Court strikes flag order

DAVID CANTON - For the London Free Press - June 11, 2005 Read this on Canoe

On May 6, 2005, the U.S. Federal Appeals Court held that the Federal Communications Commission (FCC) acted beyond its authority when it adopted a "flag order."

The FCC had required manufacturers of consumer-electronics devices capable of receiving digital television signals to install hardware components that restrict consumer's ability to redistribute recorded broadcasts.

Essentially, the court decided the FCC does not have the authority to decide what consumers do with television shows once they have been received.

In November 2003, the FCC adopted a regulation that was to take effect on July 1, 2005. The regulation required manufacturers to include the broadcast flag technology in any product that could receive digital television signals. This would apply to televisions, PCs and any other video and hardware recorders.

The broadcast flag is copy-protection technology embedded into products that receive digital television programming. It is designed to prevent people from uploading copies of television programs onto the Internet for file-swapping. Consumers would be able to make personal copies of the shows but could not swap them with others over the Internet.

As the use of analog television signals is being weaned, the broadcast industry is concerned about losing control over its programming through unregulated distribution of high-quality digital programming over the Internet and about suffering economically, similar to the music industry.

Critics said it had the potential to stifle innovation, reduce consumer use, and increase consumer costs. While the industry may have some legitimate concerns about unfettered copying and their revenue stream, this was another sledgehammer-to-kill-a-fly approach.

The appeals court decided the FCC does not have "authority to regulate consumer electronic devices that can be used for receipt of wire and radio communication when those devices are not engaged in the process of radio and wire transmission."

The effect of this U.S. decision extends beyond the borders of the United States. A large portion of the media and entertainment industry in Canada is derived from our southern neighbours. Since the FCC adopted the flag order, the Canadian government considered whether it should establish technical standards for its implementation on digital television reception equipment in Canada. Given the appeal court decision, these efforts have been put on hold.

Although the Canadian government did not intend to mandate the technical standards, the effect on Canadian manufacturers and consumers would have been significant. Manufacturers would be pressured to conform to the order's requirements and consumers ultimately would pay for it.

The appeal court decision does not necessarily mark the end of the matter. The broadcasting industry is turning to Congress to give the FCC authority to regulate the use and redistribution of digital signals. So far, those efforts have not been successful. It remains to be seen whether the interests of the broadcast industry will prevail over the interests of consumers.