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CONTENT PROTECTION IN THE DIGITAL AGE:

THE BROADCAST FLAG, HIGH-DEFINITION

RADIO, AND THE ANALOG HOLE

HEARING

BEFORE THE

SUBCOMMITTEE ON COURTS, THE INTERNET, 

AND INTELLECTUAL PROPERTY

OF THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES

ONE HUNDRED NINTH CONGRESS

FIRST SESSION

NOVEMBER 3, 2005

Serial No. 109–80

Printed for the use of the Committee on the Judiciary

(

Available via the World Wide Web: http://judiciary.house.gov 

(II)

COMMITTEE ON THE JUDICIARY 

F. JAMES SENSENBRENNER, JR., Wisconsin, Chairman 

HENRY J. HYDE, Illinois 

HOWARD COBLE, North Carolina 

LAMAR SMITH, Texas 

ELTON GALLEGLY, California 

BOB GOODLATTE, Virginia 

STEVE CHABOT, Ohio 

DANIEL E. LUNGREN, California 

WILLIAM L. JENKINS, Tennessee 

CHRIS CANNON, Utah 

SPENCER BACHUS, Alabama 

BOB INGLIS, South Carolina 

JOHN N. HOSTETTLER, Indiana 

MARK GREEN, Wisconsin 

RIC KELLER, Florida 

DARRELL ISSA, California 

JEFF FLAKE, Arizona 

MIKE PENCE, Indiana 

J. RANDY FORBES, Virginia 

STEVE KING, Iowa 

TOM FEENEY, Florida 

TRENT FRANKS, Arizona 

LOUIE GOHMERT, Texas 

JOHN CONYERS, JR., Michigan 

HOWARD L. BERMAN, California 

RICK BOUCHER, Virginia 

JERROLD NADLER, New York 

ROBERT C. SCOTT, Virginia 

MELVIN L. WATT, North Carolina 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

MAXINE WATERS, California 

MARTIN T. MEEHAN, Massachusetts 

WILLIAM D. DELAHUNT, Massachusetts 

ROBERT WEXLER, Florida 

ANTHONY D. WEINER, New York 

ADAM B. SCHIFF, California 

LINDA T. SA ́ NCHEZ, California 

CHRIS VAN HOLLEN, Maryland 

DEBBIE WASSERMAN SCHULTZ, Florida

PHILIP G. KIKO, General Counsel-Chief of Staff 

PERRY H. APELBAUM, Minority Chief Counsel 

SUBCOMMITTEE ON COURTS, THE INTERNET, AND INTELLECTUAL PROPERTY

LAMAR SMITH, Texas, Chairman

HENRY J. HYDE, Illinois 

ELTON GALLEGLY, California 

BOB GOODLATTE, Virginia 

WILLIAM L. JENKINS, Tennessee 

SPENCER BACHUS, Alabama 

BOB INGLIS, South Carolina 

RIC KELLER, Florida 

DARRELL ISSA, California 

CHRIS CANNON, Utah 

MIKE PENCE, Indiana 

J. RANDY FORBES, Virginia 

HOWARD L. BERMAN, California 

JOHN CONYERS, JR., Michigan 

RICK BOUCHER, Virginia 

ZOE LOFGREN, California 

MAXINE WATERS, California 

MARTIN T. MEEHAN, Massachusetts 

ROBERT WEXLER, Florida 

ANTHONY D. WEINER, New York 

ADAM B. SCHIFF, California 

LINDA T. SA ́ NCHEZ, California

BLAINE MERRITT, Chief Counsel 

DAVID WHITNEY, Counsel 

JOE KEELEY, Counsel 

RYAN VISCO, Counsel 

SHANNA WINTERS, Minority Counsel 

(III)

C O N T E N T S 

NOVEMBER 3, 2005

OPENING STATEMENT 

Page 

The Honorable Lamar Smith, a Representative in Congress from the State 

of Texas, and Chairman, Subcommittee on Courts, the Internet, and Intellectual Property .................................................................................................... 1

The Honorable Howard L. Berman, a Representative in Congress from the 

State of California, and Ranking Member, Subcommittee on Courts, the 

Internet, and Intellectual Property .................................................................... 4

WITNESSES 

The Honorable Dan Glickman, Chairman and Chief Executive Officer, Motion 

Picture Association of America 

Oral Testimony ..................................................................................................... 6

Prepared Statement ............................................................................................. 8

Mr. Mitch Bainwol, Chairman and Chief Executive Officer, Recording Industry Association of America 

Oral Testimony ..................................................................................................... 11

Prepared Statement ............................................................................................. 14

Ms. Gigi B. Sohn, President, Public Knowledge 

Oral Testimony ..................................................................................................... 21

Prepared Statement ............................................................................................. 23

Mr. Michael Petricone, Vice President of Government Affairs, Consumer Electronics Association 

Oral Testimony ..................................................................................................... 33

Prepared Statement ............................................................................................. 36

APPENDIX 

MATERIAL SUBMITTED FOR THE HEARING RECORD

Statement of the Honorable Howard Berman, a Representative in Congres 

from the State of California, and Ranking Member, Subcommittee on 

Courts, the Internet, and Intellectual Property ................................................ 73

Statement of the Honorable John Conyers, Jr., a Representative in Congress 

from the State of Michigan .................................................................................. 74

Statement of the Honorable Adam Schiff, a Representative in Congress from 

the State of California ......................................................................................... 75

Letter from Fred von Lohmann, Senior Staff Attorney for Intellectual Property, Electronic Frontier Foundation .................................................................. 77

Statement of Broadcast Music, Inc. ....................................................................... 78

Letter from Thomas M. Bracken, Vice President, Worldwide Marketing and 

Communications, Thomson Services SBU to the Honorable Lamar Smith, 

a Representative in Congress from the State of Texas, and Chairman, 

Subcommittee on Courts, the Internet, and Intellectual Property .................. 85

Statement of the National Association of Broadcasters ....................................... 86

American Library Association v. Federal Communications Commission, 406 

F.3d 689 ................................................................................................................ 89

Analog Hole Legislation Discussion Draft ............................................................. 123

Analog Hole Legislation Summary ......................................................................... 136

Analog Hole Legislation Table W ........................................................................... 140

Broadcast Flag Discussion Draft ............................................................................ 141

Page

IV

HD Radio Discussion Draft ..................................................................................... 142

(1)

CONTENT PROTECTION IN THE DIGITAL AGE: 

THE BROADCAST FLAG, HIGH-DEFINITION 

RADIO, AND THE ANALOG HOLE 

THURSDAY, NOVEMBER 3, 2005

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON COURTS, THE INTERNET,

AND INTELLECTUAL PROPERTY, 

COMMITTEE ON THE JUDICIARY, 

Washington, DC.

The Subcommittee met, pursuant to notice, at 2:49 p.m., in Room 

2141, Rayburn House Office Building, the Honorable Lamar Smith 

(Chair of the Subcommittee) presiding. 

Mr. SMITH. The Subcommittee on Courts, the Internet, and Intellectual Property will come to order. 

Let me make a couple of announcements at the outset. First of 

all, although maybe there is no need to say this, because we actually have a relatively good attendance already here, but there’s also 

a bill on the House floor over which the Judiciary Committee has 

jurisdiction, and a lot of Members are over on the House floor. In 

fact, I just came from the House floor, and I’d say at least half the 

IP Subcommittee is still waiting to be heard on this particular 

piece of legislation. So that’s where some folks are, but I do appreciate the attendance of the Members who are here already. 

The second is I am going to have to leave for about a half an 

hour or so after my opening statement. I don’t want anybody to 

take personal offense that I am leaving so quickly but hope to be 

back in time for the question period. And in my absence, Congressman Jenkins will be chairing the IP Subcommittee. 

I will recognize myself for an opening statement then recognize 

the Ranking Member. 

Today, the Subcommittee turns its attention to the role of content protection in digital media. The days of analog content are 

dwindling. From televisions to music collections, content is increasingly digital from its original creation to consumer playback. This 

digital conversion has assured the consumer that they will consistently see and hear a high quality version of a song or movie. 

However, creators and content owners have been concerned that 

the digital transition will result in higher levels of piracy. To reduce the amount of piracy, content owners have used a variety of 

content protection measures on DVDs and MP3 files. Although 

these measures do not stop or even hinder hard-core pirates, they 

do seem to keep basically honest people honest. The most popular 

content delivery mechanisms, free over the air radio and television 

2

broadcasts, are becoming digital by choice and by Government 

mandate. Content owners believe that this transition will result in 

more satisfied consumers but also that the transition will increase 

piracy unless new content protection measures are adopted. 

Content owners have put forward these proposals. One, the 

broadcast flag to limit redistribution of over the air digital television signals; two, a high-definition radio proposal to limit redistribution of over the air digital radio signals; and three, the analog 

hole proposal, to address the conversion of analog signals into digital formats. 

Clearly, the broadcast flag is the most well-known of the three 

proposals. This Committee is interested in hearing from proponents 

and opponents of all three of these proposals, not only to understand the need for them but also the differences in support for 

them. There are valid issues on both sides of the content protection 

debate. There are legitimate piracy concerns just as there are legitimate consumer concerns. Not everyone is a pirate, and not everyone has a right to acquire content in any way they like. 

To me, content owners deserve the right to market their creations and to profit from them. Consumers have the right to use 

content within the bounds of the law but not an unfettered right. 

We hope to accomplish several things in the hearing today: one, 

learn about the need for such proposals; two, learn about the support for such proposals; three, learn about the impact of the proposals; and finally, if possible, understand where common ground 

may exist. 

By unanimous consent, all Members’ opening statements will be 

made a part of the record, and the Gentleman from California, Mr. 

Berman, is recognized for his opening statement.

3


Intro1.eps
4

Mr. BERMAN. Well, thank you very much, Mr. Chairman, and 

thank you for holding this hearing. 

There have been many positive developments in the copyright 

context during the past year. The Family Entertainment Copyright 

Act was signed into law. Well, that’s mostly positive, but to provide 

better tools to prevent unauthorized distribution of content, the SuVerDate 0ct 09 2002 12:07 Mar 28, 2006 Jkt 000000 PO 00000 Frm 00008 Fmt 6633 Sfmt 6601 G:\WORK\COURTS\110305\24373.000 HJUD2 PsN: 24373

Intro2.eps
5

preme Court in the Grokster decision held that those that facilitate 

copyright infringement will be held directly accountable for their 

actions, and in response to judicial and legislative action, testimony 

at our hearing confirms that universities are adopting antipiracy 

technologies and instituting file sharing education programs that 

are greatly reducing the amount of illegal file sharing that takes 

place on campuses. 

But even with these many advances, the fact that mass, indiscriminate distribution of unauthorized copies is still an option allows piracy to remain a potent force. 

I’m not going to take the Subcommittee’s time to go over the statistics on the balance of payments and for core copyright industries, 

how important it is to our economy, how many jobs it has, and the 

threat of piracy to copyright creators. What I do believe many fail 

to realize is that strong protection of intellectual property is also 

necessary to benefit the consumer. Without adequate safeguards 

for content, it is easier for those in the creative chain to fall prey 

to piracy, and this jeopardizes the authors’ and creators’ ability to 

continue engaging in additional and new creative endeavors and 

content creation. It just seems to me that what it’s hard to penetrate into a lot of people’s consciousness is very obviously true: with 

fewer original projects in the end, the consumer will have less 

choices. 

Our goal is to provide consumers with a first rate, rich, abundant 

selection of music and movies in any format at any time and at any 

place. This kind of accessibility to music and movies, however, creates a tension for content owners, who though they want to widely 

distribute their works also need to protect the content of their 

works from unauthorized copying and distribution. 

Content owners do need to rely on the development of new and 

inventive technologies for distribution in order to provide the consumer with superior selection and accessibility. We must, therefore, 

be careful to not allow consumer considerations or considerations 

thrown out in the name of consumers and technology inventors to 

simply trump any concerns for creators and vice versa. There must 

be an appropriate balance which fosters creativity of new expression, innovation of new products, and accessibility to creative 

works. However, with the seemingly daily advances in technology, 

the much needed equilibrium is off kilter, leaning away from creators. 

This hearing is much different than previous discussions of piracy. Many of the issues surrounding peer-to-peer file sharing involve clearly bad actors. Here, I believe we are trying to bring the 

good guys into the process. We all generally agree that creators 

must be adequately compensated for the value of their works. I 

suppose the question today is how? Truly adequate compensation 

would probably involve providing a full performance right for sound 

recordings. Truly adequate protection measures would also prevent 

abusive use of technology when redistributing copies in both the 

digital or analog realm. 

The passage of time and design of new functionalities and devices has compelled us to reexamine the patchwork in the Copyright Act to determine whether some of the provisions need to be 

altered to address lack of suitable copy protection or the need for 

6

limitations on retransmission mechanisms. Ideally, content protection systems will be developed that are both secure for distribution 

but are not intrusive to the legitimate expectation of consumers. 

However, as technologies become more sophisticated and gain 

more interactive functionalities, this balance may have to be recalibrated. We also need, in this Committee, to engage additional partners outside this Committee to help us. 

The market is an exciting place right now. New technologies are 

emerging to help bring the consumer many additional options for 

how they receive their content. HD radio devices are being installed in cars. XM Satellite is a new service. Many television sets 

contain broadcast flag technology, and a number of players are currently in the market which can reconvert the analog signal to digital content. 

We must ensure that as each of these technologies is rolled out, 

they are complying with the spirit of the copyright law, which at 

its core demands rightful compensation and adequate protection for 

the creator. I look forward to hearing from this distinguished panel 

of witnesses, and I yield back, Mr. Chairman. 

Mr. JENKINS (presiding). We have on our panel of witnesses 

today the Hon. Dan Glickman, who is Chairman and Chief Executive Officer of the Motion Picture Association of America; Mr. Mitch 

Bainwol, who is Chairman and Chief Executive Officer of the Recording Industry Association of America; Gigi Sohn, who is President of Public Knowledge; and Mr. Michael Petricone, who is Vice 

President of Government Affairs, Consumer Electronics Association, and he is here on behalf of CEA and the Home Recording 

Rights Coalition. 

And we will hear from Mr. Glickman first. 

TESTIMONY OF THE HONORABLE DAN GLICKMAN, CHAIRMAN 

AND CHIEF EXECUTIVE OFFICER, MOTION PICTURE ASSOCIATION OF AMERICA 

Mr. GLICKMAN. Thank you, Mr. Chairman. If I may be indulged 

a moment of nostalgia, I was on this Committee, as you know, for 

about 11 years. I sat in Mr. Issa’s seat; I sat in Mr. Cannon’s seat. 

I didn’t probably fill those positions as greatly as they did. And I, 

of course, served with Mr. Berman for many years, and this is a 

terrific Committee. I’m looking at the pictures on the wall, and Mr. 

Hyde, Mr. Sensenbrenner, Mr. Rodino, and Mr. Brooks were all either my Chairman or Ranking Members during those years, so it 

is a great honor to be back here, back home. 

Mr. BERMAN. You weren’t around for Manny Seller? 

Mr. GLICKMAN. I look like I should have been. There is not much 

hair here. But no, I wasn’t. 

