Senate Mulls Law to End Tech-Media Piracy Fight

WASHINGTON – Media and technology companies told Congress Thursday they had not yet settled on a method to stop digital piracy, prompting a key senator to say he would go ahead with plans to impose a government solution.

Sen. Ernest Hollings, chair of the Senate Commerce Committee, said he would prefer that media companies like Walt Disney Co. (DIS) and high-tech firms like Intel Corp. (INTC) figure out a technological fix on their own to stop unauthorized digital copying of movies, music and other media.

But after a bumpy three-hour hearing in which executives of Disney and Intel clashed, Hollings said he would introduce a bill to push the two sides toward a compromise.

The South Carolina Democrat's long-discussed bill is championed by Disney and other media companies but opposed by tech firms who fear it would impede innovation.

The bill would require makers of personal computers, digital televisions, VCRs and other consumer electronic devices to include copy-protection technology preventing the devices from playing pirated movies, TV shows, or other broadcasts.

Federal agencies would set the standard if the two sides could not come to an agreement after 18 months, a period Hollings said he might shorten to 12 months because the technology has already been developed.

"They can easily do it, we all saw that," he said.

At the hearing, Disney CEO Michael Eisner blasted the high-tech industry, alleging Intel and other tech companies were basing their growth strategy on enabling customers to download entertainment illegally. Intel Vice President Leslie Vadasz accused Disney and other media companies of trying to dictate computer design.

PIRACY FEARS SLOW DIGITAL TV, INTERNET GROWTH

Media companies have withheld content from new distribution channels like the Internet and digital television because they fear their movies and TV shows could be copied easily.

New consumer devices like CD recorders and portable MP3 players have only compounded their concerns.

This lack of content has slowed consumer adoption of digital television and high-speed Internet connections, experts say.

Technology and media companies have worked together over the past seven years to come up with digital watermarks and other technologies to prevent unauthorized copying, but such efforts will be of little use if copyright-protection controls are not also placed in computers and other devices that play digital material, media companies say.

The technology industry has been unresponsive to these concerns, Eisner said, because they design products to encourage unauthorized copying.

"It's hard to negotiate with an industry whose growth, they think, is based on pirated content," he said.

Intel's Vadasz denied the charge, and countered that high-tech innovation would suffer if Disney and other movie studios were able to dictate the design of personal computers.

"The media industry would try to make the personal computer nothing more than an expensive DVD player," he said.

Technology groups say progress is being made. A standard to prevent unauthorized copying of digital television broadcasts will be ready by the end of March, Vadasz said. A group of high-tech CEOs sent a letter to media executives Wednesday pledging to cooperate on copyright-protection efforts.

Eisner said the tech companies have become more responsive to his industry's concerns because they are afraid of government intervention.

"Until Senator Hollings said he was going to consider legislation, we couldn't have a conversation," he said.

Vadasz said it was a coincidence that the CEOs' letter was sent a day before the congressional hearing. His response drew snickers from the audience.

Hollings and other senators said they hoped industry could solve the problem on its own, but they would continue to keep close tabs on the situation.

"Fear is a good motivating factor," said Virginia Republican Sen. George Allen. "Whether that's fear of draconian government regulations or fear of inept government regulations, that may get folks moving."