Erratum

Appendix A, "The Effect on Backward Compatibility of a Ban on Analog Outputs,"
attached hereto at p. 35, was inadvertently omitted from the
Comments of Philips Electronics North America Corporation
in MB Docket No. 02-230 (filed electronically on December 6, 2002)




B
EFORE THE

F
EDERAL
C
OMMUNICATIONS
C
OMMISSION

W
ASHINGTON
, D.C. 20554




In the Matter of



)
) MB
Docket
No.
02-230
Digital Broadcast Copy Protection
)







)






)






)




COMMENTS OF
PHILIPS ELECTRONICS NORTH AMERICA CORPORATION


Thomas
B.
Patton
Vice President, Government Relations
Philips Electronics North America
Corporation
1300 Eye Street, N.W.
Suite 1070 East
Washington, D.C. 20005
(202) 962-8550

Thomas M. Hafner
Vice President and General Counsel
Philips Consumer Electronics North
America, a division of Philips Electronics
North America Corporation
64 Perimeter Center, East
Atlanta, GA 30346
(770) 821-2232

December 6, 2002
TABLE OF CONTENTS



Page

-i-


I. INTRODUCTION
AND
EXECUTIVE SUMMARY....................................................... 1
II.
STATEMENT OF INTEREST IN THIS PROCEEDING ................................................ 4
III.
ESSENTIAL BACKGROUND FOR THE NPRM WHAT IS THE
BROADCAST FLAG AND HOW DOES IT RELATE TO DIGITAL CONTENT
PROTECTION SYSTEMS?.............................................................................................. 5
IV.
THE QUESTION OF WHETHER TO IMPLEMENT A BROADCAST
DIGITAL CONTENT PROTECTION SYSTEM NOW MUST BE DRIVEN BY
AN ANALYSIS OF THE NATURE AND IMMEDIACY OF THE THREAT,
AND THE EFFECTIVENESS OF THE TECHNOLOGY TO ADDRESS A
NARROW, IDENTIFIED PROBLEM.............................................................................. 7
A.
The Scope of the Asserted Problem....................................................................... 8
1.
What Digital Broadcast Content Is To Be Protected? ............................... 8
2.
The Scope of DTV Content Protection...................................................... 8
B.
Do the Threat of Unauthorized Retransmission of Broadcast HDTV and
the Effectiveness of the Proposed Solution Warrant Immediate FCC
Action?................................................................................................................. 11
C.
The Commission Has an Obligation to Investigate Emerging Content
Protection Technologies That Promise More Effective and Comprehensive
Solutions to the Actual and Identifiable Problems .............................................. 14
V.
IF THE COMMISSION CONCLUDES THAT BOTH THE THREAT TO
DIGITAL CONTENT AND THE AVAILABILITY OF EFFECTIVE
SOLUTIONS WARRANT ADOPTION OF A DTV CONTENT PROTECTION
SYSTEM AT THIS TIME, ANY SPECIFIC RULES IT PROMULGATES
SHOULD ADHERE TO CERTAIN FUNDAMENTAL PRINCIPLES......................... 15
VI. PENDING
MORE
DEFINITIVE
CONGRESSIONAL ACTION, THE HOUSE
ENERGY AND COMMERCE COMMITTEE'S SEPTEMBER 2002 STAFF
DRAFT PROVIDES VALUABLE GUIDANCE TO THE COMMISSION ON
IMPLEMENTATION OF THE BROADCAST FLAG .................................................. 17
VII.
ESTABLISHING A REASONABLE AND PRO-CONSUMER APPROACH TO
BROADCAST DTV PROTECTION .............................................................................. 19
A.
Any Digital Broadcast Content Protection Regime Must Preserve
Consumers' Fair Use Expectations...................................................................... 19
B.
Any Digital Broadcast Content Protection Regime Must Preserve
Competition and Innovation In The Content Protection and Digital
Equipment Technology Markets.......................................................................... 21
TABLE OF CONTENTS



Page

-ii-


VIII. THE BPDG REPORT RESULTED FROM A FLAWED PROCESS, DOES NOT
ACCOMMODATE CONSUMER FAIR USE EXPECTATIONS, AND
THREATENS COMPETITION AND INNOVATION .................................................. 25
IX.
FCC AUTHORITY TO REGULATE THE WAY CONSUMER ELECTRONICS
DEVICES REACT TO A BROADCAST FLAG IS UNCLEAR ................................... 28
X. CONCLUSION................................................................................................................ 34

APPENDIX A The Effects on Backward Compatibility of a Ban on Analog Outputs


B
EFORE THE

F
EDERAL
C
OMMUNICATIONS
C
OMMISSION

W
ASHINGTON
, D.C. 20554




In the Matter of



)
) MB
Docket
No.
02-230
Digital Broadcast Copy Protection
)







)






)






)


COMMENTS OF
PHILIPS ELECTRONICS NORTH AMERICA CORPORATION

Philips Electronics North America Corporation ("Philips") respectfully submits these
comments in the above-captioned proceeding concerning use of a broadcast flag to protect
against the unauthorized redistribution of digital broadcast television content over the Internet.
1

I.
INTRODUCTION AND EXECUTIVE SUMMARY
The NPRM identifies insightfully the complex and critical technical and public policy
issues associated with the protection of free, over-the-air digital TV from unauthorized Internet
redistribution to the public. Will studios withhold high-value content from unprotected
broadcast DTV? What is the problem's immediacy and scope? How can the Commission
ensure that a digital broadcast content protection regime will enhance rather than degrade
consumers' DTV experience and will not result in a consumer backlash that will slow the
transition? What will be the impact of a regulatory content protection scheme on competition

1

See, In the Matter of Digital Broadcast Copy Protection, MB Docket No. 02-230, Notice of Proposed
Rulemaking, 67 Fed. Reg. 53903 (Aug. 20, 2002) ("NPRM").

2

and future innovation in key technology markets for consumer electronics devices and content
protection technologies? Does the Commission possess authority to remedy this problem, if one
exists, or must it await enactment of enabling legislation by the Congress?
Before the Commission adopts any digital broadcast content protection system at this
time, it should determine that the nature and urgency of the threat to the DTV transition posed by
potential unauthorized retransmission of HDTV and other high-value broadcast digital content
over the Internet requires immediate regulatory intervention. Philips respectfully submits that
proponents of a broadcast flag-triggered, encryption-based DTV broadcast content protection
system have not yet met their burden of demonstrating the need for immediate Commission
action, especially where the Commission's authority to regulate in this area is unclear. If the
Commission concludes, however, that it must act now, it should define the specific threat and
undertake a probing analysis of the costs, effectiveness and consequences of using various
competing content protection technologies and methodologies to address that threat.
In that evaluation, the Commission should not be constrained by encryption-based
solutions, such as the comprehensive, proprietary, privately-licensed system triggered by the
broadcast flag
2
that was considered by the Broadcast Protection Discussion Group ("BPDG").
3

There is no sustainable public policy rationale for rushing to implement an encryption-based
broadcast flag solution, with technology such as DTCP (often referred to as "5C") that was not
designed nor developed to protect over-the-air broadcast content, that inherently limits all

2

As discussed in detail below, the broadcast flag itself is only a series of bits in the DTV bitstream that acts
as a signaling mechanism triggering implementation of a content protection technology. The flag itself confers no
protection.
3

See, "Final Report of the Co-Chairs of the Broadcast Protection Discussion Subgroup to the Copy
Protection Technical Working Group" (June 3, 2002) ("BPDG Co-Chairs' Report"). As discussed in Section VIII of
these Comments, Philips believes the BPDG Co-Chairs' Report, and the process by which it was produced, to be
irredeemably flawed.

