Webcasters Face Uphill Fight to Gain License

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Washington-With powerful forces arrayed against them, Webcasters face an uphill battle on Capitol Hill to win the legal right to beam local-TV signals over the Internet.

At a House hearing last Thursday, broadcasters, Hollywood studios and government copyright officials all raised objections to changing the law to make viewing local TV stations on the Internet as easy as it is on television.

"We strongly believe third parties on the Internet should never be allowed to retransmit the signals of local stations without their consent," National Association of Broadcasters president Edward O. Fritts said.

Cable operators, satellite carriers and certain other terrestrial-video distributors rely on a compulsory copyright license granted by Congress to distribute local TV stations free-of-charge to their customers, avoiding the need to negotiate with the owners of movies, sports teams and the stations themselves.

Some in the Internet community want the same license. But because Web players can't confine their broadcasts to local audiences like cable and satellite can, broadcasters fear that their discrete market structure would collapse, and filmmakers fear the loss of control over the distribution of their products, potentially costing both industries untold millions of dollars.

The hearing, held by the House Courts and Intellectual Property Subcommittee, was an attempt to ventilate the legal and technological issues associated with Webcasting.

Earlier this year, Toronto-based iCraveTV tried to develop a Webcasting portal using Buffalo, N.Y., TV stations. But a U.S. judge shut it down in January in a suit brought by CBS Corp., ABC Inc., Fox Broadcasting Co., the National Football League and Hollywood studios.

At the hearing, Webcasters did not put up a united front.

Jonathan Potter, executive director of the Digital Media Association (DiMA)-a trade group that includes Real-Networks Inc., America Online Inc., CDNow and Liquid Audio Inc.-said that rather than seeking a copyright license, the DiMA wanted the law to be fair. He twice said Congress should consider yanking cable's license.

"We think the underlying foundation for the original compulsory licenses may go away as the Internet reaches universal service," Potter said.

With technologies converging and the Internet rapidly providing video services in a manner almost indistinguishable from cable and broadcasting, he added, copyright owners had a right to be compensated in a legal environment that does not discriminate against the Internet as a platform.

"As long as content owners are fairly paid, why should our laws care about which pipe transports the content?" Potter said.

Peggy Miles, chairman of the International Webcasting Association, said fairness required that Webcasters have the same legal rights as cable and satellite.

"[Webcasters] are required to negotiate with each individual copyright owner before retransmitting a television-broadcast signal over the Internet," she said. "To level this playing field, Webcasters should have access to the compulsory license."

The IWA's members include Apple Computer Inc., Microsoft Corp., RNI and Wall Street firm Morgan Stanley Dean Witter & Co.

Motion Picture Association of America president Jack Valenti said the Internet is awash in theft, with movies still in the theaters showing up as pirated copies on Web sites that anyone in the world can access.

Fearing that the Internet will devalue the financial strength of Hollywood's films, Valenti said Congress had to clean up "stealing" on the Internet before broadening the law.

"Once broadband access becomes more universal-and

it surely will-this pay-for-nothing mind-set will prevail," he added. "The question is not how to dismantle the Internet-of course not, it's got a great potential. The question is how to preserve copyright, how to construct a digital environment that is safe and secure for the deploying of valuable creative works."

After the hearing, the MPAA announced that 11 movie companies had filed suit against Los Angeles-based Web site RecordTV.com, which allows user to record television shows and movies provided by broadcasters and cable operators for later viewing on a computer. The companies asked a federal judge to impose an injunction. RecordTV.com responded by taking down its advertiser-supported Web site.

Marybeth Peters, the U.S. register of copyright, said her office is opposed to a compulsory license for the Internet, noting that her office has traditionally supported allowing the marketplace to determine the value of copyrights. She also echoed Valenti's fears about piracy given the Internet's vast reach.

"We.believe the marketplace should decide the price and terms of the licensing of those rights," Peters said.

Pressed on whether a license would be appropriate if technology could confine an Internet broadcast to its local market, Peters indicated it was possible.

"The issue will be whether or not they can argue that the way they do business falls within [the license]," she said. "One of the critical components is whether or not the limitation with regard to controlling who receives the signal is met."

Ian Mccallum, iCraveTV's vice president of corporate sales and development, told the panel his company has developed the technology to verify the country of a subscriber who can access its service. Soon, he expects to identify users by their market location, which should satisfy broadcasters.

"Anybody who says that is not doable really doesn't understand the history of the evolution of technology," Mccallum said. "It's just a matter of time or need."

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