Hollings Launches Hardware Bill

If Senator "Fritz" Hollings has his way, coming generations of electronic products will monitor their users' behavior and report possible copyright violations to some governmental regulatory agency. That's one of the more ominous provisions in Hollings' Consumer Broadband and Digital Television Promotion Act (CBDTPA), introduced for consideration by the US Senate the third week of March. The bill goes far beyond the Digital Millennium Copyright Act, passed in 1998.

The new bill was introduced just a few weeks after Hollings and a Senate subcommittee had grilled top executives from the entertainment, telecommunications, and electronics industries on the issue of copy protection in the digital age. Should it pass both houses of Congress and be signed into law by President Bush, it will require all new electronic products—computers and audio/video equipment—to contain monitoring devices to prevent unauthorized copying of protected intellectual properties, in particular, software, movies, and music.

Washington observers give it even chances of passage in the Senate. The House of Representatives is reportedly less concerned about protecting Hollywood's profits; a similar bill has not been introduced there. Its presence in the Senate is widely seen as an incentive to all concerned industries to come up with a solution for the piracy problem.

The CBDTPA (previously known as the Security Systems Standards and Certification Act) is strongly backed by the entertainment industry, which has called for a legally-mandated hardware solution to the piracy problem in the wake of the audio file-sharing phenomenon that some executives blame for the prolonged slump in recorded music sales. It's equally opposed by the computer and consumer electronics industries, whose executives complain that its restrictions will inhibit product development and make collaborative designs difficult. The bill's restrictions on the sharing of information could make it hard for unrelated companies to build compatible products, critics from the computer industry have asserted. Although most people outside the affected industries are not yet aware of the bill's implications, some grass-roots organizations have arisen to fight it. The Consumer Electronics Association has made many public statements opposing such legislation.

After threatening to do so for more than a year, Hollings finally introduced his bill at the behest of Hollywood bigwigs like Disney CEO Michael Eisner and Motion Picture Association of America president Jack Valenti, whose patronage has earned the 80-year-old South Carolinian the nickname "The Democrat from Disneyland." The film industry's approach to the "Napsterization" problem—a legal and legislative fight against new technology rather than a welcoming embrace of its commercial potential—is part of a long tradition. Twenty years ago, as VCRs entered the market, Valenti predicted that they would be the demise of the film industry. The same prediction was made 50 years ago, as television gained popularity. Drive-in movies—an entertainment format that has almost completely disappeared—were targeted for the same reason: Somewhere, someone might be able to watch for free. Each of these threats became a new, important stream of revenue for the industry. Television franchise fees and video rentals especially worked miracles for Hollywood's bottom line.

It's amazing how the entertainment industry has had to learn the same lesson over and over. In 1994, it was already clear that the Internet was an inevitability. Three years later, when dot-com hysteria was beginning to gain serious momentum, would have been a perfect time for film studios to form partnerships for secure online distribution. By now, with broadband increasingly available, film studios would have been reaping rewards from a business model that could eventually dwarf the video rental business.

Instead they have chosen to use the courts and the legislature to attempt to force the market to adhere to a business model that will eventually be obsolete. The process has engendered plenty of resentment among an otherwise fairly law-abiding public. "How deep go the talons of Internet movie piracy? . . . With what velocity will this avalanche of thievery roar when broadband is more widely used?" Valenti recently wrote to the Wall Street Journal. The coming movie file-sharing storm could have been averted by a little forward thinking; instead, it will become yet another of Hollywood's self-fulfilling prophesies.

With the Consumer Broadband and Digital Television Promotion Act, Big Brother's gestation period has begun. Will he go full term and grow to become George Orwell's all-seeing, all-knowing supervisor of citizens? That depends entirely on how outraged they become about losing their basic freedoms.

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