Digital Entertainment Facing Possible Government Regulation

Consumers would no longer be able to play or copy movies or music on their home computers, or trade them via the Internet or by any other means, if Congress passes a bill, introduced Thursday, that aims to drastically regulate the distribution of digital entertainment material.

The Consumer Broadband and Digital Television Promotion Act of 2002 would require that the entertainment and technology industries jointly come up with standards to protect copyrighted films, television shows and songs from being downloaded, copied or swapped illegally.

If the industries cannot devise standards within one year, the government would step in and do it for them.

Sen. Ernest "Fritz" Hollings, D-S.C., who introduced the bill, said he holds out hope that the entertainment and tech industries can resolve the issue themselves.

"But given the pace of the private talks so far, the private sector needs a nudge," he said.

Technology companies strongly oppose the measure, saying it would not only lead to price increases for consumers, but might violate the "fair use" clause in existing copyright law, which among other things allows the purchaser of a copyrighted item — whether a CD, book or videotape — to make multiple copies for individual personal use.

"It would in essence turn your PC into only a VCR playback machine, and you wouldn't have the capabilities to move digital content around like you do today," complained P.J. McNealy, a research director for the Gartner G2 firm.

"It's a Draconian bill that would grind digital distribution to a near-halt," he added.

Hollings insists his bill would not infringe on fair-use provisions.

If passed in its current form, the bill would force consumer electronics, computer and software manufacturers to build "locks" into their products to make sure that copying copyrighted material, or playing illegally copied material, is impossible.

The rules would apply to everything from personal computers and compact-disc players to camcorders, TVs, and DVD players.

Hollings believes that lack of a consistent copyright-protection standard is holding up the rollout of broadband, or high-speed Internet access, across the country.

Broadband use by home users nearly doubled in 2001, despite monthly prices generally twice that of regular dial-up Internet access, as local telephone and cable-television companies rolled it out to more and more areas.

More than 21 million Americans, and more than 10 million homes, about one-tenth of the total, now have broadband, according to data from Nielsen/NetRatings.

Hollings says that nervous content providers have refused to make movies and music widely available on the Internet, and as a result, consumer demand for broadband — which makes downloading or "streaming" and such files much easier — has been on the wane.

"The real key to the advancement of broadband is increased consumer demand," he said. Once standards are put into place "an avalanche of digital content on broadband Internet connections" will make broadband more attractive to consumers, he added.

Entertainment companies, who have lobbied hard for the bill and who have given Hollings nearly $300,000 in campaign contributions in the past five years, contend they need so-called piracy controls to protect their profits.

"If you don't protect content on the Internet, you will end the entertainment business," said Michael Eisner, chairman of Walt Disney Co., in hearings before Hollings' Commerce Committee.

Fox News' parent company, News Corporation, has also lobbied on behalf of the bill, but Sony, which has equally lucrative entertainment, computer and consumer-electronics arms, sat out the hearings.

Critics of the entertainment industry say it has had the ability to protect its digital content for years, but is only now rushing to the courts and Congress to avoid looking villainous to its consumers as the growing broadband market creates new opportunities for both profits and piracy.

Hollings' bill is sure to draw fire from some of his colleagues in Congress who don't believe the government should intervene in the private marketplace.

"If the government were to set technology standards," said Richard Diamond, a spokesman for House Majority Leader Dick Armey, R-Texas, "we'd still be using eight-track tapes right now."

The Associated Press contributed to this report.