Let me just make a couple of comment. One is that as Mr. Berman indicated in his remarks, the content industries—music, movies, software, publishing and similar industries—are critically important to the future of America. They are one of the few industries 

that America still has an undisputed leadership role in the world, 

and they’re important in terms of job protection as well, and 

they’re an area where we have a balance of payments surplus. So 

underlying all of this is an important industry both for America as 

well as our leadership in the world. 

7

Number two, in this transformation to the digital world that we 

are in, there are gaps, there are holes that need to be filled. Otherwise, they present an enormous opportunity for massive amounts 

of piracy. And I think almost everybody here agrees that there are 

holes to be filled, and we’re here to try to fill, at least in my testimony, two of these holes. 

The first one is the broadcast flag, which refers to regulations already adopted by the FCC that enables owners of high value content broadcast by digital TV stations to prevent the indiscriminate 

redistribution of that material over the Internet. The ability to control such redistribution of satellite and cable programming already 

exists through contractual agreements. 

There is a gaping hole when you come to broadcast over the air 

television. Legislation is needed to allow the FCC, which has already approved these regs, to implement them and place free, offair broadcasters on a level playing field with cable and satellite distribution systems. 

The second issue is the analog hole. That refers to the problem 

created by the conversion of digital material protected by digital 

rights management systems to an analog format, which most of our 

television sets in this country are right now, and then back to digital. The process of this conversion process is to strip away the digital rights management protections, leaving the content in the clear 

and vulnerable to illicit reproduction and redistribution. 

Some consumer devices are being specifically designed to take 

advice of this analog hole, which impedes our ability to offer legitimate viewing choices and delays the digital transition. Legislation 

is needed to require that devices which convert analog material to 

a digital format recognize and respond to digital rights management information. 

The analog hole is like a car washer. But instead of washing off 

the dirt, it washes off all the content protections and then makes 

it vulnerable to massive infringement. And this is not an idle 

threat. Devices that can easily exploit the analog hole are already 

in the marketplace. So these are two of the items that I am talking 

about. Mr. Bainwol, of course, will have an additional item to talk 

about. 

The third item I want to mention is I think Congress needs to 

play a leadership role, and private industry will work together with 

the Congress to try to come up with some help in this area. The 

Government and the Congress has gotten involved in areas such as 

closed captioning, the V-chip, serial copy management, 

Macrovision, a whole variety of things where the standards were 

necessary to be set so that the marketplace could then work effectively. And I think that coming here and asking for Congressional 

help and leadership is something that has been done many, many 

times before, not to take advantage of the marketplace but to provide some clear rules. 

We do believe that the marketplace will ultimately determine the 

success of all of our products, but we want a free marketplace, not 

a black marketplace. And what’s happening with these unprotected 

areas is that we cannot participate fully in giving the consumers 

the access and the choices nor the work product that they need because a whole lot of the ability to do so is impeded by this gaping 

8

hole of unprotected content. So as we go into the digital era, we 

want to be able to provide that protection, which we think leads 

to common sense rules of the road, and that’s where we want to 

look for you in that regard. 

Finally, Mr. Chairman, we are in a period of amazing and rapid 

change, and I want to state that I believe our industry is a technological innovator, and we’re not only not scared of change; we’re 

leading the effort. We led the effort to create the DVD world, which 

has changed the way consumers watch movies and television. The 

IPod, MP3, all sorts of items that are out there have been the results of ours and related industries. 

And it’s not just delivery systems. Tomorrow, a movie opens 

called Chicken Little. Some of you or your kids or grandkids or 

maybe you personally will want to go see this movie, using a new 

form of digital content to create new three-dimensional images on 

the movie screen. I think of movies like Polar Express or Star 

Wars, where digital technology was created by our industry to give 

consumers a whole array of viewing entertainment and choices that 

they did not have before. And whatever we’ve done in the past, the 

future is just extraordinarily open to even much greater changes 

and improvements in what consumers will see. 

So our purpose in coming here is to say to you that we want to 

work together with you; we want to work together with our colleagues here at this table to come up with ways to fill this gap so 

that the digital content is adequately protected so that we can continue to offer these extraordinary opportunities for the American 

people to enjoy movies, television, movies, and other things, and 

thank you very much, Mr. Chairman. 

[The prepared statement of Mr. Glickman follows:]

PREPARED STATEMENT OF THE HONORABLE DAN GLICKMAN

Chairman Smith, Ranking Member Berman, members of the Subcommittee: 

On behalf of the member companies of the Motion Picture Association of America, 

I thank you for the opportunity to talk to you about the future of an important 

American industry as it transitions into the digital age. 

As a former member of the Judiciary Committee, I know what it is like to be on 

your side of the table. As members of this esteemed Committee, you all have to 

make important judgments about what the laws of the land should be. And sometimes, you have to make tough calls. 

Chairman Smith, you have called this hearing at a critical time for our industry, 

but also at a critical time for this nation. 

Protecting intellectual property will become a resounding theme for our economy 

in the decades to come. This nation will prosper or it will fail in large part by how 

we protect our nation’s greatest assets . . . the skill, ingenuity and creativity of our 

people. 

The American film industry, like all of the creative industries, combines capital 

and talent to produce intellectual property. It is not easy to create a movie. It requires lots of money, lots of skilled workers, and lots of hard work. In fact, four out 

of ten movies don’t make back their investment. So the movie industry is fraught 

with risk. Despite these hurdles, the American film industry is the most successful 

in the world. It is one of our most important exports. It is one of our best job creators. 

The member companies of the MPAA are excited about the future. They are working hard to make a successful transition to the digital world. They want people 

around the globe to see their product in a no-hassle, convenient and low cost way. 

But while the industry embraces the many opportunities of the future, it also 

faces the distressing reality of piracy. 

The pilfering of our films costs our industry approximately $3.5 billion dollars a 

year in hard goods piracy (DVD, VCD) alone. On the Internet front, it has been estiVerDate 0ct 09 2002 12:07 Mar 28, 2006 Jkt 000000 PO 00000 Frm 00012 Fmt 6633 Sfmt 6621 G:\WORK\COURTS\110305\24373.000 HJUD2 PsN: 24373
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mated that as much as two-thirds of Internet bandwidth in this country is consumed by peer-to-peer traffic, with much of that volume attributable to movie theft. 

And it is only getting worse. Pirating DVD’s is more lucrative than selling heroin 

or crack cocaine for many criminal gangs. New digital technology enables criminals 

to download movies, burn them onto DVD discs, and then sell them on the streets 

or through a global storefront on the Internet with amazing speed. 

The MPAA is doing its part to fight back. Using the legal tools that in many cases 

this Subcommittee fashioned, we work very effectively with the U.S. Department of 

Justice, the FBI, Customs and local law enforcement to crack down on these gangs. 

We also are providing more and more legal alternatives 

for on-line movies. We are working to help our schools teach kids that stealing 

on the Internet is as wrong as stealing from a store. We are investing in the future 

to find cutting-edge technologies that will get movies to consumers while protecting 

copyrights. And we are working with our colleagues in the consumer electronics, 

computer and online service provider industries on the development and implementation of digital rights management (‘‘DRM’’) technologies to offer consumers a wider 

array of choices for enjoying the content we produce. 

But commercial piracy is not the only challenge we face in the new digital environment. We also must develop secure delivery systems so we can offer consumers 

the viewing options they desire while maintaining a sound fiscal base to sustain our 

industry. We are embracing DRM technologies so that we can offer consumers more 

choices at a greater variety of price points: one consumer may want to purchase a 

permanent copy of a movie while another may want to watch it only once—and at 

a lower price. To sustain the viability of this array of different offers, however, we 

must be able to maintain the distinction among them. Thus, we need to provide 

technical safeguards to discourage, for example, the copying of a ‘‘view once’’ option 

that has been selected by a consumer. In using the phrase ‘‘technical safeguards’’

I do not mean to imply that we seek absolute protection against unauthorized use 

of our movies. We understand that committed pirates will break any security measures we can devise and these pirates will have to be dealt with by way of criminal 

and civil legal remedies. 

However, we can, and must, implement basic technological measures to delineate 

for consumers the differences among our various content offerings and to discourage 

what I call ‘‘casual misuse’’ of our intellectual property. At the end of the day, the 

economic impact of a thousand otherwise law abiding citizens making an extra copy 

of a movie they purchased and ‘‘sharing’’ it with a friend has the same impact as 

a single commercial pirate selling a thousand copies of a movie on a street corner. 

In many cases, the DVD being a prime example, we have worked with the technology companies to develop and implement secure delivery systems supported by 

technical measures and voluntary contractual relationships. However, there are 

some areas where private sector solutions alone will not work. That’s where we need 

your help. 

First, you can help us plug the analog hole. 

What is the analog hole? 

Let me try to explain it as simply as I can. 

While film content is increasingly arriving into American homes in protected digital form, such content must be converted into an analog format to be viewed on 

the overwhelming majority of television sets in U.S. households, which can only 

process and display an analog signal. When digital content protected by digital 

rights management technology is converted to analog form for viewing on existing 

analog television equipment, the content is stripped of all its protections. This analog content can then be redigitized ‘‘in the clear,’’ without any protections whatsoever. This redigitized and completely unprotected content can then be efficiently 

compressed, copied and redistributed without degradation. It can also readily be 

uploaded to the Internet for unauthorized copying and redistribution. Like a black 

hole, the analog hole sucks in all content protections, leading to two problems. First, 

it eliminates the ‘‘lines’’ or boundaries among the different viewing opportunities we 

are trying to bring to consumers and makes it difficult to sustain the choices for 

consumers that digital rights management technologies otherwise help facilitate. 

Second, it creates a significant loophole for our industry in the fight against piracy. 

This is not an idle concern. Already, several consumer electronics devices are 

being conceived and brought to market purely for the reason of exploiting the analog 

hole. Movie studios are actively engaged in developing and offering innovative new 

business models to give consumers greater flexibility and more choices for how and 

where they access and enjoy movies and television shows. All of these models depend, however, upon a secure environment which protects this high-value content 

from rampant theft and redistribution. Devices that permit exploitation of the anaVerDate 0ct 09 2002 12:07 Mar 28, 2006 Jkt 000000 PO 00000 Frm 00013 Fmt 6633 Sfmt 6621 G:\WORK\COURTS\110305\24373.000 HJUD2 PsN: 24373
10

log hole, whether by design or otherwise, undercut this framework and consequently 

limit the viewing choices that can be made available to consumers. 

Because of the ease with which it can be exploited, the analog hole creates a gaping hole in digital rights management protections, allowing high value content to 

be copied and re-transmitted without limit. Of particular significance is the fact that 

exploitation of the analog hole requires no act of circumvention nor any unauthorized circumvention devices prohibited by the Digital Millennium Copyright Act 

(DMCA.) Instead, the analog hole can be exploited solely through the use of general 

purpose home equipment. In some cases such equipment is specifically designed to 

permit people to take advantage of the analog hole to defeat digital rights management measures. In other cases, analog inputs and outputs serve a legitimate purpose and the analog hole is a byproduct. Closing the analog hole would place these 

analog devices on an equal footing with all-digital devices by maintaining the integrity of digital rights management measures. 

Legislation will be required to implement an analog hole solution to create a level 

playing field for device manufacturers. Legislation will help ensure that good actors 

are not disadvantaged by companies who do not play by the rules. Such legislation 

should be narrowly focused and targeted. 

The MPAA and its member companies have worked closely with representatives 

from the computer and consumer electronics industries to reach consensus on a 

technological solution for the analog hole. These talks have been productive and 

have shown positive movement. Virtually every major consumer electronics and information technology company as well as a number of self styled ‘‘consumer’’ groups, 

including the Electronic Frontier Foundation, participated in an Analog Conversion 

Working Group where a broad consensus was reached on the need to address the 

analog hole problem and on the attributes a solution should have. 

The discussion draft legislation released by the Subcommittee is consistent with 

that consensus. It provides for a robust analog rights signaling mechanism that does 

not interfere with a consumer’s ability to fully enjoy the content they receive. 

Known as ‘‘CGMS-A plus Veil,’’ Analog Copy Generation Management System 

(CGMS-A) coupled with the Veil Technologies Rights Assertion Mark provides a 

practical degree of protection from unauthorized reproduction and redistribution 

while not diminishing a consumer’s viewing experience. 

Second, Congress can help protect content by giving the Federal Communications 

Commission (FCC) authority to implement the broadcast flag regulations which it 

adopted over two years ago and that were to become effective last July. The marketplace has already anticipated that the broadcast flag will be required and many 

manufacturers of digital television devices are now producing equipment in compliance with the FCC broadcast flag regulations. Moreover, consumer equipment that 

renders high value cable and satellite programming will be required to prevent redistribution whether or not the FCC rules are reinstated. It is important to note 

that there has been no discernable consumer resistance to these broadcast flag compliant devices and no surge of consumer complaints. 

Why has most everyone, device manufacturers and consumers alike, accepted the 

broadcast flag? Because it makes eminent good sense. 

The broadcast flag protects free, over-the-air digital television programming from 

unauthorized redistribution over the Internet. It is the product of several years of 

negotiations among broadcasters, electronics manufacturers, computer technology 

and video content companies. 

The broadcast flag rule is targeted and narrowly focused on a single problem. The 

only activity affected by the broadcast flag is the indiscriminate redistribution of 

digital broadcast television content over the Internet. As long as one is not trying 

to redistribute flagged content over the Internet, a typical consumer will not know 

the broadcast flag exists. Under the rule adopted by the FCC, consumers are free 

to continue to time-shift over-the-air television. In fact, because the rule is targeted 

narrowly at unauthorized redistribution, and not consumer copying, it allows an unlimited number of copies to be made—even infringing ones—provided those copies 

are protected against further distribution over the Internet. Even Internet retransmission is not barred outright under the rule, provided it can be done in a way that 

protects against indiscriminate redistribution. Picture and sound quality are also 

unaffected. 

The protection provided by the broadcast flag will play an important role in successful transition to digital television. If program producers cannot be assured that 

programming licensed to broadcast television is protected as securely as programming licensed to cable and other subscription based outlets, these producers will inevitably move their programming over to such channels where protections are available through contractual arrangements. The broadcast flag is essential to a successVerDate 0ct 09 2002 12:07 Mar 28, 2006 Jkt 000000 PO 00000 Frm 00014 Fmt 6633 Sfmt 6621 G:\WORK\COURTS\110305\24373.000 HJUD2 PsN: 24373
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ful digital television transition and preservation of free, over-the-air digital television. 

It is essential that Congress act quickly to enact narrowly crafted legislation to 

reinstate the FCC’s Broadcast Flag ruling, and such legislation should become effective immediately. As stated above, broadcast flag compliant equipment is already 

being produced and is in the marketplace. Delay will materially worsen the legacy 

equipment problem and is completely unnecessary. 

I want to emphasize that both the Analog Hole and the Broadcast Flag have been 

the subject of intense scrutiny by technology and content communities, as well as 

other interested parties, in open forums consuming literally thousands of man-hours 

of discussion. It is a documented fact that there is broad consensus that these are 

issues that need to be addressed. There is also broad consensus on the nature of 

the solutions that should be considered. I believe the discussion draft legislation released earlier this week is fully consistent with that consensus and should be swiftly 

enacted. 

Let me add one cautionary note. While we strongly support legislation that will 

plug the analog hole and implement the broadcast flag, we cannot support legislation that will do that at the expense of the anti-circumvention provisions of the 

DMCA. I would submit that efforts to include HR 1201, which would, as a practical 

matter, repeal Section 1201 of the DMCA, would do much more harm than good. 