3

Internet distribution (including broadband Internet connections), including that among family
and friends, and negatively affects home copying, especially while the "analog hole" problem
persists. The Commission should consider emerging content protection technologies, including
watermarking and/or fingerprinting.
If the Commission determines, however, that immediate action on an encryption-based
solution triggered by the broadcast flag is warranted, it should recognize that it is embarking on
an extraordinarily complex and intrusive regulatory exercise. Any rules it promulgates should
adhere to the following fundamental principles, many of which are reflected in the House Energy
and Commerce Committee Staff Draft released in September 2002:

Preserve the functionality of consumer equipment for lawful, non-commercial use
and protect consumers' fair use expectations;

Be established and implemented through open, transparent and pro-competitive
processes;

Employ objective technical criteria;

Be narrowly tailored to address only those content protection problems, if any,
found to be impeding the DTV transition;

Protect the reasonable expectation of the content community to prevent the
unauthorized Internet retransmission to the public of content deemed essential to
driving the DTV transition (i.e., HDTV or other high-value digital content);

Promote innovation and rapid roll-out of content protection technologies and
consumer electronics products, including those used to record, shift, and store
digital content;

Not enshrine private licensing arrangements that confer, or are capable of
conferring, competitive advantages on licensors of particular content protection
technologies or systems;

Promote competition by allowing the use of any competing content protection
technology that is conducive to competition, innovation and consumer fair-use
expectations so long as it meets certain objective technical criteria; and

Ensure that compliance and robustness rules determined by the public policy
process apply uniformly to receiving devices and to downstream sink and

4

playback devices that receive content protected using authorized protection
technologies.
II.
STATEMENT OF INTEREST IN THIS PROCEEDING
Philips has a very proud history--and today is at the cutting edge--of introducing world-
class products designed to bring consumers the benefits of the latest digital technologies for
television and television displays (including the widescreen television format
4
and flat TV). It is
a leader in video compression, storage and optical products, as well as in semiconductor
technology.
Philips invented the Compact Disk, or "CD," the most widely implemented digital
technology. Philips is among the leading suppliers of DVD players and DVD recorders, and is a
leader in the PC monitor and CD-ReWritable markets.
Philips was a founding member of the Grand Alliance, which pioneered the ATSC DTV
standard, and has been a leader in the development and implementation of terrestrial digital
television in the United States.
Philips also has been an active participant in the development of content protection
technologies. Philips invented, and offered to the consumer electronics industry, at no cost, the
Serial Copy Management System, or SCMS, a "bit flag" technology which, by providing the
necessary instruction to the recording device as to whether a copy is or is not allowed, prevents
the unauthorized reproduction of multiple generations of copies of digital audio works from a
copyright-protected original (while permitting a single generation of copies). Philips also is

4

On October 3, 2002, Philips received the prestigious Technological/Engineering Emmy Award for its
"lifelong contribution" to the development and commercialization of widescreen television.

5

actively developing watermarking and fingerprinting technology to protect digital video and
audio content.
Philips is committed to seeking content protection solutions that strike the proper balance
among the consumer, the content owner and the equipment manufacturer. For years, Philips has
been a constructive participant in inter-industry content protection activities, and has dedicated
millions of dollars and thousands of hours of effort from its best engineers to groups such as the
Copy Protection Technical Working Group (CPTWG), the Secure Digital Music Initiative
(SDMI), and the Broadcast Protection Discussion Group (BPDG).
Philips' strong record of achievement in technological innovation--and consumer
acceptance of these technologies--is directly attributable to the availability and use of open
standards, a commitment to preserving consumers' fair use expectations, and a competitive
environment that promotes the development and introduction of innovations while not
overburdening manufacturers.
III.
ESSENTIAL BACKGROUND FOR THE NPRM WHAT IS THE BROADCAST
FLAG AND HOW DOES IT RELATE TO DIGITAL CONTENT PROTECTION
SYSTEMS?
Before addressing the myriad public policy questions raised by the "broadcast flag," it is
essential to understand what the broadcast flag is and is not and to adopt a framework for
analyzing digital content protection systems triggered by the broadcast flag.
The broadcast flag, itself, is nothing but a series of bits carrying a single command
allow retransmission over the Internet, or do not allow retransmission over the Internet within
the digital bitstream. It, alone, confers no protection for the content to which it is attached. The
content protection is accomplished by separate digital content protection technologies and
systems built into consumer electronics equipment that handles the content. These technologies

6

may be acquired under license. Under the proposal considered by the BPDG, the "response"
would require a "chain" of encryption and decryption of all digital interconnections and digital
copies once the broadcast flag is recognized. Such an approach would affect all devices that
could possibly be part of a digital home network including all receiving devices (e.g., DTV
receivers, set-top boxes, VCRs, PVRs, etc.) and downstream devices that receive content from
those receiving devices (e.g., DVD player/recorders, flat screen and other monitors, computer
processors, etc.).
Regardless of which encryption and decryption technologies are used in conjunction with
the broadcast flag, their incorporation into a consumer electronics device will be governed by a
license, including associated compliance, robustness and encoding rules (collectively, "license
terms"). These license terms will directly affect core public policy goals that are essential to
both the success of the DTV transition and to the promotion of competition and innovation more
generally. Will consumers' fair use expectations be preserved by the rules governing these
encryption technologies? Will digital device manufacturers and technology innovators compete
and innovate on a level playing field?
Thus, what is at issue in this NPRM is not the regulation of the broadcast flag the bits;
there is no need for regulating them. Instead, the regulation is the mandate on consumer
electronics devices to recognize and respond to the broadcast flag. To the extent that this
mandate involves encryption-based content protection technologies/systems, such as DTCP (5C)
and CPRM (4C), it necessarily involves the creation of a regulatory superstructure to oversee the
those parts of the system. This regulatory regime necessarily would involve Commission
oversight of digital content protection technology licensing terms and changes thereto that
have the potential to skew the competitive landscape, and the establishment and oversight of fair

7

and open processes, as well as the creation of objective technical criteria, for the selection of
content protection technologies.
5
Indeed, such a regulatory commitment by the Commission is
indispensable to implementation of a DTV content protection regime that preserves consumers'
fair use expectations, protects competition and innovation in key manufacturing and technology
markets feeding the DTV transition, and accelerates the DTV transition.
IV.
THE QUESTION OF WHETHER TO IMPLEMENT A BROADCAST DIGITAL
CONTENT PROTECTION SYSTEM NOW MUST BE DRIVEN BY AN
ANALYSIS OF THE NATURE AND IMMEDIACY OF THE THREAT, AND
THE EFFECTIVENESS OF THE TECHNOLOGY TO ADDRESS A NARROW,
IDENTIFIED PROBLEM
Before adoption of any digital broadcast content protection system can be justified at this
time, Philips believes that the threat of unauthorized retransmission to the public over the
Internet of broadcast digital content deemed essential to driving the DTV transition (i.e., HDTV
and other "high value" content) must be sufficiently defined and urgent and the proposed
solution sufficiently effective and balanced to warrant immediate action. If the proponents of
the broadcast flag those who seek regulatory intervention cannot make these requisite
showings, the Commission should defer issuing any rule pursuant to this NPRM. In any event,
however, the Commission should continue to explore emerging content protection approaches
that might offer innovative and more comprehensive solutions while being more respectful of
consumers' fair use expectations than encryption-based solutions.

5

Philips provides specific recommendations on the criteria that should be used in Section VII-B, infra.

