Broadcast Flag FAQ

Broadcast Flag

What is the "broadcast flag"?

The broadcast flag is technology that controls the use of Digital Television (DTV) signals. There are two components to the technology: the flag itself, which is machine readable data (called the "redistribution control descriptor") inserted into DTV broadcasts, like a label, without affecting picture or sound quality; and the reader of the flag, which is built into the equipment receiving or demodulating the DTV broadcast (such as a television, DTV tuner card in a computer, etc.). When the reader checks a signal and finds a broadcast flag, it knows that there are limitations on the use of that signal. The American implementation of the broadcast flag carries with it a troubling third component: a technology mandate. All consumer electronics equipment capable of receiving DTV signals must be flag "compliant", in that it incorporates government-approved flag-honouring technology.

Content owners claim that they will only use the flag to remove the ability to further transmit that signal to another piece of equipment that does not have approved digital rights management ("DRM") in order to remove the ability to distribute DTV content over open networks like peer to peer (P2P) networks. However, once the flag reading technology is in place, the public is subject to DRM that they were not subject to previously. DTV receiver manufacturers include DRM technologies in the receivers by way of a license agreement that determines the capabilities of the equipment. Once the broadcast flag is in place and requires the use of approved DRM, the licensing authorities for the approved DRM technologies are free to require the licensees (the equipment manufacturers) to build more oppressive restrictions into the equipment, such as the inability to copy the signal at all. Since the licensing authorities compete with each other for subscribers, they are susceptible to pressure from content owners to require these oppressive restrictions. This places far too much control over the uses of content in the hands of the copyright owners.

The United States is scheduled to adopt the Broadcast Flag in June, 2005. The process has not been smooth: a chronology.
Links to further resources.

Is the Broadcast Flag Needed? If so, Why?

The major U.S. broadcasters and motion picture studios argue that they need the flag in order to securely offer high quality digital programming to consumers. They argue that creators and producers of programming will not authorize the broadcast of movies and other high quality content in DTV format because, without protection, pirates will make limitless high-quality copies freely available over the Internet or via peer to peer networks, harming the economic interests of content creators and producers. See for example the Motion Picture Association of America's filing of comments to the Federal Communications Commission on the broadcast flag issue. However, no content owner has maintained the proposition that they would hold back their content from this exciting new channel of distribution. In fact, content owners made similar claims on the introduction of other technological advances, such as broadcast radio and the VCR. Each time, content owners eventually released content in the new format and found a lucrative new market. Accordingly, on should regard the present claim that high quality content will not be available with skepticism. Regardless, even if the major content owners were to withhold content from DTV broadcast, this would free up the airtime for lesser known content producers who otherwise would not otherwise get a chance to showcase their talent on such a wide scale. In the Canadian context, this would create an opportunity for more Canadian content producers to showcase their talent to a wider audience. Opponents argue that the broadcast flag is not necessary, because existing laws (in particular, the Copyright Act) allow for the enforcement of copyright in broadcasted content. Many groups argue that the broadcast flag won't even work to stop the spread of content over P2P networks. For a fuller explanation of the failings of the broadcast flag itself, see question eight below, "Does the Broadcast Flag Work?" If the broadcast flag is unnecessary for bringing high-quality content to viewers, and will not succeed in slowing piracy, then the need for this regulation remains questionable - at least on public policy grounds.

Are There Alternatives to the Broadcast Flag for Protecting Copyright?

There are other ways to protect copyright material, which do not require the broadcast flag technology. These alternatives fall under four general categories: technical, legal, commercial, and educational alternatives.

Technical Alternatives

DTV content transmitted in high resolution formats (such as high definition television or HDTV) contain too much data for consumers to conveniently copy and distribute over the Internet in high resolution. Currently, an hour of HDTV content fills approximately 8.5 GB of storage and would take about 14 hours to download on a typical home broadband connection. This makes the time and storage space required to share HDTV content prohibitive for the average user and 'casual' copyright infringer, who is the target of the broadcast flag initiative. This is why almost all television content that is circulating on P2P networks is via analogue to digital conversion. While this may change in the future, the time between now and then could be used to develop better solutions to the problem, such as less intrusive technical measures or new business models. Since the content owners acknowledge that the broadcast flag is meant to be a 'speed bump' that discourages the 'casual' copyright infringer (but won't stop the truly dedicated infringer), broadcasting in high definition would accomplish the same goal. The problem is that the extra bandwidth HDTV requires means fewer channels available to the public. Physical bandwidth limitations allow one HDTV signal to be carried in the same space as one analogue channel; at lower resolutions, there is the capability to carry up to four digital channels in the same space. Broadcasters must choose between broadcasting the best available content in the best available resolution and making more content available at lower resolutions to suit more potential audiences. But if the goal is to provide viewers with high quality content, then it may be more important to properly protect high quality content than to ensure as much choice as possible. By pushing for the broadcast flag, the content owners want the best of both worlds: to broadcast high quality content alongside the lesser quality content in lower resolution but to achieve the security that high resolution HDTV broadcasts provide. 2. #### Legal Alternatives

The current Canadian Copyright Act is the primary legislative vehicle for protecting rights in broadcast signals. Both the recording industry and the motion picture industry in the United States currently use copyright law to redress harm they have allegedly suffered at the hands of file sharers. The Canadian Recording Industry Association has followed suit here in Canada. This law as it stands adequately protects content without the need for technological tools such as the broadcast flag.

Moreover, introduction of the broadcast flag undermines copyright's policy objectives of supporting innovation. The Canadian Copyright Act seeks to achieve a balance between the interests of content owners and the interests of users through various provisions designed to limit unauthorized copying, and at the same time authorizing copying in certain situations. By law, copyright owners can seek compensation for unauthorized reproduction after the allegedly infringing act occurs. While this route is more expensive for content owners, it leaves legally acceptable uses of content such as criticism or review unaffected. From an innovation policy perspective, this approach to protecting private interests in content also preserves a sphere of activity for innovative experimentation. This is not accidental: society benefits from technological innovation in the form of new media, new consumer electronics, less expensive content distribution, and greater choice. Society is best served by allowing innovation to occur, and settling effects on entitlements afterward. The broadcast flag sets innovation policy on its head: incumbents restrict innovators' access to markets from the outset.

Finally, legally mandating the broadcast flag duplicates laws: both the flag and copyright pursue the same objective (protecting content). However, the two laws have contradictory effects on innovation: the broadcast flag shoves aside the balance copyright achieves without regard to the preservation of space for innovation. Such a scenario would only confuse consumers, who would find the contradictory policy aims of copyright and the broadcast flag difficult to understand. What is legal? What is not? More troublingly, what is allowed? 3. #### Commercial Alternatives

Content industries should take advantage of the new digital environment. This situation is not unprecedented: the history of copyright is one of commercial adaptation to disruptive technologies. For example, consider the movie industry's reaction to the introduction of the VCR. Content owners initially saw the VCR as a threat, but eventually recognized the technology as offering a new market. Today, the home market rivals the box office for movie revenues. Digital technology offers the same type of opportunities. For example, some musicians have experienced increased popularity after making some content available freely over the Internet. Attempting to use technology to artificially maintain the viability of one model of content delivery and exploitation is wasteful; embracing new technology and concentrating on ways to use it to enhance the market, or create new markets, is more profitable and better for content users. If past experience is any indicator, new technologies lead to more profits for content owners and more content for the public. Laws that constrain new technologies ultimately harm content owners. 4. #### Educational Alternatives

No copyright protection techniques, including the broadcast flag, will be effective if consumers do not respect copyright. Disrespect for copyright may stem from a lack of knowledge about the purpose of copyright law (which is to serve the public interest). The best way to address this problem is through education.

Who is Affected by the Broadcast Flag, and How?

The broadcast flag most directly affects consumers, but they are not the only group harmed. The broadcast flag also affects the technology industry, as well as those who work in the public interest, such as researchers and archivists, among others.

Consumers

The broadcast flag will impose numerous costs on consumers. First, consumers will be faced with otherwise unnecessary upgrade costs to replace legacy equipment that will not function with flag-compliant receivers. DTV receivers that detect a broadcast flag will only convey the signal to other equipment that can adequately protect the content with authorized DRM. Signals received by a flag-compliant DTV receiver cannot be recorded with a non-authorized recorder, even if the flag permits recording. Second, flag-compliant equipment, by definition, offers less functionality than the legacy equipment it will replace. For example, one set of broadcast flag approved DRM technologies removes the ability to record certain content at all, even if for otherwise legal time-shifting purposes. Once a broadcast flag compliant DTV receiver is introduced into the home, the consumer is faced with less uses of the content, and less choices of equipment with which to use the content. Third, consumers will face interoperability issues. In the United States, there are currently thirteen different authorized DRM technologies that satisfy broadcast flag regulatory requirements. None of these technologies interoperate. There is the prospect of needing multiple devices to access all content in a particular format, or if one device incorporates all the approved DRM, the cost of the device could be prohibitive. Similarly, there are competing standards for the copyright protected recording of digital content, and unless the content industries agree on one standard, it is possible that discs recorded using one standard will only play on players that recognize that standard. These interoperability issues could obviously involve costs and inconvenience for the consumer. The proliferation of different standards may also serve to restrict the choice of equipment. 2. #### Innovation