It has been suggested by members of another committee that attaching HR 1201 

to a broadcast flag would make a good compromise. In my view, that type of legislation would simply compromise efforts to fight piracy and hurt an important American industry. 

Chairman Smith, Ranking Member Berman, members of the Committee, I appreciate this opportunity to discuss these matters of concern to our industry and I look 

forward to answering any questions you may have regarding what I have just discussed.

Mr. JENKINS. Thank you, Mr. Glickman. 

Mr. Bainwol. 

TESTIMONY OF MITCH BAINWOL, CHAIRMAN AND CHIEF EXECUTIVE OFFICER, RECORDING INDUSTRY ASSOCIATION OF 

AMERICA 

Mr. BAINWOL. I’d like to thank the Subcommittee for this opportunity to testify. I come before you today as the CEO of the RIAA, 

but my testimony today reflects the breadth of the music community. 

Let me take a step back and provide some context. The sale of 

recorded music hit a high in 1999 before a variety of factors, chiefly, file sharing and unauthorized burning, triggered a massive 

slide. A recent study by Stan Liebowitz, a Texas economist, indicates that in the absence of file sharing, our revenues would have 

continued growing robustly. So our concern about digital theft isn’t 

academic, and it’s not paranoia. It’s grounded in the painful experience of the last 6 years. 

The Supreme Court’s Grokster decision unanimously certainly 

helped, but we need to go further. That decision is catalyzing a 

transformation among the major P2P players to go straight and 

legal or to go straight into the dustbin of history. But the Grokster 

ruling is only part of the answer. In order for us to dig out of the 

hole and grow again, we need policies to protect the integrity of the 

digital marketplace. 

And a key part of that is the emergence of digital radio across 

platforms. The laws for radio presumed a passive listening experience and did not anticipate radio services becoming download or on 

demand subscription services, but that’s what’s happening. 

In 2003, there were virtually no digital revenues. But now, we’re 

beginning to see significant revenue streams arise from download 

12

services like ITunes and Wal-Mart, from rental services like Rhapsody, Napster, and Yahoo, and from mobile music offerings, all of 

which will amount to billions of dollars by the end of this decade, 

that is, unless the emerging services, these services, are cannibalized by functionality that substitutes, substitutes for download 

sales and rentals without paying creators equivalently. 

Let me be clear: we are for technology; we are for cool devices; 

we’re for new business models and new functionality, but we are 

not for clever ways to bypass fair compensation for creators. We are 

not for the exploitation of loopholes to rig the competitive landscape against these new business models. Radio has been a passive 

listening experience. Sure, people taped off the radio; they did it 

independently; they did it manually. The quality stunk. If you 

wanted a good copy, you had to go buy one. The radio service didn’t 

provide the tool to automatically capture perfect quality songs and 

subsequently move them easily to play on your portable device on 

demand whenever and wherever you chose, until now. 

With the emerging transformation of digital radio over the air, 

on satellite, and on the Internet, we’re seeing new devices that go 

way beyond time shifting, beyond manual recording, and beyond 

current consumer expectations. These devices effectively provide 

ownership, and it sounds attractive, and it is, unless you’re a creator. 

Here’s what we’re not asking you to do: don’t stop or delay the 

rollout of digital over-the-air services. Don’t stop consumers from 

recording off the radio. Don’t stop time shifting, and don’t stop the 

invention of new recording features that allow a consumer to hit 

a record button when they hear a song they like. 

So what are we asking you to do? First, we urge this Committee 

to update section 114 to ensure parity for digital radio across all 

platforms: satellite, cable, and Internet. The law did not contemplate convergence. It creates arbitrary advantages between 

platforms, and it leaves creators holding the bag. 

Second, because over-the-air radio is not covered by 114, we ask 

that Congress grant authority to the FCC to also protect over-theair digital radio. I would like to submit a resolution from a broad 

music coalition calling on Congress to do just that. Both of these 

necessary steps are contained in the discussion draft that was circulated by your staff. We urge you to introduce and pass legislation 

that accomplishes these goals. 

I would like to mention one other very significant point in closing: many of our friends in the CE community, the technology and 

broadcast communities, have stressed the need for us to come together for a solution before we come to you, the Congress. But we 

have tried, and we continue to try. But these efforts have failed. 

The market, the market does not work. Remember, unlike the motion picture studios, we have a market failure, because we have no 

performance right, as Mr. Berman pointed out, for over-the-air 

radio, and we are subject to compulsory license over the other platforms. 

Motion picture studios and broadcasters on the video side could 

hold back programming until they were comfortable with the content protection. We don’t have that luxury. The digital marketplace 

offers enormous promise for fans, device manufacturers, broadVerDate 0ct 09 2002 12:07 Mar 28, 2006 Jkt 000000 PO 00000 Frm 00016 Fmt 6633 Sfmt 6601 G:\WORK\COURTS\110305\24373.000 HJUD2 PsN: 24373
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casters of all stripes, and creators. With your help, we can realize 

that promise. We are ready to go to work to get that job done 

quickly so devices get to market, but we want to make sure that 

creators get the compensation they deserve, that we deserve, at a 

time when we are struggling to create new art. 

Thank you again for this opportunity to testify. 

[The prepared statement of Mr. Bainwol follows:]

14

PREPARED STATEMENT OF MITCH BAINWOL


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Mr. JENKINS. Thank you, Mr. Bainwol. 

Ms. Sohn. 

TESTIMONY OF GIGI B. SOHN, PRESIDENT, PUBLIC 

KNOWLEDGE 

Ms. SOHN. Thank you, Mr. Chairman, Ranking Member Berman, 

and the Members of the Subcommittee for inviting me to testify 

today. For those of you who don’t know what Public Knowledge is, 

we are a nonprofit public organization that seeks to represent the 

public in debates over copyright law and communications policy. 

We are living in a time of great technological innovation and artistic abundance, and consumers, your constituents, are the beneficiaries. Consumers have never had so much choice, so much flexibility, and so much opportunity to become creators themselves. 

IPods and other MP3 players provide a fun and convenient way to 

listen to music, books, and pod casts. TiVO, ITV and Slingbox allow 

you to watch your favorite TV shows when and where you want. 

New services like satellite digital radio and digital broadcast radio 

are giving consumers more opportunities to hear the music they 

love and the news and information they desire. 

As the DTV transition kicks into high gear, we will be able to 

choose from a multiplicity of program streams of high definition 

news, sports, and entertainment. The opportunities for the content 

industry to profit from these new digital services are increasing 

every day. Sales of DVDs are generating enormous revenues. 

ITunes just announced in just a few short weeks, it has sold 1 million programs for use on its new video IPod. And Mr. Bainwol said 

yesterday in an interview that he estimates that legitimate online 

song purchases could supplant CD retail losses by 2007. 

As the content industry has ramped up its online delivery of content, it has been testing a variety of protection measures that provide both security for the industry and flexibility for consumers. 

Despite all this exciting activity, however, we are here today to discuss three draft bills that could bring this technological and artistic 

renaissance to a grinding halt. 

The first bill would reinstate the FCC’s vacated broadcast flag 

rule. This would give the agency unprecedented control over technological design. It would make them the arbiter of the rights of 

content owners and the public under copyright law. Ask yourselves: 

is it good policy to turn the Federal Communications Commission 

into the Federal Computer Commission or the Federal Copyright 

Commission? Should the FCC decide which technologies will succeed in the marketplace and which will fail? 

The flag scheme would prohibit lawful uses of content, not just 

indiscriminate redistribution, including use of broadcast TV excerpts online and distance learning; for example, the Parents’ Television Council, a TV watchdog, makes available clips of its favorite 

and least favorite TV shows on its Website. The flag scheme would 

prevent this way of educating parents about the shows their children watch. Nor could Members of Congress email broadcast TV 

news appearances to their home offices. Moreover, the flag scheme 

will cause great consumer inconvenience, confusion, and cost, because different approved technologies are not compatible with each 

other. 

22

We have similar concerns about the second draft bill, which 

would place the FCC in the position of mandating content protection for digital satellite and broadcast radio. This legislation would 

permit the FCC to extinguish the long-protected consumer right to 

record radio transmissions for personal use. Furthermore, because 

the draft bill would impose limits on digital broadcast radio technology that, unlike digital TV, consumers need not adopt, those 

limits may well kill this fledgling technology. Why would consumers buy an expensive new digital broadcast radio receiver when 

it would have less functionality than their analog receiver? 

Lastly, we must oppose the sweeping draft proposal to close the 

analog hole. Be assured there is no industry or other consensus on 

the CGMS-A plus veil technology mandated in the bill. Their prohibitions would require redesign of a whole range of currently legal 

consumer devices. Importantly, it would also restrict lawful uses of 

analog content. This is critical, because the content industry itself 

has touted the analog hole as a safety valve for making fair use 

of digital media products where the DMCA has rendered illegal the 

circumvention of technological locks. 

Should Congress close that hole without amending the DMCA to 

protect fair use, consumers’ rights to access digital copyrighted 

works would be eroded even further. For this reason, if Congress 

should move forward with any of these proposals, they must be 

considered in conjunction with H.R. 1201, which seeks to preserve 

consumers’ rights under the DMCA. 

Now, just because Public Knowledge opposes the three draft bills 

does not mean we oppose all content protection efforts. There are 

far better alternatives to the heavy-handed technology mandates 

proposed today. They include a multipronged approach of consumer 

education, enforcement of copyright laws, and use of technological 

tools and new business models developed in the marketplace. The 

recent Grokster decision and the passage of the Family Entertainment and Copyright Act, spearheaded by Mr. Smith, are just two 

of the several new tools that the content industry has at its disposal to protect content. 

Members of the Subcommittee, these proposals are controversial 

and do not reflect consensus. I am confident that after careful deliberation and with input from the public, you will conclude that 

the marketplace, not the Government, is the best arbiter of what 

technologies succeed or fail and that Congress, and not the FCC, 

is the correct arbiter of the balance between content protection and 

consumer rights. 

Thank you. 

[The prepared statement of Ms. Sohn follows:]

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PREPARED STATEMENT OF GIGI B. SOHN


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Mr. JENKINS. Thank you, ma’am. 

Mr. Petricone. 

TESTIMONY OF MICHAEL PETRICONE, VICE PRESIDENT OF 

GOVERNMENT AFFAIRS, CONSUMER ELECTRONICS ASSOCIATION 

Mr. PETRICONE. Good afternoon. On behalf of the Consumer Electronics Association and the Home Recording Rights Coalition, I appreciate the opportunity to appear today. 

Each proposal on today’s agenda addresses unrelated issues, and 

each carries different concerns for our industry. Although we have 

worked constructively with the content industry on past legislation, 

the proposals before you reflect no prior effort to achieve consensus. 

Indeed, I read two of these bills for the first time when I checked 

my email during halftime of Monday night’s football game. I received the third bill on Tuesday morning. 

First, the Broadcast Flag Authorization Act: this language is 

close to a reinstatement of what the FCC did in its order. We are 

concerned that it grants discretion to the FCC to change everything 

in the future. Also, we believe it is deficient in not addressing ways 

in which the flag could be misused. We urge the Committee to include narrow exceptions for local news and broadcast public affairs 

programming and allow schools and libraries to use broadcast excerpts for distance learning. 

If Congress is going to provide more protection to copyright holders, it should also safeguard the rights of consumers to enjoy works 

that they lawfully acquire. That is why should Congress move forward with any proposals discussed today, H.R. 1201 should be part 

of the package. 

Next, the Analog Content Protection Act: this draft is immensely 

broad, complicated, and confusing. After 48 hours, experts in our 

industry are still unsure of which products are covered and what 

key provisions mean. What is clear is that this bill would impose 

a massive Government design mandate on every product capable of 

digitizing analog video signals, not just PCs and televisions but 

those found on airplanes, automobiles, medical devices, and technical equipment. 

A key concern is that one of the required copy protection technologies is largely unknown as to its cost, operation, and licensing 

status. In addition, all key decisions will be left up to the Patent 

and Trademark Office. With due respect, it is unclear how the PTO 

could make these decisions or who would exercise oversight over its 

judgments. 

Regrettably, the analog hole bill is an incomprehensible and impractical proposal which the MPAA did not share with us, which 

I doubt not even Mr. Glickman can fully explain but which he 

would like you to adopt. We urge you to reject this half-baked proposal. 

I say regrettably, because the fact is that the CE industry has 

long been prepared to address the analog hole issue. It has worked 

with MPAA members toward consensus solutions. But without consensus from all affected industries in an open and fair process, we 

cannot support this legislation. 

34

Finally, the HD content protection act: let me start by expressing 

my disappointment that Mr. Bainwol would characterize consumers 

of radio as pirates. We cannot understand how he can say that ordinary consumers sitting in the privacy of their homes can use new 

radios to, quote, boldly engage in piracy with little fear of detection, 

unquote. 

As Mr. Bainwol is well aware, recording radio programs for later 

enjoyment is a legitimate fair use activity that Americans have engaged in for decades. For this reason, the proposal to lock down 

free over-the-air radio is especially pernicious. Unlike the video 

flag, this proposal is aimed at stopping private, noncommercial recording of lawfully acquired content. The only apparent way to accomplish this is through encryption. 

Please understand that the rollout of terrestrial digital radio is 

well underway. Over 500 stations are broadcasting digitally. Over 

25,000 radios will be on the market by year end with tens if not 

hundreds of thousands to follow in 2006. Since no encryption system currently exists, an encryption requirement would render both 

the transmission infrastructure and the initial radios obsolete, 

stopping the rollout of this exciting technology in its tracks. 

The satellite radio provision is equally damaging. This bill would 

destroy the utility of new consumer products that, like the VCR or 

the TiVO, will enhance Americans’ lives and broaden the market 

for entertainment programming. A TiVO customer can 

disaggregate recordings. Why can’t consumers wishing to record 

radio use similar technology? 

As you may know, XM and Sirius have announced new handheld 

devices that will allow their subscribers to enjoy music when they 

don’t have access to a satellite signal, such as while at work or on 

an airplane. These products will be fully compliant with the Audio 

Home Recording Act, on which royalties will be paid to the music 

industry, and satellite companies will continue to pay additional 

millions in performance royalties. But that is apparently not 

enough for the RIAA, which would like to change section 114 to get 

even more money and limit the functionality of these products so 

that consumers will have little interest in them. 

In essence, the RIAA is trying to use this bill to leverage the satellite radio industry on the eve of negotiations for a new performance royalty, and without saying so, RIAA is trying to gut the 

Audio Home Recording Act written by this Subcommittee. As we 

have long feared, having been emboldened by a judicial victory 

against real pirates, the music industry now sets its sights on ordinary consumers. 

I respectfully urge you to reject the RIAA’s efforts to vilify consumers and cajole the Subcommittee into repealing basic consumer 

rights established by the Audio Home Recording Act. In short, we 

see no justification to undo the provisions of the AHRA and the 

DMCA that were specifically enacted by Congress to address digital 

and satellite radio services. There is no reason for Congress to give 

further consideration to the third leg of this legislation. 

And as we consider these bills, please do not ignore the larger 

issue of U.S. competitiveness. While other countries are developing 

their technology industries to compete with America, we face a conVerDate 0ct 09 2002 12:07 Mar 28, 2006 Jkt 000000 PO 00000 Frm 00038 Fmt 6633 Sfmt 6601 G:\WORK\COURTS\110305\24373.000 HJUD2 PsN: 24373
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tent industry campaign to suppress new technologies on arbitrary 

grounds. This is a trend that ought not to be considered. 

Thank you, Mr. Chairman, for the opportunity to appear today. 

We have worked collegially with the content industry when they 

have been willing to do so. We look forward to working with you 

and your staff on the important issues that have been raised today. 

[The prepared statement of Mr. Petricone follows:]

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PREPARED STATEMENT OF MICHAEL PETRICONE


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Mr. JENKINS. Thank you, sir. 

The Chair at this time will pass to the Ranking Member, the 

Gentleman from California, Mr. Berman, for questions. 

Mr. BERMAN. Thank you very much, Mr. Chairman. 

Mr. Petricone, your members led in forming the broadcast flag 

working group, so there, I take it you have a relative comfort in 

that flag technology. Would you favor a similar technology in the 

HD radio context? 

Mr. PETRICONE. Two things: first of all, our members, we are a 

large organization. We represent over 2,000 companies. Our members had differing views on the broadcast flag. As a result, we took 

no position before the FCC. As far as addressing digital radio, I 

can’t give you an association position on that right now, but I can 

tell you that that would be much less intrusive to consumers than, 

for example, an encryption proposal that would require encryption 

at the source. 

Mr. BERMAN. To the extent you’re thinking that a sort of voluntary negotiations in this area would be better than that proposal, what incentives do your Members have to sit at the table, 

given that the RIAA has no performance right and therefore no leverage? My thought is that you would not support us trying to prevent the rollout of new technologies during the time that you were 

trying to reach a deal on content protection; am I wrong about 

that? 

Mr. PETRICONE. The fact is there has been no overture by the 

RIAA to discuss, you know, anything of that sort with us. As a 

matter of fact, you know, the FCC has been considering the digital 

radio standard for a number of years. It was an open public standards proceeding, and, you know, at no time did the RIAA participate, as they easily could have, and raise the necessity for these 

issues. As you said, you know, the video broadcast flag was the result of a long, multi-industry process with consensus among the 

stakeholders. And there has been no similar process on the digital 

radio side. 

Mr. BERMAN. Ms. Sohn, you cite in your testimony the ability to 

use digital rights management tools as a reason not to support legislation to close the analog hole. But over in the Commerce Committee, you’re supporting legislation that would legalize the manufacture and distribution of tools to defeat those very technologies. 

Isn’t the entire point of the analog hole proposal that the fact that 

these digital rights management technologies are rendered completely ineffective when DRM-protected content is converted to analog for viewing on analog equipment? How is the existence of DRM 

an argument that nothing should be done on the analog hole? 

Ms. SOHN. Well, I think I need to clarify that. H.R. 1201 does not 

permit the circumvention of DRM for unlawful uses. It only permits it for lawful uses. We do not support infringing activity. We 

only support the circumvention for lawful uses. 

Mr. BERMAN. Well, I mean, that’s your interpretation of 1201. I 

mean, sometimes, when I hear you and Public Knowledge and others who take the same position advocate, it is in order to protect 

legitimate copying, fair use activities, you create your own hole, 

digital or analog, to allow mass, indiscriminate redistribution of 

digital content. 

51

Ms. SOHN. Well, I believe that conduct should be punished 

through a multipronged approach, including strong enforcement of 

copyright laws. And Public Knowledge has been almost alone—— Mr. BERMAN. Right now, the law has a fair use defense, and 

there’s a copyright law. Why do you need a new law? 

Ms. SOHN. Well, because if you circumvent a technological lock 

for the purpose of making fair use, you’re a criminal. And certainly, 

if you plug up the analog hole—— Mr. BERMAN. My understanding of the DMCA is that it makes 

it quite clear that it doesn’t seek to change fair use law. 

Ms. SOHN. Well, that’s not its effect, unfortunately, and there 

have been several documented cases where somebody broke a technological lock so they could play a DVD that was tethered to a particular machine on another machine, and that was something that 

was found to be criminal under the DMCA. 

Mr. BERMAN. Well, 1201 has a provision which says it shall not 

be a violation of the Copyright Act to manufacturer or distribute 

a hardware or software product capable of substantial noninfringing uses, not limited to substantial noninfringing uses, not 

only substantial noninfringing uses but simply capable of. So in 

other words, it’s okay to do this because you’re going to protect 

some fair use, and the fact that the result of utilizing this technology is a mass, indiscriminate redistribution of copyrighted material is sort of beside the point. 

Ms. SOHN. It’s not beside the point. What my organization really 

has a problem with and why we brought the case challenging the 

FCC’s broadcast flag rules is that it’s a one-size-fits-all Government 

technology mandate. We do not oppose digital rights management 

technologies that come up in the marketplace. And there are lots 

of those technologies that are working right now. I mean, ITunes 

fair play obviously is the best example, but Movie Flix and Cinema 

Now, I mean, they’re all over the place. 

Mr. BERMAN. I realize my time is up, Mr. Chairman, but just to 

say that as I understand the court decision, it did not conclude that 

the broadcast flag rule was arbitrary and capricious or anything 

else. It simply said without a legislative statement, the FCC didn’t 

have the authority to promulgate that rule. 

Ms. SOHN. That is absolutely correct. 

Mr. BERMAN. So that court decision did not reach your conclusion 

on this issue. 

Ms. SOHN. Absolutely. It just decided on jurisdictional grounds, 

but I would urge that it would be very, very bad policy to put the 

FCC in the position of dictating technological design and essentially deciding what the copyright laws mean for the consumer. 

Mr. BERMAN. What if they just dictated technological standards, 

and any technology that met those standards would be okay. 

Ms. SOHN. That seems to me to be the exact same thing. I don’t 

see the difference. 

Mr. BERMAN. Oh, it’s not mandating a particular technology. 

Ms. SOHN. Well, but isn’t that what the broadcast flag is? That’s 

exactly what it is. 

Mr. BERMAN. And I ask you what if it took that approach? 

Ms. SOHN. I would have to see exactly what the proposal is. I 

really can’t comment on it. 

52

Mr. JENKINS. The gentleman from California, Mr. Issa. 

Mr. ISSA. Following up on that line of questioning, the FCC’s job 

is to set standards, isn’t it, basically, how we broadcast, where we 

broadcast, compatibility between the transmission and receivers? If 

not for the FCC, wouldn’t we have both PAL and NTSC operating, 

you know, indiscriminately, each broadcaster deciding which TV 

type he wanted to lead to? 

So I really have to ask, isn’t it a core responsibility of the FCC 

to set standards for technology that then foster the real use of the 

airwaves, which, of course, is both for entertainment and for information and for public information in times of distress, such as a 

hurricane, the deliverance of information? Isn’t all of that consistent with the FCC’s rule, and I would take it that you would all 

agree to that, wouldn’t you? Can I find any disagreement here? 

Good. 

Ms. SOHN. Well, sir, certainly they have——

Mr. ISSA. I was pausing for that moment. 

Ms. SOHN. They certainly have the right to set standards for the 

actual transmissions, okay? They have the authority to regulate, 

you know, communication over wire and radio. And what the court 

found was that when it comes to, you know, dictating technological 

design after the transmission is captured, that was far more sweeping and far more far-reaching than the FCC had ever done before. 

So you’re talking about regulating the standard of the transmission. They’ve always had the right to do that. 

Mr. ISSA. Mr. Petricone, the companies you represent in fact 

make these receivers. I presume that the manufacturers of Sirius 

and XM Radio that are now downloading, storing, they’re both 

making storage devices off of digital transmissions so that you can 

have—XM to Go, of course, is the better known of the two brands 

from the standpoint of storage. Isn’t that critical that if they’re 

going to store that that, in fact, be protected? 

Mr. PETRICONE. The devices that you’re referring to, first of all, 

they comply with the Audio Home Recording Act, and second of all, 

my understanding is that there is no opportunity, there is no way 

to move a digital copy of the material off the device. And if I can 

go back to your previous question, you know, I think I share your 

view of the critical role of the FCC. But we strongly prefer that 

standards enacted by the FCC arise from open, fair industry consensus processes, you know, that were properly vetted and developed by industry and led by the private sector. You know, again, 

the broadcast flag is certainly an example of that, as is, for example, the DTV standard. 

Mr. ISSA. Well, following up on that, at the present time, for 

audio, there seems to be a challenge between—I mean, NAB 

doesn’t seem, on either standard, NAB is reluctant to do broadcast 

flag, and they’re not represented at the table here. 

But ultimately, wouldn’t you all say that a scheme, standard to 

protect illicit use of copyrighted material, even when broadcast, 

and when I say illicit, I’m saying outside of existing fair use statutes, including the Betamax case, isn’t in fact that critical to the 

growth of digital over analog? Your company—the companies you 

represent manufacture those very new sets. They’re moving toward 

53

digital. Isn’t the success of digital in fact a higher quality product 

while maintaining the status quo under the laws? 

Mr. PETRICONE. Right, but I think our other concern is a scheme 

that would, in fact, make the new digital product less functional 

than the old analog product that would, of course, mitigate in the 

opposite direction. 

Mr. ISSA. No, I appreciate it. 

Mr. Glickman, maybe flipping to the other side of the same coin, 

isn’t the availability of content for digital broadcast dependent on— and I’ll say it in anticipation of where we want this to end up, 

maintaining the status quo under Sony Betamax, that although 

there is a fair use established by the Supreme Court and I think 

kept and held by us that in fact, you do not want to have that 

taken to essentially original master quality suddenly available for 

rebroadcast? 

Mr. GLICKMAN. That is correct, as modified by the Grokster decision, which I think has made, you know, some revisions to the 

Sony Betamax decision. But let me go back to your——

Mr. ISSA. I would say it didn’t, because certainly, I have Sony 

videotape recorders, and I’m very comfortable that their marketing 

plan did not depend on stealing anything from anyone. 

Mr. GLICKMAN. That is correct. You are correct. But it obviously 

created some additional standards on how you use—— Mr. ISSA. Grokster, to all of us on the dais, including your old 

seatmates here, very much has told us where the other side of the 

same standard now is. 

Mr. GLICKMAN. If I may just respond two things: number one is 

if you look back at the FCC decision, notwithstanding the issue of 

whether they had the legal authority or not, the FCC decided because of the threat of mass indiscriminate redistribution that 

would happen that the harm that would be created out there was 

significant enough that it was an appropriate place for them to 

come in and set standards. 

And by the way, it’s been set in the aftermarket before. The Vchip is a perfect example of that it. The other thing is that if you 

have the substantial redistribution, what is likely to happen is that 

all those millions of Americans who have regular television sets 

that get their programming over the air, they will find the likelihood that that programming will move much faster to cable, to satellite, and to the other things, because, I mean, that’s frankly 

where the marketplace will be. And so, what the FCC was trying 

to do was to try to kind of slow that train until, in fact, we got to 

the digital world. 

Mr. ISSA. Let me just ask one final question on this series. I 

started off with a red light, so I really don’t know how much time 

I have. 

Mr. JENKINS. Without objection, the gentleman will be allowed 

one more question. 

Mr. ISSA. Thank you, Mr. Chairman. 

For the record, when we talk about the analog hole today versus, 

for example, an analog cable transmission, aren’t we talking—I’ll 

ask it as a question, what quality are we really talking about? In 

other words, in my digital set top box with recording that I have 

from both coasts, I have one on both coasts from each of my proVerDate 0ct 09 2002 12:07 Mar 28, 2006 Jkt 000000 PO 00000 Frm 00057 Fmt 6633 Sfmt 6601 G:\WORK\COURTS\110305\24373.000 HJUD2 PsN: 24373
54

viders, if I take an analog output to a TV, but instead of a TV; I 

output to a videotape recorder; again, my Sonys I’ve had for years. 

As a consumer, I see no difference in the quality of that output, low 

res output, analog, and the low res output I’d get if I never went 

through my cable box and simply went directly to my analog. 

For the consumer, isn’t there an expectation that those two are 

equivalent and thus should be treated equivalent by the people on 

this dais for purposes of the prior standards we all dealt with for 

analog recording and time shifting and video tape recording and 

the like? Is that a fair assumption? 

Mr. GLICKMAN. I’m not an expert, obviously, in the quality of the 

material, but I think consumers expect the quality regardless of 

whether they get it on analog or digital. But what we’ve got here 

is a situation where they’re going to be run through the digital system material that is unprotected, and that is not in their interests 

at all. 

Mr. ISSA. I certainly agree, and maybe Mr. Petricone, as the 

more technical on the machine side, the analog outputs, again, we 

clearly have, under the Digital Millennium Copyright Act, we clearly moved a little bit away from beta standard because it could be 

easily digitally recorded, copied 1,000 times identically and redistributed. But on the analog output, which is part of what this hearing is today, how are we to view closing that, in other words, flagging it if, in fact, it’s going to my—and I have to stick to the most 

basic I think my constituents understand—my Sony video tape recorder to be recorded and put in my briefcase and taken from 

Washington, where I have no time to watch it, to California where 

I might. 

Mr. PETRICONE. We have no objection to addressing the analog 

hole issue and in fact have worked extensively with the content industry in the past to do that. 

I think what our issue is with the current draft is the fact that 

it was not, you know, their version of working with us is apparently coming up with this immensely complex, incredibly, you 

know, nearly incomprehensible program, not sharing it with us and 

then running to you and asking you to enact it. You know, again, 

that is not the kind of private sector driven consensus based process that we would like to see here. 

Mr. GLICKMAN. Mr. Issa, could I just add one comment? 

Mr. ISSA. With the Chairman’s indulgence, sure. 

Mr. GLICKMAN. I just would mention that we have two companies—I think they’re both members of Mr. Petricone’s association; 

I’m not positive, but Thompson and IBM who have sent letters to 

the Chairman indicating their support for this legislation. I would 

like those to be part of the record. 

Mr. SMITH [presiding]. Okay; without objection, they’ll be made 

a part of the record. 

Mr. ISSA. Thank you, Mr. Chairman. 

Mr. SMITH. Thank you, Mr. Issa. 

The gentleman from Virginia, Mr. Boucher, is recognized for his 

questions. 

Mr. BOUCHER. Well, thank you very much, Mr. Chairman, and 

I can’t resist the opportunity to welcome back to this Committee 

our former colleague, Dan Glickman, with whom we spent many 

55

years in productive pursuits here, and I hope this will be the first 

of many appearances that you will have. 

Mr. GLICKMAN. We were together on many issues. 

Mr. BOUCHER. We were, and I’m looking for some opportunity for 

us to join forces again here. 

But I want to thank you very much and the other witnesses as 

well for sharing your views with us today. Let me just make several points, and these will kind of be a context for the questions 

I’ll ask. First, I do not harbor hostility toward the broadcast flag. 

I understand the logic of it. I think it is important that high value 

programming be made available for over the air digital broadcast, 

and I perceive the problem that the motion picture studios have in 

making that content available for the over-the-air broadcast if 

there is no assurance that it is not going to be uploaded to the 

Internet. 

So I comprehend that argument, and I don’t have basic hostility 

to the broadcast flag. I do, however, have a couple of views regarding it. The first of those is that it ought to be considered in the 

broader context of assuring the provision of fair use rights for the 

purchasers of digital media and ensuring, in fact, the right of consumers when they have purchased content lawfully to make use of 

that content as long as they’re not infringing the copyright of the 

copyright holder. 

And H.R. 1201, which I’ve introduced, along with others, contains that set of guarantees. The position I have just announced, 

I can add, is the position of the Chairman of the Committee on Energy and Commerce, to which H.R. 1201 has been principally referred, and I assume the Committee at some point, perhaps next 

year, will begin a series of hearings on that set of issues. 

The second thing I would say about the broadcast flag is that it 

seems to me that there are certain kinds of programming that 

should not be flagged at all: news programming, in my view, should 

not be flagged. If someone wants to excerpt a small piece from a 

news program and put that on the Internet, send it to friends, if 

the rare occasion happens, and the local TV station covers me 

doing something, and it turns out to be particularly good, an even 

rarer event still, I might want to email that to my mother and say 

aren’t you proud of me now? [Laughter.] 

And my 81-year-old mother uses e-mail, I am proud to say. 

But under a strict version of the broadcast flag, if that news program was flagged, I would not be able to upload that excerpt to the 

Internet. 

It seems to me also that public affairs programs generally should 

not be flagged and should be available for excerpts of it or perhaps 

all of it to be emailed, and there doesn’t seem to me to be any particular harm to a content owner if we permit that. And Mr. Glickman, at the proper time, I’m going to ask you to respond to those 

recommendations. 

Point number two: I think this Subcommittee should take up and 

report a comprehensive reform of music licensing issues. We primarily need to be addressing section 115, but perhaps the section 

114 problems Mr. Bainwol has suggested and others have recommended to us could also be considered in that broader context. 

And I know that Mr. Bainwol’s association also would like to see 

56

us address the section 115 issues, as would others. And so, I would 

commend, Mr. Chairman, that idea to you, and hopefully, we can 

move forward with that legislation in the near term. 

The third point I would make is that the argument for the broadcast flag, which I have articulated perhaps not perfectly, in my 

view does not extend to digital radio. It seems to me that piracy 

from radio broadcasts are not the primary problem that you face. 

Peer-to-peer is probably a bigger concern, but perhaps the Supreme 

Court decision in Grokster will help you address that. I hope it 

does. 

The bigger problem might be if someone is intent on committing 

piracy that they would simply go and buy a CD, and they would 

use the CD for the same purpose that you’re suggesting they might 

use a digital radio broadcast. The CD, after all, doesn’t involve 

waiting. You can put it in your tray right away and go ahead and 

do whatever it is you’re going to do with it. It’s a better quality 

product than the digital broadcast, which has undergone compression, and probably would be better than MP3 but not CD quality. 

And it seems to me that most of the radio stations are just playing the same 20 songs over and over, and once you’ve recorded 

them, what are you going to do then? You go buy a CD in all likelihood. So, I mean, the CD really is the bigger issue, and so, I’m not 

sure the case has been made that we ought to embark on this notion of a broadcast flag for digital radio. 

I would also note that unlike the TV flag, which has the sole purpose of preventing uploading to the Internet, your proposal for a 

radio flag would dramatically affect the ability of the person at 

home who is receiving the broadcast to engage in copying. It’s a 

dramatic assault on fair use. 

And so, as you may have detected from these remarks, I’m not 

quite sold on the idea yet. And I will ask you at the proper time 

for your comments on that. 

Mr. SMITH. Would the Gentleman from Virginia like an extra 

minute? 

Mr. BOUCHER. Yes, would the Chairman be so kind as to grant 

an extra minute? 

Mr. SMITH. Without objection, the Gentleman is recognized for an 

additional minute. 

Mr. BOUCHER. Thank you very much, Mr. Chairman. 

I would also note that the bill that has been put forward, Mr. 

Bainwol, would prevent the scrolling features on the new devices 

that XM and Sirius are getting ready to introduce from functioning. 

These are features that allow you to categorize by artist, by genre, 

et cetera, much the way that IPod does, and I think those devices 

would be rendered dead on arrival were your bill to become law. 

As I read section 8(b) of the bill, that information could not be used 

for scrolling purposes. 

Finally, let me say I have not had time to review and reflect on 

the analog hole bill. I just saw that yesterday. I am concerned that 

it is a far reaching technology mandate that would apply to any device that has the ability to convert an analog signal back to digital, 

including, by the way, a personal computer, and so, personal computers would have to contain this mandated technology, and I can 

57

assure you that before we get to the point of doing that, we’re going 

to have to have a lot more conversation. 

Now, with those comments, let me give both Mr. Glickman and 

Mr. Bainwol an opportunity, if the Chairman permits, to comment 

on what I’ve said about the broadcast flag for television and the 

broadcast flag for radio. 

Mr. SMITH. If you all would answer the question, and then, we 

will go to the next Member. 

Mr. GLICKMAN. I enjoyed working with you, and while we disagree on some of these issues, you’re a person that I feel comfortable working with, and we should continue to do that. 

First of all, broadcast flag: I think it’s clear that what the FCC 

said is that broadcast flag in no way limits or prevents customers 

from making copies of digital broadcast television content. If you 

want to watch and use TiVO, TiVO has been certified as proper remote access, so that is protected under the flag. 

The issue here is that, as you know, that satellite and cable 

under contractual arrangements have a different ability in terms 

of redistribution than broadcast does. So what we are trying to do 

is to provide equal, fair, and balanced treatment, so they are all 

treated the same way. Now, that does not necessarily have to mean 

that your grandmother or aunt or sister, you cannot work out some 

sort of arrangement to, in fact, send—in fact, I would like to see 

your 15-second snippets from the House or anywhere else. 

But I am just saying that there’s got to be relatively equal treatment here, because if there’s not, I am telling you it will all move 

away from broadcast television, and that will be a dagger in the 

heart of an awful lot of people who don’t have access to cable or 

satellite, including people who live in small towns in rural America, so that’s my point there. But I appreciate your general support 

for the concept of it, and we want to, you know, continue to work 

with you on it. 

You know, on the issue of 1201, we strongly oppose your position 

on that for a lot of reasons. One is the circumvention provisions, 

particularly as it relates to the scientific area, which you put in 

there. It looked like they’re wide enough to drive a Mack truck 

through, because there’s a lot of ambiguity in that particular provision. And we’ve talked a lot about fair use before, and the fact is 

that under our laws, if you get one, you don’t get another one for 

free in the world. You know, any kind of product that you buy, you 

don’t get an extra product for free. 

But, look, I understand where you’re coming from here and will 

continue to talk to you about it. I don’t want to mislead you, however. You haven’t persuaded me today about 1201. 

Mr. BAINWOL. It’s my turn. Just to clarify, my last name is 

Bainwol. I have been called worse things, though, so that’s fine. 

Let me take a moment and kind of reframe where we are from 

a financial standpoint. Gigi characterized a story in the press that 

was a bit misleading. To put the context again, the sale of recorded 

music was about $14.6 billion in 1999. We’re under $12 billion in 

physical. In 2005, we’ll lose more on physical than we will gain 

from this wonderful marketplace that’s arising on the digital side. 

So we’re still sliding down. With a little luck, 2005 will be our 

down year, and we’ll begin climbing out. And our future is prediVerDate 0ct 09 2002 12:07 Mar 28, 2006 Jkt 000000 PO 00000 Frm 00061 Fmt 6633 Sfmt 6601 G:\WORK\COURTS\110305\24373.000 HJUD2 PsN: 24373
58

cated on having a rate of growth on the digital side that exceeds 

the rate of loss on the physical side. 

And we think we can get there, but we can get there only if the 

right policies are in place. We’ve got lots of problems. We’re not 

short of problems. We’ve got, obviously, P2P, which we think we’re 

beginning to get a handle on. We’ve got the physical piracy that 

we’re dealing with. But along comes this new functionality. 

In the old days, you had radio, and you had ownership. Now, obviously, with 114, you’ve got satellite, you’ve got cable, you’ve got 

Internet. You have this convergence going on where basically, radio 

is going to be available on all of these platforms and over the air, 

and radio, on over-the-air, of course, we don’t have a performance 

right, we don’t get paid. All of a sudden, you’ve got this new device 

that in effect replicates what you can do on ITunes. 

So the consumer will have a choice: do I want to go on ITunes 

and spend 99 cents to buy a new track; you know, I saw Nine Inch 

Nails. Maybe that’s it; maybe it’s something else. Or do you go onto 

your new device and say gee, I can mark it, I can keep it, I can 

move it to my device, and I don’t have to pay for it, and it’s part 

of a playlist, and I’ve got it, I’ve got possession of the thing. 

The challenge is as radio converges across platforms, you end up 

with an ability to replace the sale. No sane human being, few sane 

human beings would go and choose to pay for something when they 

can replicate that experience for nothing. 

Our challenge now is to make sure that this functionality, which 

can cause enormous harm at a very difficult time for us is treated 

in a fashion where it’s either licensed or compensated for fairly. 

Mr. SMITH. Thank you, Mr. Boucher. 

Without objection, by the way, I’d like for the full introductions 

of the witnesses to be made a part of the record. And Mr. Glickman, let me address my first question to you and say at the outset, 

I may be at a slight disadvantage, because you may have already 

these questions, and if so, feel free to tell me, and I’ll go to the next 

one. 

I was just curious, though, Mr. Glickman, how you thought the 

typical consumer felt about the broadcast flag and the analog hole, 

assuming they’ve thought about it at all, but let’s assume an educated consumer, and are they for it, or are they opposed to it? What 

is your experience? 

Mr. GLICKMAN. You know, I haven’t done any survey research on 

this, but my guess would be is that since the bulk of consumers 

have analog television sets now, and they want to maintain high 

quality content, digital content that’s coming down the road, that 

they would be upset to know that because of this analog hole, you 

could have massive redistribution of unprotected digital content. 

They wouldn’t like that. 

I don’t know whether they’ve thought about specifically this particular technology or not. But I think if they did think about it, 

they would probably worry about it, given all of the advances that 

are occurring in content, both television and movies. 

On the broadcast flag, my guess is that if consumers of over the 

air television, which there are millions of in this country, particularly in underserved areas would know that, the content providers 

and the distributors would likely shift to cable and satellite beVerDate 0ct 09 2002 12:07 Mar 28, 2006 Jkt 000000 PO 00000 Frm 00062 Fmt 6633 Sfmt 6601 G:\WORK\COURTS\110305\24373.000 HJUD2 PsN: 24373
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cause the content can be massively redistributed. That would upset 

them very much, because they could end up with nothing, perhaps, 

except maybe public broadcasting or other kinds of channels that 

would not necessarily fit on those new mediums. 

So I think they would be concerned about it, and you know, 

that’s my judgment right now. 

Mr. SMITH. Okay; thank you, Mr. Glickman. 

Mr. Petricone, it’s my understanding, I think I recall, that the 

membership of the Consumer Electronics Association either is neutral about or supports the broadcast flag. Is that a fair statement? 

Mr. PETRICONE. Mr. Chairman, again, we are a large association. 

We represent over 2,000 members, and we have members with differing views on the broadcast flag issue. When the issue was before 

the FCC, we took a neutral position. 

Mr. SMITH. You’re not going to go any farther than that? Do you 

want to say anything about a majority of the members or members 

you’ve talked to or anything like that? 

Mr. PETRICONE. You know, Mr. Chairman, it’s sometimes being 

in a trade association is difficult, and sometimes, you have members, and it seems to happen more often than one would like, that 

have very strong positions on an important issue, and when that 

happens, the best thing to do is to generally stay out of it. 

Mr. SMITH. It seems like you’re a good politician, too. All right. 

Mr. Bainwol, what has been the reaction from the satellite and 

the broadcasters to your proposal? If they’ve had concerns, what 

are those concerns? And on the other side, who supports your proposal? 

Mr. BAINWOL. Well, we’ve had discussions with the satellite folks 

and broadcasters. You know, if I die and come back, I’d love to be 

a broadcaster in the radio context. I get free spectrum; I get free 

content, and I have an ability here potentially to replicate what 

ITunes does and not have to pay for the product. 

So, you know, they’re not terribly anxious to come to an arrangement here. Because we have no performance right, they don’t have 

to pay us. There’s no reason for them to come to the table. So we’ve 

reached out to them over the last two and a half years in a very 

aggressive fashion, but it’s very hard to compel them to act. 

The satellite folks are in a similar situation. Of course, we have 

a performance right there, but that pays for the performance, not 

for distribution. What’s going on here is the conversion of radio to 

a mechanism to take performance and turn it into a distribution 

to replace ownership. So the satellite folks also, they’re engaged 

also. We’re in reasonable discussions, but I don’t know that we’ll 

get across the finish line in terms of reaching an agreement. 

Satellite and over-the-air, they’re fighting for market position, 

they’re fighting to compete, and they want to use this functionality 

in this competition, and we’re left out there holding the bag. All we 

want is compensation. We want to avoid harm. It’s been a very difficult time for us in the last 6 years, and this functionality is very 

cool and very meaningful. Fans deserve to have it but not at our 

expense. Let’s find a way to make it work. We can’t get them to 

the table, though, to come to a deal. That’s why we need help. 

Mr. SMITH. Okay; thank you, Mr. Bainwol. 

60

Ms. Sohn, let me ask you about three activities, and it’s my understanding, I believe, that you have indicated support for them in 

your testimony, but let me just go through these three and see 

what you think about them, and I’m assuming that Public Knowledge does support them, but I just want to double-check with you. 

First of all, suits against P2P users who upload and download copyrighted files. 

Ms. SOHN. If they do so on a massive scale, yes, a large scale. 

Mr. SMITH. Well, how do you define large scale? 

Ms. SOHN. Well, certainly more than one, but, you know, hundreds of files. You know, it’s basically—I have to say that both the 

recording industry and the motion picture industry actually have 

done a pretty good job of going after mass file—— Mr. SMITH. At the risk of making Mr. Boucher nervous, what 

about a dozen or two files? 

Ms. SOHN. You know, I really don’t want to sort of parse numbers, but I don’t think that that’s necessarily a very good use of 

their resources. 

Mr. SMITH. So you’re talking about the real abusers. 

Ms. SOHN. The real pirates, yes, the real abusers, absolutely. 

Mr. SMITH. What about the use of some DRM technologies like 

Apple’s Fair Play? 

Ms. SOHN. Absolutely. As long as it comes up in the marketplace, 

we are for it. If it’s Government-mandated, we’re against it. 

Mr. SMITH. Okay; what about the passing on of warning notices 

by ISPs? 

Ms. SOHN. Well, we actually put out a public statement applauding the agreement between Disney and Verizon to do so. 

Mr. SMITH. Has Public Knowledge always supported those three 

actions? 

Ms. SOHN. Yes, since the very beginning. 

Mr. SMITH. You have; okay. Thank you very much. 

Ms. SOHN. Could I just make one comment—— Mr. SMITH. Yes. 

Ms. SOHN.—about whether consumers care? Because I think this 

is really important. At the FCC alone, there were between 5,000 

and 7,000 consumer comments opposing the broadcast flag filed. 

So, you know, when you don’t actually have digital television, Mr. 

Glickman is right. People don’t really know what you might be 

missing. But certainly, of those who are tech savvy, they did weigh 

in. And I do know that in addition, tens of thousands of constituents have weighed in with their Members opposing the reinstatement of the broadcast flag over the last 6 months. 

Mr. SMITH. Okay; thank you, Ms. Sohn. 

The gentlewoman from California, Ms. Lofgren, is recognized for 

questions. 

Ms. LOFGREN. Thank you, Mr. Chairman. And thanks to the witnesses for being here. 

It’s great to hear your comments. As with my colleagues, I think 

it’s important to put my questions in a context. I have been a Member of this Subcommittee for many years, and I think that there 

is unanimity among each Member that we should do what we can 

to support content owners from being ripped off. I mean, that is an 

important principle, and those rights need to be protected. I also 

61

have two other concerns when it comes to proposals, and I’ll just 

state them. 

First, consumers have rights, too, and if in our efforts to protect 

content owners, we don’t also acknowledge the rights of consumers, 

and that’s a problem for me, and there’s a second issue which is 

probably rooted in Silicon Valley, where I come from: if we, in outlining a scheme, have the impact of impeding the development of 

technology, then, that is a huge problem, because we wouldn’t be 

here; we wouldn’t have CDs; we wouldn’t have a lot of things if we 

had impeded the development of technology, so I’m always on the 

lookout for that. 

Along getting to my first point or second point of consumers, I 

have some skepticism about the broadcast flag proposal, and it’s 

not just about fair use; it’s about lawful use. And I’m wondering 

both for RIAA and MPAA, how you would assure consumers that, 

say, for example, they have a right to take—we watch the Daily 

Show when I stay up that late with Jon Stewart where he will do 

a clip of one politician and then a clip of something else. I mean, 

theoretically, if you flag it, you couldn’t do that. 

There’s another issue which is not fair use which is just noninfringing use. I mean, there is material that is in the public domain. And theoretically, you could control, through technology, 

what you do not have the right to control through the law. I’m wondering how you would address those two issues if the broadcast 

flag were to go forward. 

Mr. GLICKMAN. Well, thank you. 

First of all, I agree with you. These are questions of balance. I 

served on that row, and I know what it’s like to try to bring folks 

together, and sometimes, you can’t reach agreement as an industry, 

and that’s why, you know, Congress has a leadership role on some 

of these issues, as you did in the V-chip and other kinds of things, 

where you came in and tried to deal with this issue. 

And in terms just mentioning impeding the development of technology, there are a multitude of technologies. There are technologies of delivery devices. There’s also technologies of content, 

and people want to see the most modern and new ways of movies 

and television, and so, there’s technology in that area as well. And 

so, I don’t want to put just technology in a little box. It just depends on the delivery system. It also involves the content that’s 

produced out there. 

The only thing I would tell you is that I would read from the 

FCC decision itself. They say, A, we wish to reemphasize that our 

action herein in no way limits or prevents consumers from making 

copies of digital broadcast television content. The goal will not 

interfere with or preclude consumers from copying broadcast program and using it or redistributing it within the home or similar 

personal environment as consistent with copyright law. 

So, I mean, that is from the FCC decision, and of course, that’s 

basically the decision that we want to see you reauthorize, put into 

statute. And, you know, obviously, common sense has to be underlying anything that we do in this area, and, you know, we would 

hope to work with you to make sure that would be the case. 

Ms. LOFGREN. Mr. Bainwol? 

62

Mr. BAINWOL. Yes, I would simply add in terms of the technology 

by which we would solve this problem, we’re agnostic. In a perfect 

world, in an ideal world, we’d do that with encryption at the 

source. We understand that’s probably too late, so a flag approach 

or some other approach is probably fine. 

But the bottom line is I would echo Dan’s words about common 

sense. We are perfectly fine to build in common sense adjustments 

to accommodate genuine fair use concerns. What we’re not fine 

with is allowing radio to morph into an ITunes or a Rhapsody substitution where we get no payment. 

And let me just use this moment to put all this into context. I 

hear a lot of talk about AHRA, which was, you know, before I was 

involved in this business, but 1992; that was about serial copying. 

To give you a sense of context here, AHRA probably provides the 

music world a couple million bucks a year; I don’t know if that’s 

precisely right, but order of magnitude, that’s right; a couple of million dollars a year, okay? 

Right now—two years ago, you had no download market. Right 

now, we’re dealing with about 7 million downloads a week in the 

legitimate download market: ITunes, Wal-Mart, the other services. 

In that context, according to public reports, the music world gets 

somewhere between—about two-thirds. So in a given week, you can 

do the math: we do okay. 

The bottom line is in about 3 days, we capture what we would 

get under AHRA. So AHRA comes nowhere near approximating the 

loss of value. We are in a hole. Creators have suffered huge losses. 

Ms. LOFGREN. If I may, and I know the red light is on, and the 

Chairman will allow the other two witnesses to answer, I’m sure, 

but——

Mr. SMITH. Without objection, the gentlewoman is yielded another minute. 

Ms. LOFGREN. Are we having a second round of questions, Mr. 

Chairman, or not? 

Mr. SMITH. Not necessarily. 

Ms. LOFGREN. Then I will just state I have many questions that 

I perhaps can send to the witnesses. I’ll just note that the mandating in the analog hole bill of particular technology is almost always a mistake to mandate, for the Government to decide a set of 

technologies. I mean, we should never vote to do that. I wonder if 

the other two witnesses could address the question. I thank the 

Chairman for the extra minute. 

Ms. SOHN. I’d like to address the part of your question I think 

to Mr. Glickman that talked about fair use and the broadcast flag, 

and I would just simply refer everybody to the CRS report for Congress entitled Copy Protection of Digital Television: the Broadcast 

Flag. And just indulge me for a second. 

It says current technological limitations have the potential to 

hinder some activities which might normally be considered fair use 

under existing copyright law. For example, a consumer who wished 

to record a program to watch at a later time or at a different location might be prevented when otherwise approved technologies do 

not allow for such activities or do not integrate with one another 

or with older legacy devices. 

63

So there is definitely—and Mr. Glickman did not answer—I don’t 

remember whose question it was exactly; I think it was Mr. Boucher’s question about exceptions for news programming. You’re 

never going to package news programming for later sale on DVD. 

Nobody wants to see, you know, the DVD package of the nightly 

news. And I think it’s important, we have troubles because of the 

FCC’s involvement, I think the very least, you have to answer the 

question what’s your objection to not flagging news and public affairs programming? I don’t want to diss the broadcasters, but that’s 

not the kind of high value programming that Mr. Glickman and his 

members are referring to. 

Mr. PETRICONE. If I can just address the issue of whether the 

AHRA applies in this context to these new technologies, you know, 

under the AHRA, the definition of a digital audio copied recording 

includes digital reproductions of digital musical recordings, whether that reproduction is made directly from another digital musical 

recording or indirectly from a transmission. 

As a matter of fact, Mr. Bainwol’s predecessor told the Senate 

the AHRA will eliminate the legal uncertainty about audio home 

taping that has clouded the marketplace. The bill will bar copyright infringement lawsuits for both analog and digital audio home 

recording by consumers and for the sale of digital audio equipment 

by manufacturers and importers. It will thus allow consumer electronics manufacturers to introduce new audio technology into the 

market without fear of infringement lawsuits. So, you know, for the 

RIAA to come back now with its extraordinarily narrow reading of 

what the AHRA said is frankly revisionist history. 

If I can also add, Mr. Bainwol keeps saying that digital radio essentially turns radio into ITunes. What you get with digital radio 

is current radio, except it sounds somewhat better. In other words, 

the DJ talks over the first 10 seconds of the Led Zeppelin, and 

then, the last 10 seconds of the song fades into the ad for Pizza 

Hut. 

So, again, if that’s what you’re comfortable with, that’s fine, but 

that’s in no way replication of what you’re getting from, say, an 

ITunes type service. 

Mr. BAINWOL. Mr. Chairman, if I may, there are so many inaccuracies riddled in that statement. I’m not sure where to begin. I 

know we don’t have a whole lot of time, but just on the 

functionality issue, you didn’t say I could; may I proceed? 

Mr. SMITH. Yes, Mr. Bainwol. Please. Actually, we’re going to 

give the Gentlewoman from California an additional minute for you 

to respond. 

Mr. BAINWOL. I’m just a touch overenthusiastic here, but, you 

know, what you can do with this device, the key thing is you don’t 

have to listen to the song. You can see the tracks, and you can say 

I’m going to mark that track and store it into my device here along 

with my other stuff and create a playlist and listen to it whenever 

I want. It’s essentially a tethered download. And it creates an incentive to keep the subscription going alive, because you only have 

it so long as you have the subscription. 

So this is not radio, you know, the disc jockey talking over the 

thing. You can amass a wonderful library that is a substitution for 

a purchase at a time where we can’t afford to give our music away. 

64

Mr. SMITH. Thank you, Mr. Bainwol. Thank you, Ms. Lofgren. 

This is what we wanted today was a healthy discussion. I don’t 

know whether we’re really getting to that fourth goal that I had 

for today’s hearing about common ground yet, but we’re working on 

that. 

The gentleman from Utah, Mr. Cannon, is recognized for his 

questions. 

Mr. CANNON. Thank you, Mr. Chairman. 

I would like to apologize to you and the other Members of the 

Committee and also our panel for not having been able to be here 

for the whole hearing. Mr. Issa pointed out this is the most fair 

panel we could have had on this issue just before he left, and I appreciate that, and I just want Mr. Petricone, who was very anxious 

to respond, if you would like to respond to Mr. Bainwol, you’re welcome to do so on my time. 

Mr. PETRICONE. I just wanted to clarify, the digital radio, the terrestrial digital radio service is not a subscription service. It’s free, 

over-the-air radio, again, like you’re getting today, except that it 

sounds better. 

On the satellite end, which I know is also a concern of Mr. 

Bainwol’s, you know, what Mr. Bainwol is referring to is an ongoing royalty dispute between his members and the satellite industry. And just last year, Congress created the Copyright Royalty 

Board to handle these types, these exact types of business disputes. 

And we suggest that the Copyright Royalty Board be allowed to do 

its work, do what you set it up to do and that consumers not be 

deprived of new products and digital technologies. Thank you. 

Mr. CANNON. Let me let Mr. Bainwol respond to that, but let me 

just ask a question, and if you could deal with the question and the 

process, I’d appreciate that, Mr. Bainwol, but certainly, you’re welcome to respond to that on my time. 

But let me ask: the FCC’s broadcast flag rules were very narrowly tailored to prevent unauthorized mass, indiscriminate redistribution of digital video content over the Internet, and the HD 

radio proposal would cover unauthorized redistribution over digital 

networks. Could this mean that it would sweep in wide area networks such as universities, local area networks such as offices, or 

home networks? In other words, does the term digital networks 

need to be explicitly defined in this legislation to move it forward? 

And if you could also respond to the fact that we’ve had lots and 

lots of institutional discussion about the broadcast flag on video, 

and those discussions have not been participated in. We haven’t 

had the same discussion on audio. And could you discuss just briefly whether we don’t need to go back and have some more extended 

discussions? And then, of course, you’re welcome to respond to Mr. 

Petricone. 

Mr. BAINWOL. Okay; I’m going to try to keep my wits about me, 

but I think I have three points to make. The first is Michael gets 

confused between a performance and a distribution. We don’t get 

paid on over-the-air radio. We do get paid on satellite for a performance. We’re not being paid to replicate an ITunes purchase, so 

that’s a key distinction. 

Two, in terms of your concerns about universities and LANs, 

we’re perfectly happy to work with drafters to make sure that the 

65

language captures only that which is necessary to capture to make 

sure that the piracy problem is not—— Mr. CANNON. And here, you know, I’m torn about whether a kid 

in a dorm room can grab something and then put it on his local 

area network for a kid three dorms down. That’s awkward. That 

may be the worst case, but in a home, if you’re capturing and then 

replaying it, it seems to me that we need to have some—— Mr. BAINWOL. We’re perfectly fine with flexibility to make sure 

that that home context is taken care of. 

That third piece here that I think I have to just drive home, because it separates the case of motion picture and video broadcast 

from us, there is a market failure. We do not have a performance 

right. We have a compulsory license on the 114 side. There’s nothing we can do to say if you don’t give us the right protection, you 

don’t get the programming. 

We’re stuck, and because we’re stuck, we need help. I wish it 

weren’t the case. In a perfect world, if you could give us a grant 

of a performance right, I think we would be pretty thrilled, and so 

would a bunch of artists around this country. But that’s going to 

take some time. In the meantime, we’re trying to dig out of a hole, 

and if we don’t get this thing right, we’re going to have a huge impact on the creativity of this country. 

A third of the artists that were signed to labels were lost in the 

last 6 years. Now, it’s time we do something to make sure that the 

investment in content and content innovation is protected. 

Mr. CANNON. But, I mean, there are a lot of problems behind 

that statement about losing your artists to signed contracts that go 

way beyond the legislation we’re dealing with here. 

Mr. BAINWOL. No, I’m making the point that the consequence of 

a failed decision here——

Mr. CANNON. No, I understand the point. But there are a lot of 

failures, and I’ve been arguing with your industry for a very long 

time about some of the fundamental problems that are going on 

here, including how you generate creativity in the market as opposed to in the part that we control. 

So anyway. Thanks. We do need to work on, I think, language, 

and maybe we can come up with something, but Ms. Sohn, in your 

testimony you argue that if a Member of this Subcommittee wants 

to email a snippet of his appearance on national TV, and I hope 

this question hasn’t been asked, but I actually would like to know 

that’s off a broadcast flag scheme, that would prohibit him from 

doing so. 

Does the same concern extend to cable and satellite snippets? If 

so, what position do you take on the distribution through those 

media? So, would TiVO To Go service, which is certified as broadcast flag compliant, enable a Subcommittee Member enable himself 

to email himself a new snipped, or could future technologies to facilitate that activity be certified as broadcast compliant? 

Ms. SOHN. Let me see if I fully understand the question. All I 

can say is that the first part of your question, you know, under the 

broadcast flag rule, you would not be able to do that. You would 

not be able to email yourself a snippet. You can now email a cable 

or satellite program. That is not prohibited. Did I answer that 

sufficiently? 

66

Mr. CANNON. And in part because I see that my time has expired, and I apologize, Mr. Chairman, for going over and yield back 

if there were theoretically something to yield back. 

Mr. SMITH. Thank you, Mr. Cannon. 

The gentleman from Massachusetts, Mr. Meehan, is recognized 

for his questions. 

Mr. MEEHAN. Thank you, Mr. Chairman. 

And Mr. Petricone, if you get a work-related email during the 

Monday Night Football game on Monday, I want you to know 

you’re going to have the rest of the evening to work on that email, 

because the Patriots are going to be ahead of the Colts by four 

touchdowns. You don’t have to watch the second half. 

Mr. PETRICONE. Congressman, I grew up in northwestern Connecticut. I’m a big Patriots fan, and I certainly hope you’re right. 

Mr. MEEHAN. Mr. Glickman, it’s great to have you back before 

the Committee. You were an outstanding Member of Congress. The 

MPAA seeks Congressional ratification of both the FCC’s Broadcast 

Flag Order and its companion Digital Content Protection Technology Approval Order. 

Now, as you know, the technology approval order in that order, 

Chairman Martin expressed concern that the non-assert clause in 

some of the technological agreements could hinder competition and 

suppress innovation. I’m curious: do you believe from your perspective that licensing agreements issued pursuant to Government 

mandated rules, the essential purpose of which is to protect intellectual property should be permitted to contain provisions which 

expressly require licensees to surrender their own intellectual property as a prerequisite to enabling a Government mandated license? 

