Wednesday, Jul 9, 2008
Like many new technologies, interactive TV will enter our lives by promising us more power. It won't be an empty promise; TiVo does give you new control of your TV, as will the video-on-demand and shop-from-your-couch services that are coming fast or are already here. But, as happened on the Internet, the power we'll get from interactive television will often be circumscribed by advertisers and media companies that want to make sure we don't all get out of control. Just as we'll get more and more DVDs that won't allow you to skip through trailers for other films, we'll have digital video recorders that prohibit ad-skipping and video streams that we can't record onto other devices.
The story of TiVo is instructive. TiVo, the firm, is a small California start-up, and the device wasn't part of the TV industry's script for the rollout of interactive television. The machine has not been a fantastic seller, but the people who own TiVos are delirious in their appreciation for them, which doesn't make media companies happy. The networks saw some advantages to devices like TiVo -- such a system would be necessary to provide on-demand video, a possible revenue generator for content firms -- but there was one obvious downside to the device: It let users skip ads.
When TiVo came out, "everyone thought it was just a killer of commercials, and that was great," Burke says. But after media firms began raising concerns about that feature -- with prominent executives likening ad-skipping to "theft" -- "TiVo changed and said that they would work with media companies." Sonicblue, one of TiVo's main rivals, was sued into bankruptcy by media companies upset over its Replay TV recorder; but since it has become more accommodating to content companies, TiVo has avoided legal troubles. Many critics have noted that if it wanted to, TiVo could give its users a lot more freedom. The devices are capable of skipping ahead 30 seconds (the length of the average commercial) with the click of one button; but that feature is hidden, and you need a secret code to turn it on. TiVo could also automatically make its devices skip through all commercials automatically, but that was the feature that got Sonicblue into trouble, so it's not likely TiVo would do that. TiVo currently has many advertising deals with the country's biggest media firms, and Disney, Sony, AOL and others have invested in the company.
But many in the TV industry are still wary of the sort of control TiVo gives its users, which is why a number of companies are developing TiVo-like systems that give users a taste of freedom and enable targeted advertising, while still keeping viewers firmly tethered to the networks. One of these firms is NDS, a subsidiary of Rupert Murdoch's News Corp. Dov Rubin, an NDS vice president, says that the company's main business is "protecting the revenue stream of broadcasters." The company does this by offering "conditional access technology" (the part of the cable infrastructure that allows for scrambling and de-scrambling of premium-channels) and interactive television systems that allow content companies and broadcasters wide latitude in determining how viewers can use the systems.
For instance, NDS has a digital video recorder that allows broadcasters to say whether or not users can skip over ads. The recorders "obey commands on the broadcast stream" to decide if a user can perform a specific action, says Rubin. "The programmer could designate that the following commercial cannot be fast forwarded," Rubin says. "But they also have tools to make it more subtle. The device may just jump to the last five seconds of the commercial, because there's the theory that you'd put the logo there. Or, because there's this kind of intelligence in the box, it could skip to an abbreviated version of the commercial resident in the box -- so you thought you were skipping, but you've seen a subtle version of the ad instead." Rubin notes that NDS only provides "the building blocks," and that it's the broadcasters who control the features.
You might wonder who would buy a DVR system like NDS's when, instead, one could buy a TiVo that skips over all ads, regardless of what broadcasters want. The answer is: someone who doesn't have any choice in the matter. NDS doesn't sell its DVR systems to consumers. Instead, it provides its technology to cable and satellite companies all over the world; those services then deploy it to their subscribers, in much the same way that cable companies already provide set-top boxes to users.
Although there are efforts at the FCC aimed at encouraging more manufacturers to enter the interactive television market, many industry watchers believe that most interactive TV devices will be rolled out through cable and satellite systems, rather than through consumer electronics retailers. This means that, in the future, we could all be provided with devices -- like NDS's, and unlike Tivo -- that consider broadcasters, rather than viewers, their primary boss.
The major satellite systems in the U.S. already provide interactive TV and DVR systems to their users, and cable companies are rolling out such systems as well. In 2002, Scientific Atlanta, company that specializes in set-top box cable receivers, introduced a DVR device of its own. The system seems to have TiVo in its crosshairs. People who use the Scientific Atlanta system don't have to pay an up-front fee for the DVR recorder; they just pay their cable system a monthly service fee of around $10.