8

A.
The Scope of the Asserted Problem.
1.
What Digital Broadcast Content Is To Be Protected?
There is a consensus that HDTV and other "high value added" digital programming is a
key driving factor in propelling the DTV transition. Indeed, the Commission's contemplation of
digital content protection in the first place flows from a concern that the lack of such protection
might inhibit the availability of "high quality programming...broadcast digitally," thereby
making consumers "reluctant to invest in DTV receivers..." and thus "delaying the DTV
transition."
6
Moreover, broadcasters also express concerns about HDTV and other
"revolutionary" digital programming migrating to pay services such as cable or DBS absent
effective content protection mechanisms to prevent unauthorized widespread retransmission of
such broadcasts over the Internet.
Therefore, to the extent the Commission's involvement in digital content protection
derives from its determination, reinforced by the Congress, to accelerate the DTV transition, it
should focus on protecting HDTV and other "high value digital content." Philips recognizes that
content owners' copyright interests apply to all of their works, regardless of their perceived
"quality." However, the rationale for Commission action to protect standard definition DTV
content that is not a driver for the DTV transition is attenuated.
2.
The Scope of DTV Content Protection.
Not all retransmissions of protected HDTV content (or any protected content) over the
Internet should be technologically precluded or legally prohibited. Consumers of free, over-the-
air television should be permitted to send their favorite programs over the Internet to their own

6

NPRM at 1.

9

second homes, vehicles or boats, and to their family and friends, as long as reception can be
limited, in the words of the Copyright Act, to within "a normal circle of a family and its social
acquaintances."
7
Such uses are consistent with the legally established rights of copyright users,
promote the "public benefit" espoused in the Copyright Clause of the U.S. Constitution and
copyright case law, and are entirely appropriate in light of broadcasters' receipt of spectrum for
the purpose of providing digital television (including HDTV) to the public.
While copyright owners have a legitimate interest in protecting the markets for their
works, the Copyright Act is predicated on balancing the incentives to copyright owners (creators)
with the public interest in accessing their creations.
8
Accordingly, copyright owners' rights are
limited,
9
and are subject to numerous statutory exceptions, including fair use.
10
Of the four
relevant "fair use" factors recited in the Copyright Act, the most important is "the effect on the
potential market for the copyrighted work."
11
It is well established that private recording for
"time-shifting" television programs, i.e., in order to watch them at a later time of convenience,
has no adverse effect on the market and is a fair use.
12
Indeed, as discussed at length by the
Supreme Court in Sony, permitting consumers to utilize technology facilitating the viewing of
broadcast television programs "actually enhances the value of . . . copyrights [in the programs],"

7

See 17 U.S.C. 101 (definition of "to perform or display a work `publicly'").
8

See U.S. Constitution, Article I, cl. 8 ("The Congress shall have Power . . . To Promote the Progress of
Science and useful Arts, by securing for limited Times to Authors and Inventors the Exclusive Right to their
respective Writings and Discoveries"); Sony Corporation v. Universal City Studios, Inc., 464 U.S. 417, 429 (1984)
(Congress' task assigned by the Copyright Clause requires "a difficult balance between the interests of authors and
inventors in the control and exploitation of their writings and discoveries on the one hand, and society's competing
interest in the free flow of ideas, information, and commerce on the other hand.").
9

See, e.g., 17 U.S.C. 102 (limiting extent of copyright)
10

See 17 U.S.C. 107.
11

Id.; Harper & Row, Publishers, Inc. v. Nation Enters., 471 U.S. 539, 566 (1985).
12

See Sony, 464 U.S. 417, 451-56.

10

"makes it possible for more persons to view [the] broadcasts," and is permitted and encouraged
by numerous broadcasters.
13
Similarly, digital recording for purposes of "space shifting" (e.g., to
render portable a digital file stored on a hard drive) has been found to be a "paradigmatic non-
commercial personal use" akin to the time-shifting addressed in Sony.
14

There is no evidence (and copyright owners have thus far not claimed) that private
retransmission of free broadcast television (e.g., to family and friends) is, economically, any
different from private recording for time-shifting and space-shifting. Like private taping and
portable digital recording, such retransmission increases viewership, making it more convenient
for more consumers to watch the programs of their choice, including programs that have been
recommended by trusted friends and family.
15

Likewise, the copyright owner's statutory, exclusive right of "public performance" does
not include performances within or to "a normal circle of a family and its social
acquaintances."
16
Courts interpreting this definition consistently have noted that it reflects the
legal and economic differences between the private or personal use of entertainment content, and
making such content available to the public.
17


13

Sony, 464 U.S. 417, 445, 446 n. 28, 454.
14

Recording Industry Associate of America v. Diamond Multimedia Systems, 180 F.3d 1072, 1079 (9
th
Cir.
1999).
15

See Sony, 464 U.S. 417, 446 n. 28, 454 (noting potential benefits of increased viewership in the
advertisement and ratings-driven television market).
16

See 17 U.S.C. 101 (definition of "to perform or display a work `publicly'").
17

See, e.g., Columbia Pictures Industries, Inc. v. Professional Real Estate Investors, Inc., 866 F.2d 278, 280-
81 (9
th
Cir. 1989) (noting that viewing a program in a hotel room is like doing so in one's private home, in that it is
not "open to the public" and provides "a substantial degree of privacy," and that "a gathering of one's social
acquaintances is normally regarded as private" and thus does not implicate the public performance right); see also
Broadcast Music, Inc. v. Claire's Boutiques, Inc., 949 F.2d 1482, 1488 (7
th
Cir. 1991); Bagdadi v. Nazar, 84 F.3d
1194, 1199 (9
th
Cir. 1996)..

11

Indeed, draft legislation circulated by the staff of the House Energy and Commerce
Committee addressing the digital television transition, released in September 2002, for example,
establishes the scope of protection as "distribution to the public over the Internet."
18
Senior
Members of that Committee, such as Representatives Markey and Boucher, also have expressed
specifically the view that Internet retransmission of broadcast DTV content within a circle of
family members and friends should not be restricted.
19

Currently, the encryption-based content protection technologies that have been proposed
to respond to the broadcast flag are incapable, technologically, of permitting private,
noncommercial Internet redistribution of flagged content over the Internet to family and friends
while preventing such Internet redistribution to the public. This is a significant technological
flaw directly impinging on consumers' fair use expectations. It warrants or perhaps requires the
Commission to investigate other content protection technologies that do not pose that danger.
B.
Do the Threat of Unauthorized Retransmission of Broadcast HDTV and the
Effectiveness of the Proposed Solution Warrant Immediate FCC Action?
In light of the potential harm to consumers' fair use expectations and the attendant
dampening of consumer enthusiasm for DTV, advocates of a broadcast flag mechanism must
bear the burden of proving the immediacy of the need. That is an extremely difficult burden to
sustain at this time, in light of the continuing existence of the "analog hole" and the practical,
technological limitations of computer technology available to consumers.

18

See discussion at Section VI, infra.
19

See, Ensuring Content Protection in the Digital Age: Hearing Before the Subcomm. on
Telecommunications and the Internet of the House Comm. on Energy and Commerce, 107th Cong. 74 (2002); see
also Consumer Issues at Forefront of DTV Hearing, Communications Daily, September 26, 2002, at 3.


12

Today, unfettered retransmission of broadcast content, including digital content
"protected" by a technology triggered by the broadcast flag, is possible by passing that content
through an unprotected analog output (found on virtually any consumer device) and then re-
digitizing content using an analog-to-digital converter. Due to technological limitations, analog
outputs cannot be encrypted, and the broadcast flag is not preserved when the content to which it
is attached passes through an unprotected analog output. The end product of this relatively
simple process is precisely what content owners seek to prevent using the broadcast flag:
unencrypted digital content that can be retransmitted over the Internet. This process is what is
referred to as the "analog hole."
While one solution banning all analog outputs might seem relatively simple, such an
approach is utterly untenable from a consumer perspective and, derivatively, not politically
feasible.
20
Banning all analog outputs would create a horrific legacy equipment problem,
rendering obsolete hundreds of millions of products previously purchased by consumers which
rely on analog outputs conspicuously including early adopters' HDTV receivers and displays.
21

As the Commission can imagine, this would incite nothing less than a consumer rebellion that
would halt the DTV transition in its tracks. Importantly, banning analog outputs also would
make impossible any digital-to-analog set-top box, which consumers will need to service the 200
million-plus analog TVs and VCRs, once analog broadcasts end. Additionally, such a ban would

20

Indeed, during a September 25, 2002, hearing of the House Subcommittee on Telecommunications and the
Internet on the Committee Staff Draft, which includes language that would ban all analog outputs as of July 1, 2005,
a number of Subcommittee members most notably full Committee Chairman Tauzin expressed grave concerns
about the negative impact of this proposal on consumers. See, Bill McConnell, DTV Picture Far From Clear,
Broadcasting & Cable Online September 30, 2002. See also, Consumer Issues at Forefront of DTV Hearing,
Communications Daily, September 26, 2002, at 2.
21

The extent of the legacy equipment problem is depicted on the chart addressing backward compatibility,
which is attached as Appendix 1 to these Comments.

13

create an enormous disposal of consumer electronics equipment problem with attendant costs
and strain to local infrastructures. Finally, analog interfaces between devices and analog
recording technologies offer consumers significant benefits (including affordability, simplicity
and high quality) that should not easily be eliminated by fiat from the marketplace.
Consequently, until a technology is developed to protect content over analog interfaces
and in analog recordings, broadcast DTV will remain vulnerable to digitized content
retransmission as is the case if DTV remained unprotected. For the Commission to padlock and
bar the digital "front door" while the analog "back door" is left wide open makes little public
policy sense.
Moreover, the state of consumer broadband technology largely mitigates the immediacy
of the threat of widespread redistribution of digital content over the Internet. First of all, the vast
majority of consumers do not have the necessary bandwidth to engage in widespread uploading
and downloading of HDTV content to and from the Internet. In fact, today and for the
foreseeable future, sending broadcast HDTV (i.e., the high value works deemed critical to
driving the transition to DTV) over the Internet in any reasonable amount of time (i.e., 30
minutes or less) requires such a level of compression as to necessarily degrade the signal well
below its native high definition resolution. By contrast, using today's Internet technology, it
would take approximately 25 hours using a 1.5 Mbps broadband connection, and 28 days using a
more common 56 Kbps telephone modem, to retransmit a 2-hour HDTV broadcast movie in its
native resolution.
22
Even a 2-hour SDTV broadcast would take approximately 5 hours to

22

Estimates of normal broadband/dial-up modem transfer rates above are conservative; actual rates are
typically lower (for instance, broadband connections typically provide speeds significantly less than 1.5 Mbps).
Furthermore, many Internet Service Providers would not tolerate full bandwidth transfer lasting 25 hours.

14

retransmit in its native resolution using a 1.5 Mbps broadband connection, or 142 hours over a 56
kbps dial-up modem.
23

Notwithstanding these technological constraints limiting the real world risks associated
with unauthorized redistribution of HDTV and other high value digital content to the public over
the Internet, there remains a genuine question about whether content owners believe the risk is
sufficient that they will withhold such content if the FCC does not implement a digital content
protection solution reasonably quickly. Clearly, the major broadcast networks are broadcasting
increasing amounts of prime time and premier sports programming in HDTV, partly in response
to Chairman Powell's April 4, 2002, voluntary initiative.
24
Only the major broadcast networks
and their content suppliers can provide the definitive answer to this inquiry and the related
question of whether they may still withhold top tier HDTV and other programming even if the
broadcast flag is implemented but the issue of how to protect analog outputs is left unresolved.
A clear understanding of program producers' intentions in this regard will be helpful to the
Commission as it evaluates the need for and timing of a content protection regime for digital
broadcast programming.
C.
The Commission Has an Obligation to Investigate Emerging Content
Protection Technologies That Promise More Effective and Comprehensive
Solutions to the Actual and Identifiable Problems
In light of the lack of a solution to protect analog content and the technological
limitations discussed above, the Commission should explore alternative digital broadcast content
protection solutions. Since the rise and fall of Napster, the level of interest worldwide in digital

23

Again, these transfer rates are conservative.
24

See, Letters from The Honorable Michael K. Powell to The Honorable Ernest F. Hollings and W.J. "Billy"
Tauzin, Proposal for Voluntary Industry Actions to Speed the Digital Television Transition, (April 4, 2002).

15

content protection technologies has skyrocketed. This phenomenon has been mirrored in the
public policy arena. Given the expanding level of resources and research dollars being devoted
to this issue, it is virtually certain that new digital content protection technologies and
methodologies will emerge. Some likely will be both more comprehensive in their sweep, yet
more respectful of consumers' fair use expectations, than the current generation of encryption-
based systems.
25
Whatever the Commission does in this proceeding, it must ensure that the
opportunity remains available to introduce new, innovative digital content protection solutions
for DTV and other applications. An open door will spur creative competition among some of the
foremost research companies and best minds in the world. Locking in existing digital content
protection systems can only stifle innovation to the detriment of consumers.
V.
IF THE COMMISSION CONCLUDES THAT BOTH THE THREAT TO
DIGITAL CONTENT AND THE AVAILABILITY OF EFFECTIVE SOLUTIONS
WARRANT ADOPTION OF A DTV CONTENT PROTECTION SYSTEM AT
THIS TIME, ANY SPECIFIC RULES IT PROMULGATES SHOULD ADHERE
TO CERTAIN FUNDAMENTAL PRINCIPLES
If the Commission nonetheless determines that immediate adoption of a DTV content
protection regime is warranted, Philips respectfully suggests that any implementation of such a
regime abide by the following fundamental principles:


Preserve the ability of consumers to use their equipment for lawful, non-
commercial purposes, rather than treat consumers as would-be criminals, to make
acceptance of the DTV transition desirable for consumers;

25

For instance, watermarking and/or fingerprinting architectures could create formidable obstacles for any
person wishing to place their personal copies on the Internet without rendering obsolete any equipment currently in
use or threatening consumers' fair use expectations. Such solutions could mitigate Internet retransmission to a
considerable degree. Notably, watermarking is the only technology that allows the reclamation of content that has
already been placed on a file-sharing system. Unlike encryption-based systems, which are either absolutely secure
or fail absolutely, a properly designed watermarking system can conspire to limit the utility of improperly
distributed content to the point where placing copyrighted material on a file-sharing system becomes a useless act.

16


Be established and implemented through open processes in which the public has a
full opportunity to comment and, if necessary, petition for change, rather than be
the exclusive province of private parties with vested interests;

Be based on objective technical criteria;

Be narrowly tailored to address only those digital content protection problems, if
any, that are demonstrably impeding the DTV transition, rather than be
overinclusive or underinclusive;

Protect the reasonable expectation of the content community in preventing the
unauthorized retransmission to the public of HDTV or other high-value digital
content over the Internet in a way that preserves consumers' reasonable fair-use
expectations.

Promote innovation and rapid roll-out of content protection technologies and
consumer electronics products, including those used to record, shift, and store
digital content;

Not enshrine private licensing arrangements that confer, or are capable of
conferring, competitive advantages on licensors of particular content protection
technologies or systems;

Allow any competing content protection technology that is conducive to
competition, innovation and consumer fair-use expectations so long as it meets
certain objective criteria; and

Ensure that compliance and robustness rules apply uniformly to receiving devices
and to downstream sink and playback devices.
Adhering to these core principles is essential to ensuring that approved DTV content
protection technologies create opportunities--not dangers--for consumers, manufacturers,
software designers and other DTV innovators while accomplishing the essential but narrow
purpose of protecting HDTV and other high value digital broadcast content from unauthorized
retransmission over the Internet to the public at large.

