CEA's Shapiro Protests "Audio Flag" Proposal

ARLINGTON, Va. - Jan. 24, 2006 - The so-called audio flag could diminish innovation and undermine the right of Americans to enjoy products for noncommercial purposes within their private homes, said Consumer Electronics Association (CEA) President and CEO Gary Shapiro today. Shapiro made his comments as he testified before a Senate Commerce Committee hearing on the broadcast and audio flags.

Shapiro first discussed the broadcast video flag, urging the Committee, to the extent it opts to move forward with legislation, to focus on the original narrow intent of the flag. "We are concerned by content industry proposals circulated in this chamber that would go well beyond the 'mass indiscriminate redistribution' standard originally set by the Federal Communications Commission (FCC) for the broadcast flag, and would constrain the use of networks inside the home," said Shapiro. Should the Committee go forward with a video flag, Mr. Shapiro also urged that it include exceptions for news and public affairs programming. In addition, it should include language allowing consumers to decrypt copy protection for non-infringing purposes, for example to remove spyware unknowingly placed on a computer by a music CD.

Shapiro expressed stronger concerns about attempts by the Recording Industry Association of America (RIAA) to establish an "audio flag" for HD Radio and satellite radio broadcasts.

"Instead of merely replicating the broadcast flag, RIAA apparently wants to severely limit consumer use of HD Radio and satellite radio services and new products coming to market," said Shapiro. "More, they appear to want to stop Americans from recording free over-the-air radio in their private homes for later enjoyment, no matter what device they want to use to hear lawfully acquired music.

"Indeed, I am not sure what the RIAA means by the term 'audio flag'. Right now, no audio equivalent to the video broadcast flag exists," continued Shapiro. "With respect to the audio flag, there is no industry consensus or agreed-upon technology as there was with the broadcast flag. No audio flag proposal has been brought to a standards body or to CEA for discussion. Nor do any of the flag proposals in circulation limit themselves to addressing mass, indiscriminate redistribution of music over the Internet - which is the purpose of the broadcast flag.

"After seven years of FCC proceedings, all but ignored by the RIAA until recently, the rollout of digital radio - also known as HD Radio - is underway," noted Shapiro. "Any Congressional nod toward the RIAA limits could stop the rollout of this exciting new technology in its tracks."

Shapiro also testified that RIAA concerns about satellite radio services are unwarranted. "XM and Sirius have announced new hand-held devices to allow their subscribers to record and playback music they have already paid for, like a 'radio TiVo'," said Shapiro. "At the recent International CES, both of these products won awards for innovation and consumer friendliness. These products will be fully compliant with the Audio Home Recording Act - a law the RIAA sought and promised would forever satisfy all their digital recording problems - on which royalties will be paid to the music industry. And satellite companies will continue to pay additional millions in performance royalties."

In addition, Shapiro said, these products ensure that digital content cannot be uploaded to the Internet, and thus will prevent P2P file sharing.

"Content is already encrypted with XM and Sirius satellite services and cannot be redistributed over the Internet. Discussion of a flag in this context makes no sense," he stated.

"But that is apparently not enough for the RIAA, which would like to keep these products out of the hands of consumers by placing severe restrictions on their functionality," Shapiro charged. "This is unjustifiable. Ordinary consumers are not pirates, and recording lawfully acquired content for private personal use is not piracy."

Shapiro closed by outlining other specific concerns about the draft audio flag bill. He said although the draft purports to be modeled on the broadcast flag, it invites restrictions against private, in-home consumer recording and would authorize the FCC to unilaterally mandate "anti-copying technology" that every digital device must use, essentially giving the Commission design authority over consumer electronics products.

"(The draft) also would freeze the fair use rights offered by any new product at 'current historic use'," noted Shapiro. "Think about it - had that been the law at the time we would have had no VCR, TiVo or iPod. All these products offered consumers new ways to use content.

"As we have long feared, having been emboldened by a judicial victory against real pirates, the music industry now sets its sights on ordinary consumers.

"We respectfully urge you to reject the RIAA's efforts to vilify consumers and cajole this Committee into repealing basic consumer rights established by the Audio Home Recording Act."

About CEA
The Consumer Electronics Association (CEA) is the preeminent trade association promoting growth in the consumer technology industry through technology policy, events, research, promotion and the fostering of business and strategic relationships. CEA represents more than 2,000 corporate members involved in the design, development, manufacturing, distribution and integration of audio, video, mobile electronics, wireless and landline communications, information technology, home networking, multimedia and accessory products, as well as related services that are sold through consumer channels. Combined, CEA's members account for more than $125 billion in annual sales. CEA's resources are available online at http://www.CE.org , the definitive source for information about the consumer electronics industry.

CEA also sponsors and manages the International CES - Defining Tomorrow's Technology. All profits from CES are reinvested into industry services, including technical training and education, industry promotion, engineering standards development, market research and legislative advocacy.