And I’m curious, it seems isn’t such a provision completely inconsistent with protecting the intellectual property rights that is, in 

essence, the essence of the proposed legislation to fix the problem? 

Mr. GLICKMAN. Well, to be honest with you, we have not taken 

a specific position on that, and I’m going to have to get back to you 

on that. As a general proposition, we don’t think that the FCC’s 

ruling is inconsistent with the flexibility that you talked about, but 

can’t answer the question quite candidly right now. 

Mr. MEEHAN. Would anyone else like to comment on it? 

Mr. GLICKMAN. I will get you an answer shortly. 

Mr. MEEHAN. Okay; thanks, Dan. 

Thank you, Mr. Chairman. 

Mr. CANNON [presiding]. The Gentleman yields back. 

Does the Gentleman from Florida have questions? 

Mr. Wexler is recognized for 5 minutes. 

Mr. WEXLER. Thanks. 

First, I’d like to compliment all four witnesses, because I think 

each one of you has been an extremely effective analyst, spokesperson for your point of view, and even though you have differing 

points of view, I think the Subcommittee has learned a great deal 

from them. 

In the context of trying to figure out the equities or the balance 

in terms of the competing points of view, I would like, if I could, 

to ask Mr. Petricone: if I understand your position correctly, and 

obviously, you’ll tell me if I don’t, but if I understand your position 

correctly, you articulate that Congress should move forward with 

67

the broadcast flag legislation with any of the three proposals, including H.R. 1201, which has been referred to and Mr. Boucher 

specifically talked about. 

If my analysis is correct, if that’s what occurred, if that’s what 

Congress did, then, in effect, we’d be passing legislation that collectively repealed the DMCA and then, depending on whose point of 

view you buy, either make it impossible to close the analog hole 

and implement the broadcast flag or at least make it more difficult 

to close the analog hole and implement the broadcast flag. So if we 

did that, and if this Subcommittee, if we were trying to balance the 

interests, why or how would that be a fair resolution? 

Mr. PETRICONE. Let me first start off by saying, you know, again, 

I represent the technology industry. We are an intellectual property industry. We invent things. That’s what we do. So I’m keenly 

aware of the need for strong intellectual property protections. As 

far as H.R. 1201, clearly, we view it differently. It does not allow 

decryption for infringing purposes. Again, we believe that is entirely consistent with consumer fair use and the kind of fair use 

that ought to be protected. 

We believe that linking H.R. 1201 with the kind of narrow broadcast flag approach that I previously discussed, you know, would 

balance, again, protecting the copyright holders and giving them 

additional protections but also protecting consumers and allowing 

them to make use of content that they have lawfully acquired. 

Mr. WEXLER. Would you agree that as it relates to the effect of 

1201, on one hand, and I think Mr. Glickman said it from his point 

of view, the hole is so large you could drive a truck through, would 

you agree that—and you have a different point of view, obviously, 

but the net effect of 1201 has got to either be we entirely make it 

impossible to close the analog hole, or we make it a little bit more 

difficult to close it or somewhere in between. But clearly, there’s no 

effect of 1201 that makes it more likely to close the hole. Is that 

a fair statement? 

Mr. PETRICONE. Again, I think you’re talking about a balance between perfect control of one’s intellectual property, and, you know, 

on the other side, no control. And what we believe 1201 does is 

merely allows consumers, lawful consumers, to do with their works, 

with their lawfully acquired property, the things they ought to be 

able to do anyway. 

So does it move away from perfect control of IP, well, yes, it does. 

But it does it in a way that protects rights that consumers have 

and should have. 

Mr. WEXLER. Thanks. 

Mr. CANNON. The gentleman yields back. 

Do you want to——

Mr. BERMAN. Yes, Mr. Chairman, I’d ask unanimous consent that 

anyone who wants to ask an additional question preceded by a 

short statement be allowed to. [Laughter.] 

Mr. CANNON. With the reservation of an objection if the statement gets too long, without objection, so ordered. 

Mr. BERMAN. Yes; Mr. Chairman, if I may be recognized, I want 

to—we’ve touched on this, but I think it’s so new, and it’s so interesting, and it shows how something done for one purpose gets totally twisted to another purpose. 

68

And I want to go back to this issue of the satellite services. In 

effect, a wonderful new technology that provides an incredible diversity of music and programming, XM and Sirius, linked up with 

an interactive service that allows in the case of XM, I think it’s 

Napster that allows people to buy what they’ve heard now is coming featured with a new device made by one of your member companies which in effect allows you never to listen to one piece of 

music that’s coming on the satellite radio; to have it recorded 50 

hours of programming, 50 hours, about 750 songs, to get a list of 

those songs, and to decide which of those songs you now want to 

make copies of for your library, disaggregate, delete, save, without 

listening to the program, and for the price of your monthly subscription or the monthly service. 

This is not what was intended when we granted the license for 

satellite radios. That was a performance license, not a mechanical. 

It was not intended to be for, in effect, reduced by 98 percent per 

copy situation. The long-term consequences of that are going to end 

up not only killing the traditional sales models but the online services programs and the downloading and the ITunes and all of this 

other stuff. 

And so, there’s a real problem out here which can’t just be 

passed off. You’re now replacing sales, whether they’re the traditional kinds of sales or the online sales, with this kind of a mechanism. And my question is what do you say to that? No. [Laughter.] 

Mr. PETRICONE. Thank you. 

I think what you just described in audio terms is what I do with 

my TiVO on a daily basis. And I guess what I say is I think that’s 

okay, you know. 

Mr. BERMAN. Your TiVO, to get your television programming, so 

you can watch it, right. 

Mr. PETRICONE. I index. 

Mr. BERMAN. Right. 

Mr. PETRICONE. I disaggregate. It gives me more control of my 

programming. 

Mr. BERMAN. So you have no reason to go to the retail store and 

buy TV programming. 

Mr. PETRICONE. As a matter of fact, I end up watching a lot more 

TV, and I think almost everybody would agree that the TiVO is a 

wonderful invention loved by millions of Americans. 

But I think, again, what I think you’re talking about here is a 

licensing dispute between the satellite companies, XM and Sirius, 

and Mr. Bainwol and his members. And, you know, our approach, 

I guess, is to ensure that that licensing dispute is resolved through 

the mechanisms in part that you have set up. But the solution is 

not to deprive consumers of these new digital technologies and 

functionality which we think will expand the market for digital 

music. 

Mr. BERMAN. Just to respond, I am a little off the point of the 

specifics of this hearing, but it has come up in this context; it’s indicative of a particular problem. I don’t think this proposed legislation does it; Mr. Bainwol, though, did you want to make any comment about that? 

Mr. BAINWOL. You know, there is a licensing process that we will 

go through as it relates to the performance, again, but this is not 

69

about the performance. And we keep on getting lost; let’s be candid 

here: this is about substituting for a distribution, either a purchase 

of a CD or a rental from Yahoo or a purchase from an ITunes or 

a Wal-Mart. That’s totally different. 

And our concern here is not just satellite. There’s a convergence 

across platforms, over the air and then also across platforms under 

114, where you’re getting this radio functionality where you can do 

the substitution. When you aggregate that together, what that really means is a very major challenge in terms of these new models 

that are trying to get some traction. Those models are essential to 

our future, and if we blow them up, that is damaging not only to 

ITunes and to Yahoo and Rhapsody but to creators as well. 

Mr. BOUCHER. Mr. Chairman? 

Mr. SMITH [presiding]. Thank you, Mr. Berman. 

Yes, Mr. Boucher. 

Mr. BOUCHER. I guess the question is who’s next? [Laughter.] 

Mr. SMITH. I can see some eagerness for additional questions. 

The Gentleman from Virginia is recognized. 

Mr. BOUCHER. Thank you very much, Mr. Chairman. 

Let me just comment on that conversation that the XM and Sirius signals can only be recorded on the XM and Sirius devices, and 

those devices presently and as they’re being designed for the next 

generation, as I understand it, do not have digital outputs. And so, 

once the recording takes place, it’s on that portable device, and 

that’s where it stays. 

Mr. BAINWOL. But it becomes your IPod substitute. You can move 

your other material into that device, take it with you. This is mine, 

which we think is a pretty cool thing. You put it into that device. 

You marry up those songs that you marked without listening to. 

It’s not like the old days, when you pressed a button. You’re not 

listening; you’re marking the songs you want with metadata, and 

then, you’re marrying it up in a consolidated library, taking that 

little portable device with you wherever you want. 

It’s really cool. It’s a fantastic little device. The problem is it’s 

something that it really isn’t, and that is it is radio becoming 

ITunes. 

Mr. BOUCHER. I have a limited period of time here. Let me just 

note this, and then, I’m going to pass to the real question I want 

to ask, which is to Mr. Glickman. 

Every time that music is transmitted by satellite by XM or Sirius, the compensation goes to the recording industry, to all copyright holders. This is all done pursuant to licensing. So if the compensation isn’t right, and if people are making this greater use of 

it, I’m sure that’s going to get reflected in the negotiations down 

the road. I need to leave this and go on to another subject. 

Mr. Glickman, I just want to give you an opportunity to respond 

to the question I asked earlier, which you gave a terrific answer. 

I listened to every word of it, but I didn’t hear the answer to the 

real question. And so, let me phrase the—— Mr. GLICKMAN. Is this the answer you wanted or the real answer? [Laughter.] 

Mr. BOUCHER. No, it was just any answer you choose to give. But 

I’d like it addressed to the question, and the question is this: I see 

no reason why, if we’re going to authorize a broadcast flag, we 

70

should allow the flag to be applied to news. Ms. Sohn said it very 

well: nobody packages news for later CD sales or DVD sales. And 

it should not be applied to public affairs programming. 

Let me give an example, just this example: I’m on the road. I’m 

a candidate for reelection. My opponent, clever as he is, well funded, as I am sure he will be, keeps producing these troublesome television ads, and because I’m constantly on the road with my laptop, 

my staff wants to be able to email these TV ads to me. 

Now, my opponent is not gracious enough to give us a hard copy 

of these things. We have to record them off the air. And so, what 

my staff does is record it off the air, convert that ad into an email, 

send me the email. Now, if that’s flagged, they can’t do that. So it’s 

a public affairs program, this ad is, and I could cite many, many 

other examples. 

So my question to you is I don’t think your industry is harmed 

if we authorize the broadcast flag and do it in a way that says that 

news and public affairs programming is not eligible to be flagged, 

and I would just like your response to that. 

Mr. GLICKMAN. I’m willing to talk to you about it. I would say 

this, that again, I want to make sure there is parallel treatment 

between cable, satellite and over-the-air broadcast, because if 

there’s not, then, nature abhors a vacuum, and the vacuum will 

come in there. Second of all, I would say that there are an awful 

lot of video news services now out in the marketplace, as I’m sure 

you’re aware much more than when I was in this business. 

And so, the market has come in to fill that gap fairly adequately, 

but, you know, look: the heart of our position is we want nothing 

that will, in fact, cause the end of over the air television to occur 

during this time period. 

Mr. BOUCHER. Okay; so we’ll talk about it. 

All right, thank you very much. Thank you, Mr. Chairman. 

Mr. SMITH. Thank you, Mr. Boucher. 

Does the gentlewoman from California have an additional question? She is recognized. 

Ms. LOFGREN. I referred to it just briefly before my time ran out 

on the first set of questions, but I’d like to ask the Mr. Petricone, 

is that how you pronounce it? 

Mr. PETRICONE. Petricone. 

Ms. LOFGREN. Petricone. 

On the so-called analog hole, you know something, I really hate 

that. It’s like we’re in the analog world right now, and I don’t feel 

that I’m in a hole, but I’ll just state that. 

The bill refers to CGMS-A and veil technologies, and it also, in 

section 107, says the Patent and Trademark Office can adopt improvements to veil technology but that they shall be limited to adjustments or upgrades solely to the same underlying veil technology. Now, what strikes me about this is, number one, I don’t 

know whether these technologies have been through some sort of 

industry standard setting process or how they arrive; whether this 

is just a Government mandate, and how we’re going to envision 

technology innovation with this draft provision. 

Do you have a comment on that? 

Mr. PETRICONE. Sure; before I comment on that, I’d just like to 

comment on something Mr. Bainwol said. Mr. Bainwol and I agree 

71

on something, which is the MyFi device he has in front of him is 

an incredibly cool device. It was introduced last year at the Consumer Electronics Show. The consumer response has been terrific. 

There has been no indication of harm to the recording industry. It’s 

a great product. 

Ms. LOFGREN. Well, maybe he’ll hold it up again, and we can——

Mr. BAINWOL. Time shifting is really cool. Distribution is not. 

Mr. PETRICONE. The down side, unfortunately, is that under this 

bill we’re looking at today, that product would be illegal. Section 

A would permit recording only in increments of no less than 30 

minutes’ duration, and that records for longer than 30 minutes. 

And this is an issue our industry faces. Every time we try to introduced a product that allows consumers to use content in a new and 

more flexible way, like MyFi, like Slingbox and so on, we either 

face legislative hurdles or litigation, and frankly, it is becoming a 

very difficult environment for American innovators, and that is Exhibit A. 

As far as responding directly to your question, our concern, I 

think, is a slightly different concern, and that is CGMS-A is widely 

known within the technology industry. It’s been talked about; we 

understand it. Veil is largely unknown. We’re not sure how it operates. We’re not sure what the impact would be on plain and ordinary and regular uses of devices. I guess most critically, we have 

no idea what the licensing and intellectual property situation is 

and where it would be used, who would require licenses. And that 

is one of our most significant reservations about this bill. 

Ms. LOFGREN. You don’t know who holds the patent, if anyone? 

Mr. PETRICONE. At this point, we do not know, so both from the 

patent side and the operational side, veil is a bit of a mystery to 

us. 

Mr. GLICKMAN. May I disagree? 

Ms. LOFGREN. Sure. 

Mr. GLICKMAN. And not that I’m—there’s more acronyms in this 

business than there are even in the Pentagon, but just so that you 

know, this didn’t come out of the blue. There have been extensive 

discussions with a variety of working groups, technical working 

groups from the industry, and I’m talking about the technology industry, and as I’ve indicated, too, the largest companies, neither of 

whom, I understand, have an interest in these technologies; IBM 

and Thompson endorsed it as a way to try to deal with this problem. 

And then, but what we’ve done in the legislation is we have 

thought that the appropriate people to try to issue the regs were 

the Patent and Trademark Office. 

Ms. LOFGREN. Well, it’s a very unusual role for the Patent Office 

to play and one I would be very—given the state of pendency at 

the Patent Office and the other problems they have, I would be 

very reluctant to assign something like that to the Patent Office at 

this point. 

Mr. GLICKMAN. But we would be willing to work with this Committee to massage this if necessary, but the idea was that through 

a long period of time, a lot of technology companies said this is a 

way to——

72

Ms. LOFGREN. If I may, and maybe people can give some thought 

to this, I think we almost always do better if there’s private sector 

standard setting, and there can be a multiplicity of standards, and 

let the market select which standard works best. And you could, I 

guess, have somebody certify it, but so far, that process has served, 

you know, all of us pretty well, and I would recommend that we 

think through alternatives such as that. 