17

VI.
PENDING MORE DEFINITIVE CONGRESSIONAL ACTION, THE HOUSE
ENERGY AND COMMERCE COMMITTEE'S SEPTEMBER 2002 STAFF
DRAFT PROVIDES VALUABLE GUIDANCE TO THE COMMISSION ON
IMPLEMENTATION OF THE BROADCAST FLAG
Following the Commission's adoption of the NPRM, the bipartisan staff of the House
Energy and Commerce Committee, under the direction of Chairman Tauzin and Ranking
Democrat Dingell, released a draft of comprehensive DTV legislation that addresses directly the
issue of the broadcast flag and its implementation.
26
Philips suggests that Section 5 of the
Committee Staff Draft, supplemented by the Philips principles enumerated above, serve as a
baseline from which the Commission moves forward in the event it concludes that any regulation
of consumer electronics equipment with respect to the broadcast flag is necessary at this time.
Specifically, Section 5 of the Committee Staff Draft would require implementation of the
broadcast flag in a manner that:

Protects consumers' ability to enjoy the full functionality of equipment intended
for lawful, non-commercial use, and prohibits technology licensing terms,
including any associated compliance, robustness and encoding rules, that would
diminish such functionality;
27


Relies on objective and technology neutral criteria, established in an open and
public process by the Commission, for identifying viable protection
technologies;
28


Limits the scope of any protection system aimed at the Internet to retransmissions
to the public at large;
29


26

"Staff Discussion Draft, H.R. __, To require the Federal Communications Commission to take actions
necessary to advance the transition to digital television service, and for other purposes," (Rel. Sept. 18, 2002)
("Committee Staff Draft").
27

Id. at new Section 340(b)(2)(C) and (b)(5)(A).
28

Id. at new Section 340(b)(2).
29

Id. at new Section 340(b)(2)(A).

18


Requires technology licensing terms to be narrowly tailored to only prevent theft
of services;
30


Prohibits content protection technologies that place unnecessary or unreasonable
burdens on product design or manufacture, or that stifle innovation;
31
and

Provides for an expedited process, including self-certification, by which DTV
content protection technologies are approved by the FCC.
32

But perhaps most instructive about the Committee Staff Draft is that it would NOT:

Allow controlling entities to diminish consumers' lawful, non-commercial use of
their equipment;

Pre-ordain a particular technology;

Give any industry segment unfettered control over "authorized technologies" such
that they might gain important market advantages, such as lead time to market, or
have a stranglehold on innovation;

Give controlling entities the ability to shape associated compliance and robustness
rules to the disadvantage of their competitors; or

Allow controlling entities to obtain advance market intelligence about their
competitors' products.
In short, the Committee Staff Draft, quite wisely, does not "anoint" the BPDG Co-Chairs'
Report. Although the Committee Staff Draft acknowledges the broadcast flag as a tool to protect
digital broadcast content, it also insists upon protecting the full functionality of equipment for
legal, non-commercial use by consumers, promoting competition, and fostering innovation.

30

Id. at new Section 340(b)(5)(B).
31

Id. at new Section 340(b)(2)(B).
32

Id. at new Section 340(b)(1).

19

VII. ESTABLISHING A REASONABLE AND PRO-CONSUMER APPROACH TO
BROADCAST DTV PROTECTION
If and once the Commission determines that the establishment of a government-imposed
content protection system is warranted, the question becomes how to apply the core public policy
principles of protecting consumer fair use expectations, preserving competition and promoting
innovation, reflected in the Committee Staff Draft and endorsed by Philips, in a manner that
provides meaningful and effective protection for digital broadcast HDTV content (or any other
DTV content the Commission determines is the appropriate subject of protection, as discussed
above). To that end, Philips offers the following specific recommendations:
A.
Any Digital Broadcast Content Protection Regime Must Preserve
Consumers' Fair Use Expectations.
If digital content protection solutions degrade consumers' digital experience in
relationship to digital expectations and analog background, the experience will trigger a
consumer backlash against the DTV transition, more than offsetting the potential benefits to the
transition of DTV content protection. Any limitations on consumers' ability to use and
manipulate DTV that exceed those applied today to analog television will slow the DTV
transition. Conversely, the transition will move more smoothly and rapidly if the great flexibility
of digital technology is allowed to enhance the consumer experience by facilitating storage,
processing, organization and handling of content.
The Commission Should Ensure That No Content Protection Technology Is Employed
That Limits Consumer Copying Of Broadcast Content In Any Way. Similarly, encryption should
not be employed in ways that inhibit the public's ability to manipulate or process content within
a device. Consumers expect to be able to record over-the-air broadcast television. They expect
to be able to play back those copies on any similar format player, regardless of where it is

20

located, and to skip over content that does not interest them. The digital transition cannot be
permitted to limit these capabilities.
The Compliance Rules Applicable To Receiving Devices And To The Output And
Recording Technologies Are Critical. The former dictate how consumers may use their
receiving devices to handle content; the latter dictate how consumers may use "sink" (in the case
of interface technologies) or playback (in the case of recording technologies) devices to handle
the content (e.g., whether recordings may be made and how they may be made and what outputs
may be used). There is no justification for allowing private parties to impose different and more
restrictive rules on downstream sink and playback devices than are imposed on devices that
receive DTV content over-the-air in the first instance. It is for that reason that Philips strongly
believes that all compliance and robustness rules applicable to DTV content should be adopted
and implemented in an open public policy-driven process and that the rules for receiving, sink
and playback devices should be the same, regardless of where in the device chain a given
product is found.
Technologies That Permit Consumers To Engage Freely In "Fair Use" Activity Should
Be Favored. Thus, for example, if a technology permits consumers to send a program over the
Internet to a family member away on business or attending college, or to a summer home, while
preventing Internet retransmission to the public at large, it should have an edge over competitive
content protection incapable of so differentiating. Conversely, a technology that inhibits fair use
should be regarded skeptically.
The Adoption Of A Content Protection Regime That Requires The Use Of Encrypted
Digital Recordings Should Be Viewed Critically. Consumers have continued to purchase digital
playback devices (such as DVD players) with the expectation that they will be able to use those

21

devices in the future to play back digital recordings made by other devices using the same
format. The fair use expectation to record necessarily embraces the expectation to play back.
Any system that requires the encryption of recordings will preclude consumers from using their
existing playback devices to play those future recordings of DTV. Such a rule should not be
implemented in the absence of a compelling showing of need, which has so far not been made.
The Committee Staff Draft, as noted supra, recognizes the importance of these principles.
The Draft provides that the Commission should ensure that its broadcast protection rules "do not
result in altered or diminished functionality of a consumer's digital television reception and
recording equipment as intended for legal noncommercial use."
33
A system that inhibits
legitimate use of playback devices clearly alters and diminishes functionality. Further, the
Committee Staff Draft limits the rules to those "that are no broader in scope than necessary to
implement the requirements of this section."
34
A technology that inhibits consumer fair use is
not necessary to implement broadcast protection against Internet retransmission to the public.
B.
Any Digital Broadcast Content Protection Regime Must Preserve
Competition and Innovation In The Content Protection and Digital
Equipment Technology Markets
Just as specific measures are necessary to translate the goal of preserving consumers' fair
use expectations into reality, concrete FCC actions also are essential to preserving competition
and innovation in the content protection and digital equipment technology markets.
The FCC Should Adopt a Uniform Set of Reasonable Compliance and Robustness Rules.
There is no justification for allowing private parties to impose rules for the handling of broadcast
content on downstream devices that are any different from those that are imposed by the

33

Id. at new Section 340(b)(5)(A).
34

Id. at new Section 340(b)(5)(B).

