By Jeffrey Krauss,
Innocent Bystander
and President of Telecommunications and Technology Policy
The first round of comments has come in to the FCC in response to the "plug-and-play" agreement between the cable industry and the consumer electronics industry. And the comments make it clear that the cable industry is caught in the middle, between the movie industry, and the consumer electronics and computer industries.

The most controversial areas of the agreement deal with copy protection over an analog interface, including selectable output control and image constraint (or "down-resolution"), and whether the FCC even has jurisdiction over this area.

"Selectable output control" is shorthand for the ability of the content provider to control whether a particular program is permitted to be carried from one consumer device to another over a particular interface. The particular interface of concern is the wideband analog component interface. Unlike the digital 1394 and DVI interfaces, there is no accepted means to control copying of a program that traverses the wideband analog interface. The issue is whether the cable operator (or DBS operator) will be allowed to remotely control a set-top box or cable-ready DTV receiver so as to shut down the analog interface when certain high-value programs are being received.

The agreement says that selectable output control will be prohibited in cable boxes and cable-ready receivers, but only if it is also prohibited in DBS receivers. Otherwise, if DBS operators can shut down the analog interfaces from DBS receivers, there will be some valuable programming that Hollywood will sell to DBS in an earlier exhibition window compared with cable. Because there is no copy protection method defined for the analog interface, Hollywood would be assured that DBS subscribers could not make or redistribute copies of first-run movies, but would not have that assurance with cable subscribers.

While the plug-and-play agreement supports the prohibition on selectable output control, the comments of the Motion Picture Association of America oppose it. The MPAA evidently already has private agreements in place with DirecTV and EchoStar to control the analog output of DBS receivers.

This is a serious issue for the consumer electronics industry, because it has sold around four million HDTV displays that have only a wideband analog interface, not a digital interface. Consumers bought these displays initially to watch DVD movies. In the future, these consumers will hook up the displays to HD-capable cable boxes. The consequence of selectable output control is that the display might "go dark" when certain first-run movies are carried.

While the MPAA wants the ability to control the analog interface by selectively turning it off, it long ago recognized the consumer unfriendliness of that approach, and proposed image constraint, or "down-resolution," as a less drastic alternative. The analog interface would still work, but the picture carried on it would no longer be high resolution. The plug-and-play agreement leaves it up to the FCC to decide whether image constraint should be permitted for high-value (VOD) programming. (For over-the-air broadcasting, the agreement says that it should not be permitted.)

The consumer electronics comments are strongly against image constraint, even for high value programming. They say that the early adopters of HD displays would be unfairly penalized. The MPAA comments are strongly in favor of allowing image constraint. They say that the decrease in resolution would be imperceptible on existing HD displays. The cable industry comments lay out both sides of the argument, and insist that whatever the FCC decides should be required of DBS as well as cable.

Moreover, the MPAA believes that the FCC has no authority to adopt the regulations requested by the CE and cable industries in the plug-and-play agreement. The proposed regulations would apply to all multichannel video program suppliers, DBS as well as cable, and they would impose copy protection rules on all receivers and set-top boxes. The MPAA argues that these regulations would limit its ability to protect its property rights in its movies. It argues that, while the FCC has authority to regulate content distribution mechanisms, it does not have authority to regulate the rights of content owners and their ability to protect their rights.

Meanwhile, the computer industry is worried that the plug-and-play agreement applies only to unidirectional devices, but computers that have modems are inherently bi-directional devices. It complains that the agreement might not allow a cable subscriber to watch movies on a computer. It complains that the delivery of movies over the Internet, using cable modems, might be prohibited. It complains that it didn't have a seat at the negotiating table. And of course, the industry is right on all accounts. But the threat of unrestricted file sharing a la Napster and Kazaa is now well appreciated.

Maybe the FCC will adopt the proposed rules. Maybe there will be broader negotiations that include the MPAA and the DBS industry, although that strikes me as unlikely to achieve consensus.

One thing is clear. The cable industry feels strongly about its competitive position with respect to DBS, and the agreement will fall apart if the FCC declines to impose the same requirements on the DBS industry as the cable industry has agreed to.

Have a comment? Contact Jeff via e-mail at: