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MEMORY LANE: A copycat development

Sun, 08/31/2008 - 8:15pm
Stewart Schley, Media & technology writer, Englewood, Colo.

‘Centralized network DVR is a better engineering solution...’ – Britt

During Time Warner Cable’s second-quarter earnings conference call, President and CEO Glenn Britt was presented with a puzzling question: how could Time Warner Cable favor the idea of a “network DVR” – a centralized digital video Stewart Schleyrecorder shared by cable customers – when one of the company’s corporate cousins, Turner Broadcasting System, had challenged the technology in a lawsuit? Was one Time Warner Inc. affiliate championing a technology that another unit wanted to quash?

Hardly, said Britt. He said Turner’s Cartoon Network and other programmers merely are looking to the courts for guidance on how copyright laws apply to the novel shared DVR idea.

If it turns out cable operators employing network DVR must obtain licensing agreements for content that’s stored on the shared system, so be it, Britt said. That’s the approach TWC has adopted for its “Start Over” on-demand TV service.

On the other hand, if courts determine that network DVRs fall under the same copyright umbrella that allows individuals to record and watch TV shows for their personal use – a derivation of the U.S. Supreme Court’s 1984 “Betamax Decision” – then TWC will act accordingly, Britt said. “There really isn’t any particular conflict on this issue,” he said.

Renewed interest in the legality of network DVR technology springs from a ruling by the U.S. Court of Appeals for the Second Circuit that Cablevision Systems Corp.’s network DVR recording system should be accorded the same copyright treatment that applies to DVRs inside the home. Turner Broadcasting’s Cartoon Network had challenged Cablevision, winning a U.S. District Court ruling that proclaimed the remote-storage DVR approach violated U.S. copyright law. The circuit court’s ruling overturns that original decision and is subject to appeal to the U.S. Supreme Court, where it almost certainly is headed.

The seeming conundrum presented to Britt wasn’t new. When DVRs first entered the U.S. television scene, they were greeted with one of the all-time ironies of the media business: content companies both invested in upstart DVR companies and challenged in court some of the underlying technologies that made them popular.

It was a wild time. Personal digital video recording technology was introduced commercially in March 1999, when start-up developers TiVo Inc. and Replay Networks Inc. began selling “personal video recorders.” Sensing something big, or possibly something scary, content companies circled the category immediately. In July 1999, Walt Disney Co., CBS, Comcast, Discovery Communications and Liberty Media Corp. invested money in the barely-born TiVo, which would end the year with just $223,000 in revenue. Time Warner, Disney and NBC separately invested a total of $57 million in Replay Networks.

Then, in November 2001, a heavyweight contingent of entertainment companies – Disney, Time Warner, Viacom Inc., MGM, Fox and Universal – sued Replay Networks, charging that features of the company’s Replay 400 PVR violated copyright law.

The programmers weren’t looking to quash a category in which several had invested millions of dollars. But they were looking to understand the legal boundaries of a technology that seemed to rip control of television out of the hands of programmers and put it in the hands of viewers.

Copyright law, a mutating organism by any measure, is accustomed to regular probing by entrenched interests that can’t exactly figure out where new technologies, ranging from high-speed paper copiers to Internet file-sharing protocols, fit in.

The Replay case provided some guidance about how far technology developers can go before inflaming the ire of content providers – and reaching beyond permissible application of copyright law. Replay and its successor Sonicblue settled the litigation by removing from their DVRs a “commercial advance” feature and Web file-sharing functionality the plaintiffs specifically had challenged.

But as everyone knows, the broader, fundamental functionality of DVR technology remains perfectly acceptable under modern interpretation of copyright law. Today, 25 percent of U.S. households use a DVR.

Should the network DVR concept withstand any forthcoming legal challenges, it will advance the forward march of personal video recording. But programmers ought not to be blamed for challenging the technology in court. In fact, it’s their obligation to demand that the legal system declare what’s permissible and what isn’t.

The goal is to figure out the rules of the game. When they’re established, industry participants can take whatever risks they wish. TWC already has declared its intent. “We’ve said for a long time that centralized network DVR is a better engineering solution than having hard drives all over everybody’s home,” said Britt. “It’s almost self-evident from a technical sense. If this case is upheld, we will deploy that.”

stewart@stewartschley.com

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