Industries Move Closer To Digital Copy Protection

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Apparently taking to heart a Federal Communications
Commission challenge to meet a Nov. 1 deadline for completing IEEE 1394
"fire-wire" standards, the Consumer Electronics Manufacturers Association said
last week that it expects to wrap up discussions on the new digital interface as early as
the end of this month.

FCC chairman William Kennard sent a letter to CEMA
president Gary Shapiro and National Cable Television Association president Decker Anstrom
earlier this month, asking that the standards be set in time for digital-television
manufacturers to produce sets with the 1394 technology by November 1999.

The 1394 fire-wire technology will allow digital products
-- including high-definition television sets and digital set-top boxes -- to communicate
with and send digital signals to each other.

According to a CEMA spokeswoman, CEMA engineers met in
Chicago earlier this month to address outstanding issues relating to 1394, including
digital copy protection, and the players involved are "still on track" to meet
their late-August goal.

But any fire-wire technology developed in the next few
weeks or months will still be too late to be incorporated into first-generation HDTV sets
and receivers, which have already started making their way to retail.

Without a 1394 digital interface in the digital-television
receiver, next-generation digital set-top boxes and direct-broadcast satellite receivers
won't be able to deliver digital HDTV signals. As an interim solution, some cable and
DBS companies may deliver HDTV signals via analog component-video interfaces.

But since a copy-protection scheme has not been developed
for the component-video interface, some industry observers have questioned whether
Hollywood studios will make first-run movies available over pay-per-view or
video-on-demand to early adopters of those HDTV sets.

On the face of it, digital copy protection doesn't
appear to be a pressing consumer issue, since it may take some time before the first
compatible digital consumer recorders hit the market. However, it's not just a
question of passing the digital signal to the recording device; it's also a matter of
making sure that the digital-display device can receive a copy-protected feed.

"The issue of greatest concern to us is that sets
coming out this fall will not have digital inputs, and analog inputs will not incorporate
a copy-protection capability," said Fritz Attaway, senior vice president and
Washington general counsel for the Motion Picture Association of America.

Attaway said a digital set-top box would need to complete a
digital "handshake" with the HDTV receiver before it sends a copy-protected
signal through, and it could not make such a connection through a component-video
interface.

"Studios couldn't deliver copy-protected
materials to sets delivered this fall," agreed Jerry Bennington, senior vice
president of Internet technologies for Cable Television Laboratories Inc. Bennington added
that the sets would have to be taken back to the shop and physically modified before they
could receive copy-protected PPV.

The lack of earlier standards has the potential to
disadvantage the first adopters of HDTV, Bennington conceded. "You have to make sure
that customers are well-informed about this," he added.

"That's not to say that people shouldn't buy
these products," said Mark Belinsky, senior vice president of copy protection for
Macrovision. "At the start of any new technology's life cycle, you inevitably
end up with products that the industry calls 'orphans.'" Belinsky said any
early adopter for HDTV should buy the receiver based on what he or she can enjoy now, and
not 10 years from now.

Early adopters of HDTV sets will be able to see a
considerable amount of digital programming that's not copy-protected.
Broadcast-television programming is expected to remain free from copy protection so that
viewers can continue to make recordings for time-shifting purposes.

Attaway said it's impossible to say how much
programming would be copy-protected. He said people expect PPV and VOD windows to shorten
with better copy protection, although there's no clear consensus among Hollywood
studios on just how short those windows would be.

"There's no reason why video-on-demand can't
follow theatrical releases very closely if there is a secure technology" for copy
protection, Attaway said.

Bob Van Orden, vice president of product marketing for
digital-subscriber networks at Scientific-Atlanta Inc., said the cable industry is
concerned with how secure the link is and how comfortable the Hollywood studios are with
the copy-protection standard that is adopted.

But from a set-top-box manufacturer's point of view,
"we just want that to be decided so that we can go on our merry way," Van Orden
said. He added that he expects the issue to be resolved in time to meet OpenCable
standards deadlines at the end of this year.

Bennington said only one of the two proposals in front of
the Copy Protection Technical Working Group has received wide industry support: the
so-called 5C standard, which incorporates the work of Sony Corp., Intel Corp., Matsushita
Consumer Electronics, Hitachi Corp. and Toshiba America Consumer Products.

The copy scheme will allow for three levels of protection:
no protection, for broadcast programming; copy-once protection, to allow time-shifting for
premium movies; and no-copies-allowed protection, for first-run movies on PPV and VOD.

The copy-protection technology is expected to add less than
$1 to the cost of each digital set-top box.

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