Monday, April 15, 2002
Fast Internet plan could trample consumer rights
By GREG WRIGHT
Gannett News Service
WASHINGTON — Sen. Ernest Hollings has a bill he says will stop rampant piracy of music and movies on the Web and encourage American computer users to give up pokey dial-up modems for high-speed Internet connections.
But critics say the South Carolina Democrat's Consumer Broadband and Digital Television Act stomps on consumer rights. The bill calls for built-in copyright protection technology in most new electronics.
This technology would block consumers from using computers to copy songs from CDs and sharing them with others on the Internet, critics said. It also would prevent them from transferring songs from their computer music collections to portable MP3 music players or recording custom CDs and cassettes.
According to Hollings, security hardware in electronic devices would keep consumers honest and make the entertainment industry less worried about piracy. As a result, the industry would be more willing to offer pay-to-download movies and exclusive music deals directly over the Web, and more consumers would get fast Internet connections so they could download quickly.
Only 10 percent of American households — about 10 million — have high-speed Internet, although cable and telephone companies offer the service in 80 percent of the United States, according to Jupiter Media Metrix in New York City.
“By unleashing an avalanche of digital content on broadband Internet connections as well as over the digital broadcast airwaves, we can change this dynamic and give consumers a reason to buy new consumer electronics and information technology products,” Hollings said.
Hollings' introduced his bill March 21, a few days before Congress left on a two-week break. It already is raising a storm of protest from some lawmakers, electronics companies, and consumers. Sen. Ted Stevens, R-Alaska, and four other senators endorse the bill, but Senate Judiciary Committee Chairman Patrick Leahy, D-Vt., has concerns the measure would violate consumers' right to freely use their electronic gear.
More than 1,300 consumers sent letters and e-mails to Leahy's committee, with some demanding he block Hollings' bill. The Consumer Electronics Association, which represents companies such as Sony Electronics and Toshiba America Consumer Products, said the measure could hurt manufacturers because shoppers would not buy electronics that would limit their freedom of use.
In fact, some accuse Hollings, chairman of the Senate Commerce, Science and Transportation Committee, of using the bill to help the entertainment industry recoup money it lost from rampant movie and music piracy over the Internet. Entertainment giants such as AOL Time Warner and the Walt Disney Co. have contributed more than $260,000 to Hollings' re-election campaign.
Hollings denied he is a patsy of the industry and said his legislation would be effective.
“Anybody who knows Senator Hollings knows he is an independent operator,” said Hollings' spokesman, Andy Davis.
Internet piracy costs music labels and movie studios billions of dollars a year in lost sales. More than 350,000 movies are downloaded free off the Web every day, said Rich Taylor, Motion Picture Industry Association of America spokesman. These include ones still in theaters or not yet released on video or DVD, such as “Lord of the Rings: Fellowship of the Ring.”
American consumers also are flocking to file-sharing Web sites such as MusicCity and KaZaA where they can download free songs, software and movies. In March, 3.4 million Americans went to KaZaA for freebies, double the number who did just six months earlier, according to Nielsen/NetRatings in Milpitas, Calif.
Increasingly popular computer accessories, such as CD and DVD “burners” or recorders, also make it easier for consumers to take free material off the Web and make custom DVD movies and music CDs.
Hollings' bill requires the electronics and entertainment industries and consumer groups to devise standard copyright protection technology in one year. If talks fail, the Federal Communications Commission would set the standard.
This technology might include putting special digital coding on CDs and DVDs to prevent them from being played on electronics without security chips.
“I think (Hollings) is serious about the bill. I don't think he has another motive,” said Mitch Glazier, a senior vice president at the Recording Industry Association of America. “What it contemplates is getting the private industry together to negotiate.”
But using technology to lock up digital music and movies will not stop piracy, said Lisa Allen, a telecommunications analyst at Forrester Research in Cambridge, Mass. Savvy techies already cracked coding that prevents consumers from copying DVDs, and a determined hacker probably would figure out a way to get around security hardware.
If Hollings' bill does become law, it likely would be challenged in court because it would change drastically the way people use electronics, she said.
If the bill fails, it would join the stalled Tauzin-Dingell bill, which would have promoted high-speed Internet deployment by deregulating the telecommunications market. Tauzin-Dingell would let large regional phone companies such as BellSouth monopolize the broadband market, critics charged.
“Personally, I don't think (Hollings' bill) stands a snowball's chance in hell,” said Bill Evans, a spokesman for Boycott Recording Industry Association of America, a Web site that accuses music labels of pushing Hollings' bill to control how music is distributed in America.
Instead of pushing Hollings' bill, the entertainment industry must decide what digital content they want consumers to use freely and what products they want to charge for on the Web, Allen said.
If the industry offered compelling content on the Internet, consumers would be willing to pay for it, analysts said.
“That's the beauty of a market economy,” said Michael Bracy, spokesman for the Future of Music Coalition. “You have to find the sweet spot between service and what consumers want.”
At least one music lover, Lyle Bickley of Mountain View, Calif., agreed. Bickley is an intellectual property consultant, so he knows the problems companies face when their software or music is pirated.
Perhaps legislation should address this problem, he said.
But Bickley, who is in his 60s, said technology should not stop him from using his computer to copy the jazz, pop and country CDs he purchased so he can have a back-up to play on his car stereo.
“There needs to be balance,” he said.
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