22

Commission on receiving devices. Further, the ability to manipulate compliance and robustness
rules provides the controlling entities with the ability to threaten competition and innovation in
both consumer devices and competing protection technologies.
35

Proposed Content Protection Technologies Should Be Measured According to Objective,
Technical Criteria. Consistent with the Committee Staff Draft, proposed digital content
protection technologies should be measured against a set of objective technical criteria.
Establishing such clear, objective criteria would promote competition and innovation by making
it easier to bring content protection technologies, and devices that employ them, to market. A
regulatory body could also identify "safe-harbor" protection technologies, and manufacturers
could self-certify compliance of new content-protection technologies and electronics devices.
Philips suggests that the Commission might draw upon the technical resources and expertise of
the National Institute of Standards and Technology within the Department of Commerce in
accomplishing these tasks.
36


35

For example, both the DTCP and CPRM compliance rules provide their own list of approved output and
record protection technologies that may well diverge from the list of technologies approved by the FCC-mandated
process. Sink devices and playback devices may only use technologies on the approved 5C and 4C lists
(respectively). Such a rule, if permitted, would grant the entities that control FCC-approved technologies the ability
to foreclose other technologies from widespread use, even if the FCC process later approves the competing
technology. Similarly, unlike the rules proposed for receiving devices, the DTCP rules prohibit integrated PVRs
from making unencrypted copies, even though those copies cannot be removed from the device on which they are
made. As a result, manufacturers will be limited in their ability to offer consumers innovative means of
manipulating, organizing and storing the content.
36

Such self-certification and expedited safe-harbor procedures would meet the objectives, articulated in the
Committee Staff Draft, that a content protection regime "recognize and utilize multiple technologies that have been
developed by private industry," and "take into account technological advances subsequent to the adoption of
[objective] criteria." See Committee Staff Draft at new Section 340(b)(2)(D)(ii)-(iii).

23

The specific criteria upon which Philips believes any acceptable content protection
technology should be judged include the following:
37


Any broadcast flag technology should be designed such that defeating or avoiding
the technology would require either: 1) use of a device that is beyond the ordinary
capability of an ordinary user to construct; or 2) acquisition of the keys to an
encryption system that is at least 56 bits in length. When protected content is
digitally output, transmitted, or recorded over a digital interface, the technology
should also ensure that the content continues to contain information marking it as
protected.

The technology should confirm that devices receiving marked content comply
with the digital output, recording and compliance rules. The technology should
accomplish such authentication in a way that prevents unauthorized snooping on
the interface. The technology should not, however, allow content providers to
mark content in a manner that restricts its use in ways beyond those reasonably
necessary to prevent unauthorized redistribution to the public over the Internet.

The specifications of the technology and the compliance rules that govern its use
should be final and clearly defined. Indeed, neither the technology nor the rules
should be subject to change (other than to correct truly non-functional errors, such
as typographical errors) except through a consensus process that: 1) involves both
licensees and content providers; 2) allows time for implementation (ordinarily not
less than 18 months); and 3) provides adequate notice before approval or
implementation of any change to ensure that no one has any advantage in
implementation.

The technology should be made available under license to third-parties pursuant
to fair, reasonable, and nondiscriminatory terms and conditions. Such terms and
conditions must not restrict use of covered broadcast content in ways unrelated to
the goal of preventing unauthorized redistribution to the public. Output and
recording technologies authorized for use with an approved broadcast flag
technology should allow use of digital outputs and recordable media protected by
other approved technologies without requiring additional approval.

There should also be a defined, neutral process for evaluating a technology
against these criteria. Moreover, no output technology should be approved until a
certain minimum number of competing output technologies are also approved.
Similarly, no recording technology should be approved until a minimum number
of competing recording technologies have been approved.

37

Philips originally proffered these criteria, in slightly different form, to the BPDG, and they were included
(at Tab G) in the BPDG Co-Chairs' Report.

24

The Commission Should Create One Set of Open Standards, Subject to Public Input and
Oversight. Creating one set of open standards, subject to public input and government oversight,
also would prevent any industry segment from commandeering the content protection regime.
No subset of participants could change the rules to their benefit, take control of product design,
or claim approval rights and control competition in downstream encryption technologies. Any
technology allowed to handle content for devices that receive/demodulate broadcast DTV
content would be allowed to handle content in downstream products. An open standards-setting
process also would prevent anticompetitive abuses such as ensuring that industry competitors are
not able to take advantage of advance, inside knowledge and/or lead time to market.
Importantly, the standards also must apply to all products in the DTV chain. Such an
approach would ensure that no one device in the chain is vulnerable to attack as the weakest link
and that all devices share the content-protection burden equally. If different products are subject
to different rules, some devices would inevitably be prohibited from incorporating features
available in other devices, such as the ability to store unencrypted copies of content, making
certain devices less desirable and limiting the ability of manufacturers to tailor the functionalities
of their products to enable new and intriguing uses.
Content Protection Technology Should Not Impose Unreasonable Burdens on Product
Design or Manufacture. To preserve the ability to innovate, the content protection technology
should not impose unreasonable burdens on product design or manufacture, and should be
compatible with all functionalities of consumer equipment manufactured before January 1, 2006,
as well as with non-infringing transmission over the Internet and within a consumer's personal
network.

25

Any Safe Harbor Technology Should Be Made Available Under Reasonable And Non-
Discriminatory License Terms. Any technology that is adopted as a "safe harbor" will have a
head start in becoming a de facto standard. As such, any safe harbor technology should be made
available under reasonable and non-discriminatory license terms and any changes to the
technology or licenses should be subject to public policy review. The ability to change the
technology, or the license or rules governing a technology, can provide insiders with advance
knowledge, lead time to market and thus an unwarranted competitive advantage. Further, safe
harbor technology should be made available under licenses that relate only to the handling of
broadcast DTV content. To do otherwise would allow the proponent licensors to use the DTV
mandate to leverage their control into the handling of other content. Such licensing tactics would
interfere with the operation of markets for the design and sale of products designed to handle
digital audiovisual content as well as markets for the design and development of competing
content protection technologies. To ensure that competitors have an opportunity to develop rival
systems, any license terms, including compliance and robustness rules, associated with a safe
harbor content protection technology also must not be subject to nondisclosure agreements.
VIII. THE BPDG REPORT RESULTED FROM A FLAWED PROCESS, DOES NOT
ACCOMMODATE CONSUMER FAIR USE EXPECTATIONS, AND
THREATENS COMPETITION AND INNOVATION
Philips has been outspoken in expressing its concerns about the BPDG Co-Chairs'
Report, and the FCC should not adopt the technology discussed in that Report as the template for
a governmentally imposed content protection regime. The process by which the BPDG Co-
Chairs' Report discussed only a single proposal was flawed. Moreover, that proposal does not
adequately accommodate consumer fair use expectations, and threatens both competition and
innovation.

26

The BPDG initially was designed as a forum of experts to flesh out a proposal for the
protection of broadcast digital content. It was not tasked with making public policy
recommendations, nor could it take on such a task in light of the tight time constraints. Thus,
key public policy issues implicated by the BPDG Co-Chairs' Report remained unresolved,
including: (1) whether the proposed content protection technology should prevent Internet
retransmission to the public or provide more restrictive protection; (2) whether such protection
should extend only to high definition transmissions or all digital content; (3) how to address re-
digitization of in-the-clear, high-quality analog output; and (4) how soon, in light of current
Internet bandwidth constraints and the existence of unprotected analog outputs, will the threat to
high quality digital broadcasts warrant imposing the costs of a content protection regime, both on
manufacturers and consumers. Finally, the BPDG had no rules to govern participation in the
forum or procedures to reconcile differing viewpoints.
As a result, the BPDG Co-Chairs' Report correctly noted that there was no consensus
among the BPDG's participants.
38
Most meaningful negotiations occurred behind closed doors
among a small group of participants. The proponents of any particular content protection regime
must not also be its judge and jury. No one subset of industry should be left to determine
whether a specific technological solution works. A robust content protection regime must be
born of a more inclusive process with an eye toward both public participation and the public
interest.
To serve that public interest, a content protection mechanism must accommodate
reasonable consumer expectations. The BPDG Co-Chairs' Report falls short of that goal.

