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Don’t Wrap Anti-Competitive Pay-TV Practices In A Copyright Flag

DEEPLINKS BLOG
August 1, 2016

The Federal Communications Commission has proposed to break cable and satellite TV companies’ monopoly over the hardware and software used by their subscribers. Those companies are fighting back hard, probably to preserve the $20 billion in revenue they collect every year from set-top box rental fees. Major TV producers and copyright holders are pushing back too. They want to control how you can search for TV shows and discover new ones, and the order in which shows appear to you. And they want to limit the features of your home and mobile TV setups, like how and when you can control the playback.

One tactic these major media companies are using to try to derail the FCC’s proposal is to claim that allowing customers to buy pay-TV viewing technology from independent vendors (something that Congress actually ordered the FCC to do way back in 1996) somehow violates “principles of copyright law.”

As we explained to the FCC along with top legal scholars, the plan to break the set-top box monopoly doesn’t change copyright law or allow anyone to get pay-TV content without paying for it. But by crying “copyright,” cable companies and TV producers have rallied opposition to the FCC’s plan from some members of Congress, and possibly from the Copyright Office. It’s a misleading tactic.

Today, TV studios influence the design and features of home video equipment by specifying them as terms in the deals they make with cable companies. The cable companies have to accept those terms because under copyright law, they need permission from major copyright holders (the TV studios) to transmit programming to subscribers. And because cable companies have a monopoly over the technology on the subscriber’s end—the set-top boxes and apps that can access cable channels—the TV studios effectively have veto power over that technology.

TV studios’ power over the design of personal TV technology derives from that confluence of market agreements and monopoly—not from the law. Copyright gives rightsholders power to control copying, but not technology design. In fact, that sort of control is the antithesis of copyright’s purpose. Over thirty years ago, in Sony v. Universal, the Supreme Court refused to allow movie studios to “extend [their] monopoly” into “control over an article of commerce”—the videocassette recorder—“that is not the subject of copyright protection.” Today, you can search all 280 pages of the Copyright Act, and you won’t find anything that says a copyright holder has the power to control search functionality, or channel placement, or to decide who can build a DVR or video app.

The studios claim that things are different this time, because the successors to the VCR—today’s smart TVs, DVRs, set-top boxes, and mobile apps—are more sophisticated and have an online component. But the law remains the same, and for good reason. Allowing pay-TV subscribers to choose the devices and software they want to use doesn’t permit or encourage copyright infringement. Illegal copying is still illegal, and under every version of the FCC’s plan, pay-TV content will continue to be wrapped in user-unfriendly DRM at every step. (That raises other problems, including privacy and security threats.) A competitive set-top box or video app will be subject to the same copyright law as a TV, DVR, or home audio system is today.

In short, this isn’t a copyright issue. Yet TV studios and other opponents of the Unlock the Box proposal have draped their existing contracts and market relationships in the rhetoric of copyright and creativity in order to preserve their veto power over the design of consumer technology. When two businesses enter an agreement, they can include almost any terms they want to include. Adding terms to a copyright license doesn’t automatically make them copyright issues.

Imagine, if you will, that a movie studio refused to let their film play in theaters unless the theaters promised to serve a particular brand of cola. The studio has licensed its copyrighted movie to the theater with certain conditions, but no one would claim that movie-goers drinking Coke instead of Pepsi offends principles of copyright law, or hurts artists, or requires intervention by the Copyright Office and members of Congress. It’s simply an agreement between businesses.

That’s essentially what defenders of the set-top box monopoly mean when they argue that the proposal will harm “property rights” and interfere with “licensing.” Not coincidentally, the license terms that they want to maintain are the ones that preserve the competition-free status quo that the FCC’s plan seeks to transform. At best, the only new devices and apps that would be allowed under the cable industry’s latest proposal will be so much like today’s set-top boxes that no real competition will be possible.

Cloaking those anti-competitive contracts and practices in the language of copyright may lead the Copyright Office and certain members of Congress to toss monkey wrenches across the National Mall in the direction of the FCC building. Fortunately, it seems that FCC Chairman Tom Wheeler sees this tactic for what it is — an attempt at misdirection.

Bringing competition to pay-TV technology is a complex issue. Crafting good rules on consumer privacy, and closing off sneaky avenues of cable company influence over consumer technology, will take care and cooperation to get right. That’s why the FCC should not allow misleading copyright rhetoric to derail those discussions, and the Copyright Office should keep its thumb off of the scales.

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