Battle Brews Over Web, Channel Surfing

Combining Web and channel surfing may sound like a dream to dedicated couch potatoes, but new technology that allows the two to mix is a nightmare for media companies.

There is a brouhaha brewing over technology that would allow people with digital video recorders like TiVo (search) to tape programs and send them — almost immediately — over the Internet to other TiVo machines. Entertainment companies say this could throw a wrench into their marketing strategy and encourage piracy.

The conflict stems, in part, from recent Federal Communications Commissions (search) regulations that give the green light to some companies putting TV content on the Net.

One such new service is TiVoGuard, which would allow TiVo customers to beam their recorded programs to other TiVo machines in different locations. So a "Will & Grace" fan could transfer the Thursday night show to his weekend home and watch it on Saturday instead.

Matt Zinn, vice president of general counsel at TiVo, said TiVoGuard would help networks increase profitability by encouraging viewers to watch more television.

"Television shows are based on advertising, and advertising revenues are based on how many people watch a show," said Zinn. "By allowing more people to view that content, it actually increases the value of that content."

But not everyone in the industry thinks linking the Internet with TV is a certain moneymaker. Critics contend that movies and sports programming normally broadcast only in certain markets could end up beamed all across the country — and even the world.

"If TiVo came up with a device that enabled a fan to watch the same game in a different room in his own house or in his beach house, we would have no problem with that," said National Football League spokesman Brian McCarthy. "It's when the device would be used indiscriminately in an area where we have no control that causes a problem."

The NFL and the Motion Picture Association of America (search) have expressed concern over TiVoGuard and similar technology, and want companies like TiVo to pause their race for the Net — at least for now.

It’s not hard to see why the idea of TV over the Net raises some corporate eyebrows. For instance, NFL games are aired in local markets only if tickets to see the games sell out; otherwise broadcasters "blackout" the zone, a policy meant to ensure that fans support teams directly before watching them on TV.

Fans can work around the blackouts if they shell out at least $325, plus monthly fees, to get a service like DirectTV's NFL Sunday Ticket (search), which allows them to see any game in the country.

The NFL fears that if TiVoGuard catches on, it's possible a Seahawks fan in Seattle could have his buddy in Denver send him the blacked out game over the Internet, in which case the Seahawks fan might not be so eager to plunk down the money for the Sunday Ticket service.

But the NFL and MPAA imagine something even more damaging happening than a few friends sharing programming. These media giants worry that their products could be redistributed over the Internet on a mass scale.

The controversy illustrates a growing problem for media companies: On one hand, they are trying to provide users with fast, online access to their products. On the other, they want to guard against piracy.

TiVo claims their technology will be secure from piracy. Still, the media industry has reason to be skeptical of technology that gives online access to their products.

In 1999, a computer programmer from Norway cracked the encryption that prevented DVDs from being copied. When Sony spent a reportedly generous sum developing copy-proof CDs, word spread quickly across the Net that the protection could be circumvented by running a felt-tipped marker around the disc's edge. Even Apple's iTunes Music Store has had its anti-piracy technology cracked by computer mavericks.

And it's not just the big corporations that could suffer under technology's influence.

Brenda Gilmore, managing partner at Mother Hubbard's, a popular Chicago sports bar and grill, said she thinks Internet sharing of TV programming could hurt her business. The bar has a DirectTV sports package and two backup satellite dishes so it can show any game playing in the country including those played by Chicago's hockey team, the Blackhawks, whose games are blacked out in the Windy City.

"It effects our revenue if someone in another part of the country could just TiVo [games] and send it to someone else," Gilmore said. "Football season is our busiest time of the year. The next five months are the most lucrative of the year for us."

For the moment, TV-quality video is too large for residential broadband connections to handle, but experts say the question is not if TV programming will be available via the Net, but when and how.

Miriam Smith, associate professor of broadcast and electronic communication arts at San Francisco State University, pointed to countries like Great Britain and Denmark that levy a tax on TV sets to defer the cost of content distribution.

"We really need to examine the cost structure and business model [of broadcasting] in this country," Smith said. "The cost of programming seems to escalate every year and yet we’re still using the same business models we’ve used since 1950."

And with rumors circulating that TiVo and online DVD renter NetFlix (search) are negotiating a deal to allow subscribers to download movies to their TiVo boxes, it looks like in the future the Internet will be the homestead of TV rather than the frontier.