The flag technology may hamper future technological development, as new technologies must include backward-looking architecture that will read, obey and retransmit the flag. Under the U.S. broadcast flag model, companies must submit new technologies to the government for approval (i.e., to ensure compliance with regulations) prior to going to market. This will be time consuming - which is important in the high-paced technology industry - and expensive - which is potentially fatal to small start-ups seeking to market potentially disruptive innovations. The regulatory process will serve as a very effective barrier to entry, and one in which content industries will actively participate. This consideration is perhaps the most beneficial result for content owners: they will have a hand in the development of new technologies, so that innovators will not be able to introduce new technologies that may put content - and historical business models - at risk. Again, consider the example of VCR: if the U.S. broadcast flag regulatory framework was in place in the 1970's when the VCR was invented, then we would have only been able to purchase VCR's that could play back content without the ability to record. This also leaves innovators in the position of designing technology to satisfy the regulator, instead of designing to satisfy a need in the marketplace, which means that the marketplace is no longer determinative of the innovations consumers receive. 3. #### The Public Interest

The broadcast flag will generally hurt the public interest in two ways. First, the flag will make less content freely available for public use. For example, if a researcher or archivist records flagged DTV content with a flag compliant receiver, then the content becomes unavailable unless a broadcast flag-authorized display is used, forcing costly upgrades and binding the content to a particular DRM technology or format. Similarly, if a library receives digital content recorded with a particular standard of content protection, some patrons who borrow the content may be unable to use it. Both archivists and librarians need the freedom to make copies and convert to different formats in order to maintain the accessibility to their collections. The introduction of the broadcast flag will hinder the librarian or archivist in doing their job, which is serving the public interest.

Second, and more troubling, the broadcast flag does not consider the public's interest in unimpeded innovation. The broadcast flag is a technology mandate. No government - neither the Canadian government, nor the American government - is well placed to shepherd technological innovations to market, or to pick and choose the technologies that best serve consumers. The broadcast flag represents content owner's desire for an orderly marketplace with smoothly functioning content distribution business models. Functional markets are not orderly. They are chaotic - and the public interest is best served by this chaos. The content industries most fear disruptive technologies which overtake their established business models. And in fact, such fear may be well-founded. Economic history is full of once great companies who failed to adapt to changing technologies and to changing times. While such changes may not always accord with the interests of private parties, without exception, such changes have accorded with the public interest. Disruptive technologies create new markets, new services, new industry participants, and cheaper, faster, better products.

What is the Canadian Government Doing About Broadcast Flag?

The Canadian government has not yet announced any policy initiatives regarding the adoption of the broadcast flag program. However, officials at Industry Canada have recognized that the United States is the driving force on this issue, stating in the August 17, 2004 issue of Canadian Communications Reports (subscription service only) that once the U.S. adopts the broadcast flag, Canada may be forced to follow suit because televisions sold in Canada are usually made with the U.S. market specifications in mind. This means that Canadian equipment will include the technology even if not legally mandated by the Canadian government. Industry Canada may view this as a reason to regulate proactively in the area. This position assumes that there will be no benefit to providing equipment that does not comply with the broadcast flag. This is not the case. If the Canadian market is less regulated than the U.S. market, then there is the possibility that newer and better products will be available to Canadians. As well, certain markets, like the computer component market, will not be ready with approved DRM in time for the adoption of the broadcast flag. A Canadian market that is able to accept these components offers more choices to Canadians. For now, there is no draft legislation in place, and public consultations have not yet begun. Any legislative response remains a way off.

There is some question over the ability of Industry Canada to regulate in this area, as the general power to regulate broadcasting comes from the Canadian Broadcasting Act. In that Act, the Canadian Radio-Television and Telecommunications Commission (CRTC) is responsible for regulating broadcasting. However, in the Canadian Radiocommunication Act the Minister of Industry has the power to regulate radiocommnication receiving devices, which includes television signal receivers. Accordingly, full implementation of a broadcast flag regime would require a co-operative effort on the part of these two government bodies. There is a further wrinkle: the Radiocommunication Act does not give the power to regulate consumer electronics that are not involved in the reception of television signals, such as DVD recorders and computers. This means that the interoperability of flag-compliant DTV receivers and other consumer electronics would be left solely in the hands of the DRM licensing authorities.

What are Other Governments Doing About Broadcast Flag?

