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At Least For Today, Intellectual Property Triumphs At The FCC

Harold Furchtgott-Roth

Today, Chairman Tom Wheeler withdrew from consideration at a Federal Communications Commission public meeting an order promulgating new rules for what are popularly known as “set-top boxes” for television viewing. While they may be approved by the FCC at a later date, as of today, there are no new rules.

The dispute surrounding whether to adopt the new rules is often characterized as between the video distribution industry—cable, satellite, and telephone companies—and high-tech Internet companies. As the story goes, the former want to keep business as usual, and the latter want to open up video services more easily to Internet customers.

But the real issue is about intellectual property. Just a few days ago, the U.S. Patent and Trademark Office of the Department of Commerce released a study showing that “IP-intensive industries support at least 45 million U.S. jobs and contribute more than $6 trillion dollars to, or 38.2 percent of, U.S. gross domestic product (GDP).” One might quibble with measurement techniques used in the study, but one cannot dispute the finding: intellectual property is important to the American economy.

Video programming is an important form of intellectual property in America. Billions of dollars are invested each year in American video programming both because people around the world love to watch it, and because investors can recover their funds through American intellectual property protections. Those legal protections mean that programmers can control how their video programming is distributed, including through traditional pay-TV outlets and through the Internet.

In most countries around the world, consumers have access to far less local-language video content than we have in America. Relative to the United States, other countries are likely to have some combination of less income, a smaller language base, and weaker intellectual property protections. The result is less video programming and lower quality video programming.

The proposed set-top box rules at the FCC would intrude on the intellectual property rights of video programming in the United States. The proposed FCC rules would limit control of distribution and force certain types of distributors to make video programming available over the Internet.

Proponents of the proposed rules claim that American consumer will benefit from more access to programming over the Internet rather than through pay-TV devices. But many video programmers like the security of the set-top boxes. These devices lessen the likelihood of piracy of video content. In many countries, piracy of video content is rampant. Theft of video programming is less common in the United States in part because of our intellectual property laws and in part because of the security layer of set-top boxes makes piracy much more difficult.

If adopted, the set-top box rules would lead to fewer opportunities for investors in American video programming to recover their investments. Video programming in America would begin to resemble video programming in other countries: smaller quantities and lesser quality.

For all of the appearance of an industry dispute among large corporations, those who stand to lose the most are not large corporations before the FCC or even the large and small video programmers who supply them. The most vulnerable group is the American consumer. Until America begins to look more like other countries, we should enjoy high-quality video programming while we can.

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