THE BLOG
06/19/2007 10:48 am ET Updated May 25, 2011

Movie Companies Want Protection From FCC

There's a lot going on that our government has to be concerned about these days. There's the war in Iraq, and the war in Afghanistan. The rest of the Middle East is unsettled. Gasoline prices are moving up with the temperature. Global warming is getting worse and our energy and environmental policies are bogged down.

What should the government's priority be? To protect the movie industry, of course. Over the last week, our "creative community" has called for an unprecedented intrusion of government power to protect an industry that sees itself as the center of the universe.

In May, the Justice Department again proposed a new set of intellectual property laws, including the recycling of the proposal to make "attempted" infringement a crime. But that's not enough. U.S. attorneys shouldn't out be investigating gangsters or bank robbers or terrorists, according to the newly formed Coalition Against Counterfeiting and Piracy, which includes the movie and record companies and the U.S. Chamber of Commerce. There are other priorities.

Rick Cotton, the general counsel of NBC/Universal, who is heading the Coalition, said this: "Our law enforcement resources are seriously misaligned." He added: "If you add up all the various kinds of property crimes in this country, everything from theft to fraud to burglary, bank-robbing -- all of it, it costs the country $16 billion a year. But intellectual property crime runs to hundreds of billions a year."

Tell it to the widow who was defrauded out of her life savings. Tell it to the small store owner whose shop was burned down. Tell it to the family whose house was invaded and their possessions stolen. Tell is to the young teller traumatized by a bank robbery, and to the bank customers whose savings are now gone.

Yes, it would be nice if the cops were out looking for bootleg records instead of, say, watching the border for terrorists. Perhaps the new Intellectual Property enforcement coordinator the group recommends for the White House could come up with a way to stop al Qaeda from making a few extra copies of Friends.

Having the power of law enforcement at their command isn't enough, however. In filings with the FCC, the movie industry wants the commission to, gasp, regulate the Internet in the most intrusive manner possible. On the same day that the coalition announced its grand plans, AT&T Exec. Vice President James Cicconi was out in Los Angeles announcing that AT&T would work with Viacom on anti-piracy technology.

AT&T, though, won't have to go it alone in an attempt to use network tools to root out material its movie-studio patrons don't like. Their sniffing of every packet to chase down the heavy-duty "pirates" would be part of a larger policy.

NBC-Universal is asking the Federal Communications Commission (FCC) to get involved. According to NBC, "The commission should make unmistakably clear, as part of its regulations governing broadband industry practices, that broadband service providers have an obligation to use readily available means to prevent the use of their broadband capacity to transfer pirated content, especially when such use represents huge percentages of their capacity and reduces the quality of service to other subscribers."

NBC is calling for regulation of the Internet. Does AT&T know about this? In its filing on "broadband industry practices," AT&T railed against Net Neutrality advocates whose "agenda is a reckless invitation to subject the Internet to intrusive regulation despite the lack of any market failure." Mr. Cotton, meet Mr. Cicconi.

NBC's view of the Internet is Hobbesian in its bleakness. It's a dank refuge where illicit P2P traffic clogs the pipes of law-abiding citizens. The company sees the Internet as the cyber-equivalent of Gresham's law, with the bad traffic chasing out the good. From the filing: "A failure by the commission to mandate the deployment of such measures is bad public policy -- bad for legitimate businesses, bad for the networks that comprise the Internet and bad for law-abiding consumers who are being deprived of the Internet access they have paid for."

The situation is dire, and the government must step in, NBC said. "It is inconceivable that the U.S. government would stand by mutely and permit any other U.S. business to be hijacked in this fashion," NBC thundered, after it trashed P2P technology as the scourge of the movie industry. Perhaps NBC should also ask Congress to obtain permission to open every package carried by the U.S. Postal Service and every delivery company, just in case there are stolen discs inside. Or the chamber could ask for broader authority to open any package, just in case something stolen is inside.

There is no "market failure" here. In fact, the industry's protestations to the contrary, things look positively rosy for the movie industry. The U.S. government predicts at 16 percent growth in employment in the movie and record businesses in the Los Angeles area in the 10-year period ending 2014. That's an additional 21,300 jobs, bringing employment to 153,500 workers, according to the Bureau of Labor Statistics in the area that is home to the entertainment world.

Financially, things are starting to look up. The Hollywood Reporter reported: "After a disappointing 2005, the six major [studio] companies have received official confirmation from the MPA that their all-media revenue from filmed entertainment -- comprising money from home video, television, theatrical and pay TV -- expanded by 8 percent in 2006 to reach $42.6 billion." Viacom is even being touted as a "growth stock," largely on the performance of the Paramount movie studio.

Do the movie and record companies have ups and downs? Sure, but there are lots of reasons for them, ranging from bad movies and records that no one wants to see or listen to, to industry consolidation, to foreign competition. You can read about the threats to the industry in any annual report of a movie studio.

None of it, however, justifies the measures proposed by the movie and recording industries. None of it justifies the intrusion into the use of the Internet. In an industry known for being self-centered, the message here is clear: It is not all about you.