Dave Davies, Scientific Atlanta's director of business development, said that his company decided not to offer some features in its DVR box. "We don't offer a 30-second skip button," he said. "A consumer could fast forward [through the ads] but we don't make it easy for them." Davies also said that the box could be configured to not skip by certain ads, but that it doesn't currently do that. "Could you do that? Yes. Is it in our system today? No. The real question out there is how much you inhibit what people can do -- if satellite systems can skip ads then cable companies would need to have those capabilities too."
Still, it's clear that when your cable or satellite company gives you your set-top box -- as opposed to your going out and purchasing it yourself -- the service provider retains tremendous control over your system. Look at Sky TV, Rupert Murdoch's satellite system. In the U.K., Sky TV offers the NDS-built digital recorder and satellite receiver to customers as an extra service, called Sky+. Unlike TiVo, the Sky+ system records "personal viewing information," which is information about your viewing practices that is tied to your contact information (i.e., it's not kept anonymous, like TiVo's). A look at the Sky+ service's privacy policy is chilling: "Unless you ask us not to," the policy states, "we from time to time may send Personal Viewing Information to third parties that offer products or services that we believe may interest you or our customers in general for their use in providing digital satellite services to you via Sky+. Such third parties will be prohibited from using this information for any other purpose and they will be required to keep it confidential. These third parties may use this information to contact you."
The privacy policies of cable and satellite systems in the United States are more stringent than those of Sky+. But it's important to note, says White Dot's David Burke, that the federal laws governing data collection from TV systems have some significant loopholes. "The most significant limitation is that [the law] only applies to cable operators," stated a 2001 report on interactive TV by the Center for Digital Democracy. But interactive TV will transmit information over a number of platforms, not just cable. There are essentially no laws regulating data collected at your TV but sent over "phone lines, satellite links, wireless, and DSL," the report says.
And recently, movie studios have been pushing through new efforts to limit the kinds of devices consumers can connect to their cable and satellite systems. In several states, the Motion Picture Association of America, the studios' main lobbying group, has persuaded (or attempted to persuade) legislators to add new laws on the books to make it illegal to use certain devices that the MPAA believes could facilitate "theft" of cable and satellite TV services. Critics of the laws -- who have taken to calling the proposed rules "Super-DMCA" laws, after the controversial federal Digital Millennium Copyright Act -- say that the rules would force consumers to use only the set-top boxes that their cable or satellite providers give them, and would possibly prohibit third-party devices like TiVo.
Vans Stevenson, the MPAA's senior vice president of state legislative affairs, described the laws as nothing more than an innocuous "update" to current theft bills. He said that attorneys at the group had determined that studios would need the state laws to protect some new services they planned to offer, including Movielink, a movie-on-demand system that movie companies recently unveiled.
Traditional critics of the movie studios' copyright protection legislation, such as the Electronic Frontier Foundation, were blindsided by the MPAA's state efforts. The EFF only found out about the MPAA's laws after several states had passed them. "They know that people aren't paying attention at the state level," said Fred von Lohmann, an intellectual property attorney at the EFF. He and several other critics, including the Consumer Electronics Association, called the laws overly broad. Michael Petricone, the CEA' vice president of technology policy, said that electronics companies were concerned that the new laws would prevent users from connecting even VCRs to their cable systems -- a suggestion that Stevenson, of the MPAA, dismissed as "unfounded and bordering on the hysterical."
The back-and-forth between the tech companies and movie studios continues in Arkansas, Colorado, Florida, Georgia, Massachusetts, Tennessee and Texas, where the bills are pending. But the studios seem to be facing some setbacks. One legislator who supported the MPAA's bill in Michigan, where it was passed in December, recently told the Detroit Free Press that the law should probably be brought back to the Legislature to be clarified.
Fred von Lohmann, of the EFF, says he's certain why the MPAA wants these laws passed. "I think the primary motivation is to get more leverage of the living room -- they would love to be able to control what you can connect to your set."
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