38

BPDG Co-Chairs' Report at 6.

27

Consumers currently enjoy the ability to transfer content within a "personal network" of devices
and among formats for their own non-commercial use. The BPDG's approach does not
adequately address consumers' expectations that they will continue to be able to do so. Indeed,
the proposal does not even define the scope of the personal network, which has been variously
described to include primary residences, secondary residences, workplaces, cars, personal
computers, laptops, personal audio and video devices, and family members. Nor does the
proposal provide a means for differentiating between content use within a personal network and
Internet dissemination to the public.
The proprietary control of content protection rules and standards themselves, as
considered by the BPDG, also stifles competition and innovation. Under the BPDG's approach,
transmission or recording of flagged digital content could be accomplished only if the content is
encrypted using "approved" proprietary technologies.
39
Compliance rules would govern the
handling of content. Robustness rules would govern product design. The approved
technologies, the licensing terms under which they would be available, and the compliance and
robustness rules would all be controlled by private entities subject only to private negotiations.
In other words, other licensees, consumer representatives, legislators and public policy officials
would be excluded.
Consequently, the policies and technical solution considered by the BPDG would allow a
small group to determine the rules that govern product manufacture and permissible content use,
and that bind consumers and the controlling entities' own competitors. The rules that these
private parties establish would give them a degree of control that would enable them to gain

39

Id. at Tab C-2.

28

important market advantages for their products, such as lead time to market, and to obtain
advance market intelligence about competitors' products. They could use the broad scope of
their licenses to coerce rights to other technologies, to control consumer use of content, and to
disable consumer devices.
Moreover, for competition and innovation to flourish, all downstream devices must be
able to move content around the personal network once it has been received. The approach
discussed by the BPDG, however, contemplates encryption of DTV content every time it is
transmitted around the home or recorded on removable media. It must then be decrypted once
again for viewing. Thus, the obligations to protect DTV broadcast content would not stop with
the device that receives the content over the air. That device would be permitted to pass the
content over digital interfaces for copying or transmission only to other products that are subject
to their own privately negotiated content-protection licenses and robustness and compliance
rules. The result is a theoretically closed chain of encrypting and decrypting devices. Under
such a regime, all devices would be burdened with multiple encryption and decryption
technologies, adding costs to manufacturers and consumers. This would both hinder competition
and stifle innovation by manufacturers and consumers.
IX.
FCC AUTHORITY TO REGULATE THE WAY CONSUMER ELECTRONICS
DEVICES REACT TO A BROADCAST FLAG IS UNCLEAR
The Commission's existing authority under the Communications Act to require consumer
electronics devices to recognize and respond to the broadcast flag is unclear. Regulating the way
broadcasters transmit the flag is one thing. After all, the flag is simply bits in the digital
broadcast signal bitstream, and the FCC has broad and explicit authority over broadcasters and

29

their transmissions.
40
Regulating the way equipment reacts to that flag is another matter.
Encryption-based digital content protection is not about the transmission or reception of
broadcast signals. It is about the design and operation of consumer electronics devices when
they detect content subsequent to DTV broadcast signal transmission and reception.
Manufacturers are not licensed broadcasters.
In prior instances in which the FCC has regulated consumer electronics devices,
Congress has enacted enabling legislation that grants the FCC specific authority over narrowly
defined features and functions of those devices. Only thereafter does the FCC promulgate
regulations. Before the FCC required televisions to receive all UHF and VHF channels, for
example, Congress passed the 1962 All Channel Receiver Act.
41
Originally, the legislation
would have granted the FCC broad authority to set performance standards for television
receivers.
42
The legislation was criticized, however, for providing the FCC too large a role in
receiver design.
43
Consequently, it was amended to only "require that apparatus designed to
receive television pictures broadcast simultaneously with sound be capable of adequately

40

See 47 U.S.C. tit. III.
41

Pub. L. No. 87-529, 76 Stat. 150 (codified at 47 U.S.C. 303(s), 330(a)).
42

See S. R
EP
. N
O
. 87-1526 (1962), reprinted in 1962 U.S.C.C.A.N. 1873, 1879.
43

Id. In hearings before the Senate Commerce Committee, Sen. Kenneth Roberts stated that "[t]he FCC
should not have the power to require that all sets be color sets, or have a certain size of picture tube or be made with
a certain size speaker and so forth. Electronic Indus. Ass'n. Consumer Elec. Group v. FCC, 636 F.2d 689, 694 (D.C.
Cir. 1980) (citing All-Channel Television Receivers: Hearing on S. 2109 before the Subcomm. on Communications
of the Senate Comm. On Commerce, 87
th
Cong. 59 (1962)). Similarly, during hearings on the bill before the House
Committee on Interstate and Foreign Commerce, industry officials criticized the proposed language because it
"provides too broad an authority to prescribe `minimum performance capabilities.'" Id. (citing All Channel
Television Receivers and Deintermixture: Hearings on H.R. 8031 Before the House Comm. On Interstate and
Foreign Commerce, 87
th
Cong. 274 (1962) (testimony of W. Walter Watts, RCA Corp.)).

30

receiving all frequencies," with the specific goal of limiting its applicability to reception of UHF
channels.
44

Similarly, before the FCC required closed-captioning, Congress passed the 1990
Television Decoder Circuitry Act,
45
which authorized the FCC to require manufacturers to equip
televisions "with built-in decoder circuitry designed to display closed-captioned television
transmissions."
46
Congress was clear that it was "not the intent of the bill to require, directly or
indirectly, standardization of a specific decoding chip or specific decoding circuitry."
47
Before
the FCC required the V-Chip, Congress passed the Parental Choice in Television Programming
provisions of the 1996 Telecommunications Act,
48
which authorized the FCC to require
manufacturers to equip televisions with "a feature designed to enable viewers to block display of
all programs with a common rating."
49
In doing so, Congress instructed the FCC to preserve for
manufacturers the option of using "alternative technology that meets certain standards of cost,
effectiveness and ease of use."
50

This well established pattern of a specific congressional grant of authority as a pre-
requisite to FCC regulation of consumer electronics operation and functioning
51
is replicated in

44

See H.R. R
EP
. N
O
. 87-1559, at 1 (1962); S. R
EP
. N
O
. 87-1526, at 1873, 1880.
45

See Pub. L. No. 101-431, 104 Stat. 960 (1990) (codified at 47 U.S.C. 303(u), 330(b)).
46

47 U.S.C. 303(u).
47
S.
R
EP
. N
O
. 101-393, at 9 (1990), reprinted in 1990 U.S.C.C.A.N. 1438, 1446.
48

See Pub. L. No. 104-104, sec. 551, 110 Stat. 56, 139-42 (1996) (codified at 47 U.S.C. 303(x), 330(c)).
49

47 U.S.C. 303(x).
50

H.R. Conf. Rep. No. 104-458, at 196 (1996), reprinted at 1996 U.S.C.C.A.N. 124, 210.
51

Even in the case, now on appeal, of the FCC's recent Order requiring all television receivers to have DTV
tuning capability pursuant to a phased-in timetable, the Commission relies heavily on the All Channel Receiver Act
as a specific source of statutory authority for its regulatory action. In re Review of the Commission's Rules and
Policies Affecting the Conversion To Digital Television, MM Docket No. 00-39, Second Report and Order and
Second Memorandum Opinion and Order, FCC 02-230, at paras. 1, 23-28, 35, 45-46 (rel. Aug. 9, 2002).

