MPAA Selectable Output Control Waiver Request Seen as Ready for FCC Vote

No item on selectable output control is circulating on the eighth floor, and the commissioners haven’t recently held detailed discussions about the waiver of one-way plug-and- play rules, FCC officials said. No commissioners have sought a vote, but that could change as the regulator takes up matters besides broadband, they said. Only the MPAA seems to be seeking action soon on the issue, an official said. A FCC spokeswoman declined to comment.

Among those that think the FCC has enough documentation to act are DirecTV and the NCTA, which support the waiver request. “We do think the record on SOC is complete and hope for action on the matter soon,” said an NCTA spokesman. The commission seems to have all the information it needs to make a decision, said Vice President Stacy Fuller of DirecTV. “We're happy to talk to the commissioners when and if they look at the waiver request.” To the MPAA, “there is a very complete record that is before the commission,” Executive Vice President Michael O'Leary said. “I don’t feel there is any point for us to make that we haven’t made. We will work to get it approved whether that happens next week or that happens two months from now or three months from now.”

Docket 08-82 has “been open for a long time,” said CEA Vice President Jamie Hedlund. “There’s plenty in the record. We would be happier if there was outright denial. But if they don’t act on it that’s OK, too.” Public Knowledge, which opposes a waiver, ‘isn’t “asking for this to be decided now,” President Gigi Sohn said. “If the FCC needs to take more time, that would be fine with us. Given that this is a data-driven commission, the MPAA has provided not one speck, not even a pinhead, of information that they need this.”

Waiver opponents contend that studios can distribute films to pay-TV companies earlier than they're released now and also before they go on DVD without encrypting content. They pointed to smaller film distributors, including IFC Films and media billionaire Mark Cuban’s company, that send movies to cable providers and satellite operators long before they go on DVD without encryption, using existing technology like on-demand video. MPAA executives said that won’t work for major studios, where there’s a high risk of piracy without the use of selectable output controls for encryption.

“If they get this waiver, it will be a precedent they will use to try to lock down everything they consider high- value content,” Sohn said. “First it’s going to be movies. Next it’s going to be sports. Next it’s going to be sitcoms.” The real motive of the MPAA is to “shut the analog hole down, which is the last place any sort of device innovation is going on,” she added, referring to analog inputs on devices including TV sets. “They could make this content available for us tomorrow. … What Hollywood wants is a hook into devices.” Under the MPAA’s proposal, older HDTVs without digital outputs for HDMI cables couldn’t get the encrypted content, both sides agree. CEA’s “conservative” estimate is that there are 20 million such HDTVs, and many more that already use their only digital output for other uses, Hedlund said. Even with selectable output controls in use, VoD and pay-per-view services will work with any HDTV, O'Leary noted.

The CEA and Public Knowledge contend that pay-TV operators have been required by the six major studios that belong to the MPAA to agree to use the controls in order to get movies earlier. “What they're being told is if they want to show the content, they have to support” the request, Hedlund said. “More content is always better, but we reject the premise that they need to technologically disable lawful features of CE devices to make that content available. The infringement that happens -- it happens through camcording. They just haven’t shown that there is any threat of piracy or massive infringement through analog components.” The movie industry is “basically using this petition to browbeat cable operators and satellite operators that ‘we will not close this window for you unless you use selectable output control,'” Sohn said.

Adding viewing choices for viewers, as the use of the controls would allow, “is exactly the thing that answers our critics when they say we do not respond to consumer demand,” O'Leary said. “This criticism leaves us bewildered,” because some opponents “also criticize us for not getting content to consumers in different ways,” he said. Selectable output control technology is “becoming the market standard in terms of security” and movies are “most vulnerable to theft” right when they come out, O'Leary said. “We're getting to the point where HDMI is becoming sort of a market standard, and it’s going to become what everybody has.”

Cable and satellite executives say their customers will benefit from use of the controls. Approving the waiver will “give our subscribers access to new services that they don’t currently have” and will “help competition,” DirecTV’s Fuller said. Using the controls will provide “consumers with an option to view video that they can’t currently,” the NCTA spokesman said. “It’s clear that delivering high-value content has to be done properly or the system that produces the content will not be able to survive financially.”

Using the controls “serves no purpose whatsoever,” Cuban said. “We hate selectable output control.” He doesn’t want any copy protection on movies to or from pay-TV companies, Cuban said. “In a TV Everywhere universe, they just act to confuse customers and act as a sales deterrent in a universe where consumers want to watch the content they have purchased on whatever devices they own.”