and on the public interest,” it said. A “strong, documented, detailed and persuasive showing must be made on its behalf,” and the MPAA hasn’t done so,” it said.

If the MPAA is seeking a waiver letting a content owner apply SOC to a protected, licensed digital interface, it should say so “explicitly” -- but it doesn’t, CEA said. The MPAA “should then attempt to explain and justify why such a waiver should be granted,” CEA said. “If MPAA is not proposing that the waiver allow a secure digital interface to be shut off, it should say so. This would save trees, energy, and expended hours by all concerned. CEA’s position is that no such waiver would ever be appropriate and that under no circumstance should any be granted.”

Similarly, the Home Recording Rights Coalition argued that the MPAA “has presented no sufficient reason or inducement for the Commission to lift the ban” on SOC, calling it an “anti-consumer practice.” Nor has the MPAA “even recognized any obligation to meet any burden of proof in this respect,” the HRRC said. Were the MPAA to get its way, SOC would be imposed “on a basis that is arbitrary, capricious and without recourse for consumers,” HRRC said.

HRRC fears imposing SOC would “chill the development of new products and interfaces that allow for lawful home recording,” and “uniquely disadvantage HDTV content at a time when public viewing of and reliance on HDTV programming is nearing fruition,” it said. As the CE industry works with others toward a smooth DTV transition, “we cannot imagine why the commission would accede to the MPAA’s demands and thereby engender potential consumer confusion about whether future products will work as advertised,” HRRC said.