31

the cable and multichannel video programming distribution contexts. Congress enacted sections
624A and 629 of the Communications Act, addressing respectively cable compatibility and the
availability of navigation devices.
52

In each of these instances, the nature and extent of proposed mandates on consumer
electronics equipment was extensively debated in Congress, and Congress was careful to grant
the FCC only limited authority to regulate narrowly defined features and functions of consumer
electronics equipment, rather than plenary authority over manufacturers and product design. As
discussed in detail above, DTV content protection regulation necessarily flowing from
mandating that consumer electronics devices recognize and respond to the broadcast flag would
be vastly more intrusive than the regulations that Congress authorized with its UHF, closed-
captioning, V-Chip, cable-compatibility, and navigation-device mandates. To impose such
regulation absent a prior, explicit grant of congressional authority would be, at a minimum,
extraordinary.
Even if the FCC concludes that it has the latitude to depart from precedent and regulate
consumer electronics manufacturers absent a specific and explicit congressional grant of
authority, the Communications Act does not unequivocally convey jurisdiction over the subject
matter at issue: content protection of free, over-the-air broadcasts. Broadcast programming
transmitted in-the-clear has never before been treated as controlled content. Only now, with the
advances in digital broadcasting and duplication, is there a perceived need for some protection of
non-subscription broadcast content.

52

See 47 U.S.C. 544a(b)(1), 544a(b)(2), 549(a).

32

It appears that key Members of Congress are split about the FCC's jurisdiction in this
area. Some members of Congress believe that the FCC has authority to impose broadcast flag
regulations
53
while others believe that such regulation is outside the FCC's purview.
54
These
competing views underscore the lack of clarity with regard to the FCC's jurisdiction in this
area.
55
It is no wonder, then, that the NPRM seeks comment on "the jurisdictional basis for
Commission rules dealing with digital broadcast copy protection."
56

In particular, the FCC seeks comment on the applicability of section 336(b).
57
Section
336(b) does not appear directly applicable, however, as it only grants authority that the FCC may
exercise "[i]n prescribing the regulations required by subsection (a)."
58
Section 336(a), in turn,
directs the FCC to "limit the initial eligibility" for advanced television service licenses and to
"adopt regulations that allow the holders of such licenses to offer ... ancillary or supplementary
services."
59
Digital content protection technologies which consumer electronics devices must
utilize have nothing to do with DTV license eligibility or ancillary services offered by broadcast
licensees.

53

See Letter from Senate Commerce, Science and Transportation Committee Chairman Hollings to FCC
Chairman Powell (dated July 19, 2002); Letter from House Energy and Commerce Committee Chairman Tauzin and
Ranking Member Dingell to FCC Chairman Powell (dated July 19, 2002).
54

See Letter from Senate and House Judiciary Committee Chairmen Leahy and Sensenbrenner to FCC
Chairman Powell (dated Sept. 9, 2002).
55

See also FCC Chairman Michael K. Powell, Agenda and Plans for Reform of the FCC: Hearing Before the
Telecomm. and Internet Subcomm. of the House Energy and Commerce Comm., 107th Cong. 37-38 (2001)
(testimony of FCC Chairman Powell) (stating that "there are issues about copyright and intellectual property
protections.... [M]ost of those issues are outside the specific jurisdictional context of the Commission"); In re
Digital Broadcast Copy Protection, MB Docket No. 02-230, Notice of Proposed Rulemaking, FCC 02-231,
Concurring Statement of Commissioner Copps (noting that "there is not a majority here to resolve the issue of the
Commission's authority").
56

NPRM, at 10.
57

NPRM, at 10.
58

47 U.S.C. 336(b) (emphasis added).
59

47 U.S.C. 336(a)(1), (a)(2) (emphasis added).

33

Reliance upon the FCC's ancillary authority under Title I is also far from certain.
60
The
D.C. Circuit's recent decision vacating the FCC's video description rules indicates that Section 1
"does not give the FCC unlimited authority to act as it sees fit with respect to all aspects of
television transmissions, without regard to the scope of the proposed regulations."
61
Similarly,
Sections 4(i) and 303(r)
62
only support regulations that are reasonably required for the
"necessary and proper" administration of specific FCC subject-matter jurisdiction rooted in other
provisions of the Act.
63
As discussed above, the question remains whether the FCC has that
subject-matter jurisdiction in the first place.
In these circumstances, the most prudent approach--and one consistent with prior FCC
regulation of consumer electronics manufacturers--would be to await a clear grant of statutory
authority from Congress. A more aggressive approach would be to test uncharted waters.

60

See NPRM, at 10 (seeking comment on the FCC's ancillary authority to impose broadcast-flag
regulations.)
61

MPAA v. FCC, No. 01-1149, slip. op. at 2-3 (D.C. Cir. Nov. 8, 2002).
62

See 47 U.S.C. 154(i), 303(r).
63

See MPAA v. FCC, slip. op. at 10-11; United States v. Midwest Video Corp., 406 U.S. 649 (1972)
(plurality opinion); United States v. Southwestern Cable Co., 392 U.S. 157 (1968); North America Telecomm. Ass'n
v. FCC, 772 F.2d 1282, 1292-93 (7th Cir. 1985), aff'd 440 U.S. 689 (1979); Midwest Video Corp. v. FCC, 571 F.2d
1025, 1036 n.25 (8th Cir. 1978); HBO v. FCC, 567 F.2d 9 (D.C. Cir. 1977).

34

X. CONCLUSION
Philips again commends the Commission for the deliberative, fact-seeking approach it is
taking to any implementation of a DTV content protection system. While Philips questions
whether the Commission's authority, absent a direct legislative mandate, is sufficient for it to
adopt rules implementing such a system, we would urge the Commission, if it does conclude it
possesses such authority, to ensure any actions it takes: (1) are narrowly tailored to address a
specific, identifiable problem; (2) preserve consumers' fair use expectations; (3) promote
competition in the manufacturing and technology marketplaces; (4) promote innovation; and (5)
do not impose undue burdens on manufacturers or consumers.
Respectfully
submitted,

PHILIPS
ELECTRONICS
NORTH
AMERICA
CORPORATION




Thomas B. Patton
Vice President, Government Relations
Philips Electronics North America Corp.
1300 Eye Street, N.W.
Suite 1070 East
Washington, D.C. 20005
(202) 962-8550

Thomas M. Hafner
Vice President and General Counsel
Philips Consumer Electronics North
America, a division of Philips Electronics
North America Corporation
64 Perimeter Center, East
Atlanta, GA 30346
(770) 821-2232

December 6, 2002

1
Appendix A:
The Effect on Backward Compatibility of a Ban on Analog Outputs
No Analog
Outputs

Analog TV
Legacy VCR
Legacy DTV
Receiver

Legacy DVD
Recorder

Legacy DVD
Player

Legacy PVR
(TiVO)

Affected Devices >200 million > 200 million >2 million
< 1 million
> 35 million
> 1 million
New DTV
Receiver

No interaction
LIMITED
(plays
tapes only;
records as long as
off-air analog
signals exist)
No interaction
LIMITED
(plays
DVDs only; records
as long as off-air
analog signals
exist)
OK
LIMITED
(plays
stored content only;
records as long as
off-air analog
signals exist)
New Digital VCR
("DVR")

X
No interaction X
No interaction No interaction OK
New Cable STB
(handles both analog &
digital cable services)
X
X
X
X
No interaction X
New DVD Player X
No interaction X
No interaction No interaction No interaction

Legacy DTV receivers will not function with new digital VCRs, cable STBs or DVD players (due to lack of digital inputs in legacy DTV
receivers.

Digital-to-analog converters (required for analog TV reception of DTV signals) unlawful

Legacy VCRs obsolete when used with cable STB; OK with off-air analog signal

Legacy DVD recorder has play-only capability

VCR tape and DVD libraries viable