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Court Won’t Salute Flag

5/08/2005 8:00 PM Eastern

Washington —In a major setback for the Federal Communications Commission and possible broadcasters’ transition to digital television, a federal court here last Friday ruled that the agency lacked authority to protect DTV signals from rampant Internet piracy.

The FCC adopted rules in 2003 — commonly called the “broadcast flag” — under pressure from Viacom Inc. and other major broadcasters.

Viacom threatened to cease HDTV programming provide by CBS if the FCC failed to impose the copyright protection regime.

In a unanimous ruling, a three-judge panel of the U.S. Court of Appeals for the D.C. Circuit held the FCC did not have authority to require DTV set makers to install technology that restricted the distribution of television content after it had been received by the units.

“In seven decades of its existence, the FCC has never before asserted such sweeping authority.

Indeed, in the past, the FCC has informed Congress that it lacked any such authority. In our view, nothing has changed to give the FCC the authority that it now claims,” the court said in a 34-page opinion by Judge Harry T. Edwards.

The broadcast flag was to take effect in July. Broadcasters argued that without the flag, high-value content would migrate to pay-TV services, which can better protect programming from theft, and thus harm consumers who rely exclusively on free, over-the-air broadcasting.

The court’s decision likely means that Congress either has to give the FCC explicit authority to adopt the broadcast flag or codify the FCC’s now-rejected rules into law.

Another option is to allow broadcasters to scramble their signals, but that is unlikely because DTV sets today do not have conditional access technology capable of descrambling off-air signals.

The ruling was a victory for various public interest groups, such as Public Knowledge and the American Library Association, which had argued that the flag was too broad and prevented legitimate copying for personal use.

National Association of Broadcasters CEO Edward Fritts’s response, in part: “We will work with Congress to authorize implementation of a broadcast flag that preserves the uniquely American system of free, local television.”

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