FCC's Broadcast Flag Overturned

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A federal appeals court struck down the Federal Communications Commission's controversial broadcast flag mandate today, ruling unanimously that the FCC acted outside the scope of its authority when it adopted broadcast flag regulations.

The FCC regulations stated that a flag should be attached to "over-the-air" digital content--both network and local station programs, such as movies or prime-time series. Any device with a digital TV tuner can grab that content, whether it comes over an antenna or through a cable or satellite set-top box. The flag, basically a piece of code, was to have traveled with any show that the broadcaster wanted to protect.

Under the regulations, new consumer electronics devices--including tuner cards for computers--that receive digital TV signals were to have shipped with the ability to recognize the flag and to respect its copy restrictions.

"This is a huge victory on a couple levels," says Ren Bucholz, the Electronic Frontier Foundation's policy coordinator for the Americas. "The court kind of rebuked the FCC for overstepping its bounds... We're ecstatic that the courts had such wonderful language in this decision and that it was a unanimous decision."

The ruling by the U.S. District Court of Appeals for the District of Columbia Circuit came in a case brought by the American Library Association, the Electronic Frontier Foundation, and Public Knowledge. Set to take effect this July, the broadcast flag would have mandated that any device capable of receiving a digital TV signal would have to respect a flag that would limit your ability to record and copy that program. Read the full PDF of the ruling here.

"This is definitely a blow to broadcasters as far as determining what is done with digital content once it is given to the consumers," says Michelle Abraham, principal analyst with In-Stat.

A spokesman for the FCC said the agency had no comment on the ruling.

Appeal Looks Unlikely

With the broadcast flag out of commission for the moment, the FCC and the broadcast industry have several options: The FCC could appeal or the broadcasters and content owners pushing for the flag could ask Congress to mandate copy protection technology with a new law or to delegate that power to the FCC.

"This is three appeals court judges saying very unambiguously that the FCC doesn't have authority here," says Bucholz. "So the decision to appeal should be a tough call for the FCC."

A statement released by the National Association of Broadcasters also seemed to point towards a legislative approach. In the statement, Edward R. Fritts, NAB chief executive officer, said: "We will work with Congress to authorize implementation of a broadcast flag that preserves the uniquely American system of free, local television."

Fritts's statement also alluded to the fear among broadcasters that Hollywood would stop licensing major movies to them. "Without a 'broadcast flag'," Fritts said, "consumers may lose access to the very best programming offered on local television."

Technological Impact

Whether content will be flagged or not, consumer electronics manufacturers are still producing hardware that respects it. According to In-Stat analyst Abraham, "the design cycles can be as little as 3 months on a DVD player, but on products like a TV set, it's 18 months or so, so many have already designed their products to meet the flag requirement they expected in 2005."

But Jeff Joseph, vice president of communications for the Consumer Electronics Association, said that the flag-equipped hardware arriving in July wouldn't have much of an impact on the consumer. "Every major manufacturer was in line to comply with the law, so they're definitely shipping product. But [the flag complaint hardware] is now just something that's there, and you won't even notice it's there."

Joseph points out that the ruling could have its greatest impact on the area of innovation. "[The ruling states that] for the FCC to claim jurisdiction to regulate a specific product, they have to demonstrate there's a very specific and compelling interest and that the regulation itself must be very narrowly focused," Joseph said. "If that's the case, it's a very important ruling for innovators, for manufacturers, and ultimately for consumers."

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