Mr. GLICKMAN. If I just—I don’t disagree with you, but in some 

cases, especially in this interface between technology and content, 

as you know, because you represent so much of this, it’s very, very 

difficult to get people together. Mr. Bainwol has talked about this. 

And in certain cases, the Government and the Congress have engaged in the areas to try to get some standards involved. We think 

this is a case that’s appropriate to do that, because we’re not very 

sanguine that this is going to happen without it. 

Mr. BERMAN. Would the Gentlelady yield? 

Ms. LOFGREN. Yes. 

Mr. BERMAN. It seems to me back early this year, we had this 

bill that mandated a technology that allowed certain technology 

users to filter out frames from—— Ms. LOFGREN. So parents could take the smut out of movies? 

Mr. BERMAN. I didn’t vote for that legislation, offended by the 

idea of mandating a technology; I’m not sure that was the general 

position. 

Ms. LOFGREN. It wasn’t a mandate. It allowed the technology to 

be used, to correct the record. 

Mr. BERMAN. Yes, it said if you’re going to do something, you’ve 

got to do it this way. 

Mr. BOUCHER. Parents had the option; isn’t that correct? 

Ms. LOFGREN. That is correct. 

I will just say we’ve got a long ways to go on all of this. I am 

more than eager to work with everybody for a solution that works. 

But I do think that if the Government is going to start micromanaging the technology, we’re heading down a road that will probably 

not be pleasing to us several years from now and that there are 

ways that maybe we can work through incentives and disincentives 

in some ways that will be useful that private standard setting 

might actually be helpful. And I appreciate the Chairman’s allowing the second questioning. 

Mr. SMITH. Thank you, Ms. Lofgren. 

Thank you to all of the witnesses today as well. This has been 

very informative, obviously. There has been a little bit more difference of opinion on the part of the Members than is usual, just 

as there has been a difference of opinion on the part of the panelists as well, but it has all been informative, and we will move forward with your good expertise in mind. 

Thank you all for being here, and the Subcommittee stands adjourned. 

[Whereupon, at 4:37 p.m., the Subcommittee adjourned.] 

(73)

A P P E N D I X 

MATERIAL SUBMITTED FOR THE HEARING RECORD

STATEMENT OF THE HONORABLE HOWARD BERMAN, A REPRESENTATIVE IN CONGRES

FROM THE STATE OF CALIFORNIA, AND RANKING MEMBER, SUBCOMMITTEE ON

COURTS, THE INTERNET, AND INTELLECTUAL PROPERTY

There have been many positive developments in the copyright context during the 

past year. For example, The Family Entertainment Copyright Act was signed into 

law to provide better tools to prevent unauthorized distribution of content; the Supreme Court in the Grokster decision held that those that facilitate copyright infringement will be held directly accountable for their actions; and in response to judicial and legislative action, testimony at subcommittee hearing confirms that that 

universities are adopting anti-piracy technologies and instituting file-sharing education programs that are greatly reducing the amount of illegal file-sharing that 

takes place on campuses. But even with these many advances the fact that mass 

indiscriminate distribution of unauthorized copies is still an option allows piracy to 

remain a potent force. 

In addition to providing us with movies, sound recordings and television programs, the core copyright industry accounts for over six (6) percent of the U.S. gross 

domestic product - which translates into employing more then 5.48 million workers 

and over $626 billion dollars. As a result, allowing rampant piracy to continue has 

the potential to severely harm the American economy. It is already a grave threat 

to all copyright creators. Therefore, we need robust protection of creativity to support everyone—from the most famous artists, to the unrecognized set designer; from 

the shareholders and executives of studios and R&D record companies, to the many 

thousands of hourly wage earners who work for them. 

Perhaps what many fail to realize is that strong protection of intellectual property 

is also necessary to benefit the consumer. Without adequate safeguards for content, 

it is easier for those in the creative chain to fall prey to piracy, and this jeopardizes 

the authors’ and creators’ ability to continue engaging in additional and new creative endeavors and content creation. Clearly, with fewer original projects, in the 

end, the consumer will have less choices. 

Our goal is to provide consumers with a first rate, rich and abundant selection 

of music and movies, in any format, at any time and at any place. This kind of accessibility to music and movies, however, creates a tension for content owners, who 

though they want to widely distribute their works, also need to protect the content 

of their works from unauthorized copying and distribution. Content owners do need 

to rely on the development of new and inventive technologies for distribution in 

order to provide the consumer with superior selection and accessibility. We must, 

therefore, be careful to not allow consumer considerations and technology inventors 

to trump our concerns for creators, and vice versa. There must be an appropriate 

balance which fosters creativity of new expression, innovation of new products and 

accessibility to creative works. However, with the seemingly daily advances in technology, the much needed equilibrium is off-kilter, leaning away from creators. 

This hearing is much different that previous discussions of piracy. Many of the 

issues surrounding Peer-to-Peer file sharing involved clearly bad actors. But here, 

I believe, we are trying to bring the ‘‘good guys’’ into the process. 

We all generally agree that creators must be adequately compensated for the 

value of their works. I suppose the question today is how. Truly adequate compensation would probably involve providing a full performance right for sound recordings. 

Truly adequate protection measures would also prevent abusive use of technology 

when redistributing copies in both the digital or analog realm. 

The passage of time and design of new functionalities in devices has compelled 

us to re-examine the patchwork in the Copyright Act to determine whether some 

of the provisions need to be altered to address lack of suitable copy protection or 

74

the need for limitations on retransmission mechanisms. Ideally content protection 

systems will be developed that are both secure for the distribution but are not intrusive to the legitimate expectation of consumers. However, as technologies become 

more sophisticated and gain more interactive functionalities, this balance may have 

to be recalibrated. We may also need to engage additional partners (Commerce) to 

help us. 

The market is an exciting place right now. New technologies are emerging to help 

bring the consumer many additional options for how they receive their content - HD 

radio devices are being installed in cars, XM Satellite has a new service, many television sets contain broadcast flag technology and a number of players are currently 

in the market which can re-convert the analog signal to digital content. We must 

ensure that as each of these technologies is rolled out they are complying with the 

spirit of the copyright law - which at its core demands rightful compensation and 

adequate protection for the creator. 

I look forward to hearing from the witnesses to describe the challenges they face 

- and the effect legislation would have on helping them meet those challenges.

STATEMENT OF THE HONORABLE JOHN CONYERS, JR., A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF MICHIGAN

A creator’s right to their intellectual property would be meaningless without the 

ability to enforce it. It is Congress’s job to make sure that copyright owners are able 

to protect their content from theft, whether it is in analog or digital form. 

It is worth repeating that copyrighted content serves as this nation’s number one 

export. The sale of music, movies, games, books, and other media provides our economy with billions of dollars in annual revenues. Creators of such content depend on 

their ability to sell their work in order to employ thousands of artists, writers, and 

programmers in this country. 

Unfortunately, the same technologies that enhance our educational and entertainment experiences are being used to deprive creators of their livelihoods. Several 

software programs were written for the sole purpose of allowing free access to copyrighted content. The copyright laws, in general, and the Digital Millennium Copyright Act, in particular, have helped combat these acts of theft. 

While these laws have encouraged copyright owners to release their content in 

digital form, a new problem has arisen. Creators have developed technology to protect their work, but not all devices obey such technology. If creators cannot ensure 

the viability of their anti-piracy efforts, they will be resistant to transitioning away 

from analog content and toward digital content. Such resistance would be unfortunate but understandable; that is why we must ensure there are no loopholes in 

copyright law. 

In closing, I would suggest that the need to plug loopholes in the law should not 

be used to trade on other proposals. Providing necessary content protection is directly related to the transition to digital; without such protection, there will be no 

digital content and no need for new electronic devices.

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STATEMENT OF THE HONORABLE ADAM SCHIFF, A REPRESENTATIVE IN CONGRESS

FROM THE STATE OF CALIFORNIA


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LETTER FROM FRED VON LOHMANN, SENIOR STAFF ATTORNEY FOR INTELLECTUAL

PROPERTY, ELECTRONIC FRONTIER FOUNDATION


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STATEMENT OF BROADCAST MUSIC, INC.


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LETTER FROM THOMAS M. BRACKEN, VICE PRESIDENT, WORLDWIDE MARKETING AND

COMMUNICATIONS, THOMSON SERVICES SBU TO THE HONORABLE LAMAR SMITH, A

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS, AND CHAIRMAN, SUBCOMMITTEE ON COURTS, THE INTERNET, AND INTELLECTUAL PROPERTY


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STATEMENT OF THE NATIONAL ASSOCIATION OF BROADCASTERS

The National Association of Broadcasters hereby submits this statement to the 

House Judiciary Committee’s Subcommittee On Courts, The Internet, and Intellectual Property. NAB supports the provisions of the discussion draft before the Subcommittee giving authority to the Federal Communications Commission to reinstate the DTV broadcast flag previously adopted by the Commission. In contrast, 

with regard to the portions of the draft related to copy protection for new digital 

audio broadcasts and receivers, NAB has reservations. As explained below, NAB is 

concerned that such anti-copying measures would almost certainly stall the digital 

radio transition without solving the unauthorized copying problems of the recording 

industry. 


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The DTV Broadcast Flag 

NAB supports Congress’ providing the FCC with specific authority to re-instate 

its regulations implementing a broadcast flag for digital television adopted in 2003. 

The DTV broadcast flag mechanism was developed over many years of intense negotiations by scores of participants from a wide array of industry sectors. The purpose, 

concept and methodology of the DTV flag were then the subject of voluminous comments and reply comments from affected industry and consumer groups, companies 

and organizations. The FCC scrutinized these comments, heard in-person presentations from many interested parties and concluded that the purpose of preventing 

widespread indiscriminate re-distribution of digital video content over the Internet 

was worthy and that the methodology was sound and workable. Although the D.C. 

Circuit Court of Appeals ultimately decided that the FCC lacked authority to impose 

these regulations, the policy remains valid and should be implemented. This Subcommittee and the Congress as a whole should endorse legislation making the 

FCC’s authority to promulgate regulations in this area clear. 

The DTV flag will help insure that high value digital video programming will not 

migrate off free, universal, over-the-air television to platforms that can assure protection for such programming against widespread, unauthorized and indiscriminate 

internet distribution. Without such protection, NAB fears that content owners will 

withhold high-value productions from broadcast television and thus that the television medium that is available for free to all in this country will be reduced to carrying second-rate shows rather than continuing to be the envy of the world as it 

is today. The flag can preserve, for the benefit of all viewers, the ability of free television to attract and broadcast high quality content. Consumers win when today’s 

system of free broadcast television remains robust and of the highest quality. 

It is particularly important that the protection of the broadcast flag apply to all 

programming on broadcast stations, and thus NAB opposes any attempt to exempt 

local broadcasters’ news or public affairs programs from the protection of the flag. 

While broadcasters freely and widely distribute their news and public affairs programming, they should retain the right to protect their copyrighted news and public 

affairs programs, which typically are the main or only product of local broadcasters. 

Unauthorized internet redistribution could well eviscerate the program exclusivity 

of news or public affairs programs of stations in local markets, as well as undermine 

the original broadcast and its accompanying revenue by re-distributing programs 

across time zones, thus allowing Internet viewing before the original show is seen 

on local stations in western U.S. markets. Such results would wreak havoc on stations’ audience ratings and advertising revenues, not to mention their network relationships. 

It would be ironic indeed if the DTV broadcast programming that is produced in 

the new digital format (whose claim to fame is high quality) by DTV broadcasters 

(who will have spent billions to convert to DTV) could wind up degraded by compressed re-distribution and distributed to the detriment of those stations and networks. 

It is important to recognize that the DTV flag will not prevent consumers from 

copying broadcast footage for personal and family use. The flag is intended to prevent indiscriminate and widespread Internet distribution that could result in commercial copying and re-sale should not be facilitated by considering an exemption 

of broadcasters’ news products from the protection of the broadcast flag. 

In sum, NAB also supports Congress’ giving the FCC authority to re-instate the 

DTV flag because the flag protects consumers’ expectations about freely copying television content for personal use in the digital world. 

Digital Radio and Copy Protection 

In contrast to our support of the DTV broadcast flag, NAB has concerns about 

current proposals for digital radio copy protection. At the outset, NAB wants to 

make clear that it opposes piracy in all shapes and forms. Broadcasters are, themselves, victims of piracy of their content and their signals and support efforts to protect both, and to prosecute violators. 

The Recording Industry Association of America’s (RIAA) has expressed concerns 

regarding the possibility of indiscriminate recording and distribution of musical recordings from digital radio broadcasters. NAB here raises several points about 

RIAA’s proposals. We see significant differences between the RIAA proposals and 

the DTV broadcast flag. We are concerned that these proposals could well slow new 

digital radio service yet fail to achieve meaningful benefit. 

NAB is greatly concerned that developing and implementing a technical system 

to provide copy protection, particularly one involving encryption of the broadcast signal, would have an inevitable negative impact on the digital radio transition curVerDate 0ct 09 2002 12:07 Mar 28, 2006 Jkt 000000 PO 00000 Frm 00091 Fmt 6601 Sfmt 6621 G:\WORK\COURTS\110305\24373.000 HJUD2 PsN: 24373
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rently being rolled out. Arriving at a consensus on a technical copy protection mechanism would not be a simple or swift matter. 

Most troubling is RIAA’s suggestion of encrypting the digital radio signal. This 

is likely to risk stalling the digital radio transition by requiring a change in the 

technical digital radio broadcasting standard of such magnitude that a year’s delay 

and likely more would be inevitable. Resulting uncertainty in the marketplace and 

potential loss of confidence and interest in IBOC by manufacturers now ready to roll 

out IBOC receivers would harm broadcasters and threaten the public’s receiving the 

advantages of digital radio. There has been as of yet no investigation of what kind 

of encryption would be utilized, what copy control and re-distribution measures 

would be added (and acceptable to various stakeholders) and what features receivers 

can and cannot employ in terms of storage and replay. 

Encryption of IBOC transmissions, even at this early stage, would likely result 

in obsolescence of millions of units of IBOC components currently in the production 

pipeline, including receivers, integrated circuits and installed component parts in 

automobiles, thereby increasing manufacturers’ and auto makers’ frustration with 

deployment of IBOC products. 

Encryption and copyright protection considerations with regard to digital radio 

differ in important ways from the DTV broadcast flag. The DTV broadcast flag does 

not involve copy restrictions (as does RIAA’s proposal for digital radio) but rather 

precludes only indiscriminate re-distribution of broadcast programming over the 

Internet. The DTV broadcast flag does not disable the existing base of ‘‘legacy’’ receivers, which will simply not ‘‘read’’ the flag and its instructions on re-distribution. 

As noted above encryption of IBOC signals would obsolete receivers now in the field 

as well as receivers and component parts currently in the production pipeline. With 

the DTV flag, there was an acknowledged problem and a consensus solution developed by a broad cross-section of industry participants; here there is neither. 

For the foregoing reasons, there remain serious questions about both the need for 

additional legislation to protect sound recordings with respect to over-the-air digital 

broadcasts and the methods by which that protection should be accomplished.

AMERICAN LIBRARY ASSOCIATION V. FEDERAL COMMUNICATIONS COMMISSION, 406 

F.3D 689

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ANALOG HOLE LEGISLATION DISCUSSION DRAFT


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ANALOG HOLE LEGISLATION SUMMARY


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ANALOG HOLE LEGISLATION TABLE W


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