The United States government took some initial steps to implement broadcast flag technologies, but those efforts appear to have been thwarted by the courts. In November 2003, the Federal Communication Commission (FCC) issued a Report and Order and Further Notice of Proposed Rulemaking that would have mandated that all devices capable of receiving or processing digital television signals sold after July 1st, 2005, must incorporate approved technologies recognizing the broadcast flag or restrict the output of digital content to other devices that have approved DRM. There is a danger that once implemented in the U.S., the broadcast flag will become a world wide standard for digital broadcasting. However, the order was successfully appealed on the basis that the FCC lacked jurisdiction under the U.S. Communications Act to mandate the inclusion of flag reading technology in reception equipment. The FCC had argued that it has ancillary powers granted under the Communications Act to regulate in matters that are required to fulfill its mandate, and that a redistribution control system such as the broadcast flag is necessary to fulfill the mandate of ensuring high-quality free programming. The appellants argued that the ancillary power is inapplicable and required direction from Congress before regulations could be made. This is important because a bill to adopt copy protection technologies died in Congress in 2002, indicating that support in Congress for the broadcast flag is less than overwhelming. The appellants also argued that enforcing copyright is not part of the mandate given to the FCC, and that the decision to implement the flag, in light of the evidence of the weakness of the flag and the lack of true need for it, is 'arbitrary and capricious' which violates the U.S. Administrative Procedure Act. The Court of Appeals for the DC Circuit struck down the broadcast flag regime on May 6, 2005, holding that

"The Commission's general jurisdictional grant under Title I plainly encompasses the regulation of apparatus that can receive television broadcast content, but only while those apparatus are engaged in the process of receiving a television broadcast. Title I does not authorize the Commission to regulate receiver apparatus after a transmission is complete. As a result, the FCC's purported exercise of ancillary authority founders on the first condition. There is no statutory foundation for the broadcast flag rules, and consequently the rules are ancillary to nothing. Therefore, we hold that the Commission acted outside the scope of its delegated authority when it adopted the disputed broadcast flag regulations."

The World Intellectual Property Organization (WIPO) has taken a somewhat different route to protect copyright material that is broadcast. A draft treaty has been proposed that will give broadcasters a new property right in their signals. Most of the current rights in many of the world's Copyright Acts are granted, such as the right to fix the signal in any medium, or the right to reproduce it. Additionally, in Article 16 of that treaty, governments of signatory countries must adopt legal protection for any technological protection measure broadcasters use to protect the signal. This would create an obligation to legally protect a broadcast flag if was used by broadcasters, so this treaty would likely mandate a broadcast flag-type law, and at the same time add a layer of regulation that will increase the costs and difficulty to consumers of accessing content.

The Japanese broadcasters have also employed a different method to protect copyright content. DTV signals in Japan are encrypted at the source by the broadcasters and require an access card to access the digital signal. Included in the card are restrictions on how the consumer may deal with the signal. The signal can only be copied once, and cannot be altered in any way once it has been copied. This means that consumers of DTV in Japan have much less right to make use of the content than would be allowable under Canadian copyright law. It also provides an example of how content owners can use technology to increase the control over content and upset the copyright balance in their favour.

Is There a Need for Urgency in Dealing with Broadcast Flag?

The only sense of urgency comes from the developments in the United States. One of the reasons that the U.S. is moving quickly on this issue is that The U.S. has set a deadline of 2006 for the transition from analogue to digital television signals. Once the transition has been made, the FCC will auction off the newly-freed radio spectrum. In fact, Congress has already allocated revenues from the auction into its 2006 budget. If the U.S. implements the broadcast flag on July 1, 2005, as proposed, then there will be some effects on Canadians, as mentioned above. Canada has no similar deadline for transition to all digital television, preferring a market driven transition because of the uncertainty involved in consumer acceptance of DTV. Since Canada has no deadline for the transition to digital television, there is no urgency, because there is arguably no present danger of indiscriminate redistribution of digital television programming (due to current availability, bandwidth and compression technology limitations noted above). There is also no hard evidence to suggest that the harms predicted by U.S. groups will come to pass, which means that both Canadian broadcasters and Canadian consumers would not benefit from adopting the broadcast flag, nor lose out by failing to adopt the flag. This renders the broadcast flag unnecessary and wasteful.

Does the Broadcast Flag Work?

There are many groups that believe that it will not work, for a number of reasons. Primarily, there is the problem of "legacy" equipment, which is equipment that is available before the implementation of the flag. This equipment will not be affected by the flag, and will pass on the signal to any equipment. As well, it has been argued that the flag could be relatively easily circumvented, because analogue signals do not preserve the flag. Processing a flagged DTV signal through a widely available digital-to-analogue signal converter would strip the flag, and then processing the signal through an analogue to digital converter would result in a clean digital copy of the signal ready for P2P distribution. As well, relatively high quality analogue content can be captured directly from receiving equipment that has component analogue outputs. The FCC recognizes this potential ineffectiveness, but argues that the broadcast flag is not meant to be bulletproof, but rather a 'speed bump' that will place just enough of an obstruction in the way of the ordinary consumer to prevent widespread, indiscriminate sharing of digital television programming. Given the nature of P2P networks, it will only take a few copies of this nature to be posted to various P2P networks before the content is widely available, and thus the protection is defeated. In light of this and the above mentioned effects that the system could have on consumers, innovation and the public interest, it is not be in Canadians' best interest to install such a costly 'speed bump'.

This page last updated: June 2, 2007

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