07.12.2004 12:00 PM
Major pay TV players differ on digital copying

An attempt by movie companies, pay TV operators and the consumer electronics industry to resolve issues over digital copying of subscription on-demand programming has reportedly fractured.

A major split over copying technology has developed that pits unlikely allies — the two largest pay TV services, HBO and Showtime — against the No. 3 pay TV operator, Starz! Encore, most cable operators and the consumer electronics industry.

The disagreement centers on the so-called “plug and play” technology that the FCC favors as a way to simplify the hook-up of digital television receivers to a pay television service without the need of a set-top box. The problem is that current plug and play technology does not include two-way services such as video-on-demand, pay-per-view or interactive program guides. For these advance services, it’s business as usual—customers still need a set-top box.

HBO and Showtime want the next generation of plug and play technology to prevent consumers from ever copying premium on-demand content, while the other side wants to allow such TV content to be recorded once. “We argued that [subscription VOD] should be copy-once, and HBO argued that it should be copy-never,” Thomas Southwick, a Starz! spokesman, told TelevisionWeek.

The Starz! representatives argued that since SVOD would eventually become a dominant model for TV distribution, the FCC would be setting a precedent by not allowing recording from it.

As a result of the dispute, the FCC is unlikely to take further action on the issue, according to FCC sources, and most consumers probably will be allowed to record from HBO, Showtime and all other on-demand services for the foreseeable future.

However, this is a contentious issue for HBO especially, because the subscription network sees its lucrative DVD business threatened by home recording. The addition of a DVD burner in a VOD environment will make recording whole seasons of, say, “The Sopranos,” as easy as changing channels.

Existing rules allow a copy to be made once off pay TV, and if the FCC does not make a new ruling that will apply to on-demand as well. While the FCC has left it to the industry to sort it out, absent an FCC ruling, the industry will not do so, insiders say; the consumer electronics manufacturers will not be forced to make equipment with the encoding mechanisms. Therefore, the status quo will stand, with consumers being able to record on demand.

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