WASHINGTON -- In a blow to the entertainment industry, a federal appeals court on Friday found that federal regulators overstepped their authority by requiring consumer-electronics manufacturers to help restrict digital home recording.
The U.S. Court of Appeals for the District of Columbia reversed a Federal Communications Commission order that required makers of consumer-electronics devices capable of receiving broadcast digital TV signals to recognize a "broadcast flag," which is code that allows content owners to place limits on redistribution of digital content streams. The rule was to apply to devices manufactured on or after July 1, 2005.
Specifically, the court admonished the FCC for exceeding what's known as its "ancillary authority" over some reception devices (consumer-electronics products) by trying to regulate a function not directly related to the actual transmissions themselves.
"In other words, the Flag Order imposes regulations on devices that receive communications after those communications have occurred; it does not regulate the communications themselves," the court stated (.pdf). "Because the demodulator products are not engaged in 'communication by wire or radio' when they are subject to regulation under the Flag Order, the Commission plainly exceeded the scope of its general jurisdictional grant."
Public-interest groups, which opposed the original FCC order as unreasonably restricting fair-use rights, were beaming on Friday.
"It clearly was a slam dunk," said Gigi Sohn, president of public-interest advocacy group Public Knowledge.
Sohn said the decision should also help rein in the FCC, which she claimed has been exceeding its authority on matters involving new technologies.
"This case is about much more than the broadcast flag," she said. "This case is about ... the power of the FCC over the internet and associated technologies."
Mike Godwin, Public Knowledge's senior technology counsel, said the FCC's broadcast-flag rules were always "a Rube Goldberg scheme. It's difficult to overstate how much it overreaches."
For example, according to the FCC rules, consumers could make personal copies of shows but couldn't send them to other people through peer-to-peer networks on the internet.
But Godwin said the FCC's language is "difficult to translate into the way technology works" and would force manufacturers to sell "constrained devices" that could potentially make it difficult for consumers to make even personal copies of shows -- much less redistribute them.
The FCC originally adopted the broadcast-flag order under pressure from Viacom and other broadcasters, which are worried about unfettered distribution of high-quality digital programming -- especially HDTV content -- over the internet.
On Friday, broadcasters vowed to take their fight to Congress and push for broadcast-flag legislation that "preserves the uniquely American system of free, local television," said Edward Fritts, president and CEO of the National Association of Broadcasters.
"Without a broadcast flag, consumers may lose access to the very best programming offered on local television," Fritts said. "This remedy is designed to protect against unauthorized, indiscriminate redistribution of programming over the internet."
Groups opposed to the broadcast flag are planning a counteroffensive on Capitol Hill.
"I look forward to Congress hearing the public-interest side of the debate," said Fred Von Lohmann, an attorney with the Electronic Frontier Foundation. "A host of public-interest voices were not heard in this process, and we look forward to them being heard now."
Lawmakers are already discussing digital television legislation that would set a "hard date" for broadcasters to give back their analog spectrum so it can be auctioned off for next-generation wireless services.
Gene Kimmelman, co-director of Consumers Union in Washington, predicted that the broadcast industry will try to use the court's decision on Friday as yet another excuse to delay the digital TV transition.
"This will become front and center in the DTV-transition legislation," he said. "Obviously, the broadcast industry will claim that they can't move to digital without the protection of their products."
Indeed, in the lead-up to the FCC's original 2003 order, Viacom actually threatened to stop transmitting CBS television network shows in HDTV if the FCC didn't mandate broadcast-flag protections.
And on Friday, Motion Picture Association of America President and CEO Dan Glickman said the ruling "could create a digital television divide by slowing or eliminating access to high-quality digital programming for some consumers.... If the broadcast flag cannot be used, program providers will have to weigh whether the risk of theft is too great over free, off-air broadcasting and could limit such high-quality programming to only cable, satellite and other more secure delivery systems."
Others, however, said that Friday's decision will have zero effect.
"This ruling will have no impact on the nation's successful, ongoing transition to DTV," insisted Gary Shapiro, president of the Consumer Electronics Association.
Nonetheless, Shapiro called on lawmakers to "ensure a consumer-friendly approach to the (DTV) transition, specifically setting a hard date for ending analog television signals."
