The United States Copyright Office has sided with cable companies in their fight against a Federal Communications Commission plan to boost competition in the TV set-top box market.

The FCC proposal would force pay-TV providers to make channels and on-demand content available to third parties, who could then build their own devices and apps that could replace rented set-top boxes. Comcast and other cable companies complain that this will open the door to copyright violations, and US Register of Copyrights Maria Pallante agrees with them. The Copyright Office provided advice to the FCC at the FCC's request, and Pallante yesterday detailed the concerns her office raised in a letter to members of Congress who asked her to weigh in.

"In its most basic form, the rule contemplated by the FCC would seem to take a valuable good—bundled video programming created through private effort and agreement under the protections of the Copyright Act—and deliver it to third parties who are not in privity with the copyright owners, but who may nevertheless exploit the content for profit," Pallante wrote. "Under the Proposed Rule, this would be accomplished without compensation to the creators or licensees of the copyrighted programming, and without requiring the third party to adhere to agreed-upon license terms."

There are already "third-party set-top box devices, mainly produced overseas, that are used to view pirated content delivered over the Internet," and the FCC's plan could expand the market to include devices "designed to exploit the more readily available [cable TV] programming streams without adhering to the prescribed security measures," Pallante wrote.

Consumer advocacy group Public Knowledge, a supporter of the FCC's original set-top box plan, criticized the Copyright Office's analysis, saying it ignores the interests of consumers and contains various inaccuracies. "This letter is another example of how the Copyright Office has become dedicated to the interests of some copyright holders—as opposed to providing an accurate interpretation of copyright law," Public Knowledge Senior Staff Attorney John Bergmayer wrote.

The proposal doesn't require "delivery of content to third parties," it simply lets consumers watch the video they subscribe to on the devices of their choice, he argued.

It's not like CableCard, Copyright Office says

The Copyright Office, which processes registrations of copyright for books, music, movies, software, and other works, says that under the FCC plan, third parties "would have no way of knowing all of the requirements and limitations" imposed by licensing agreements between programmers and pay-TV providers. Among other things, such requirements can be related to the types of devices that video may be viewed on, limitations on advertising, and channel lineups, the letter said. For third-party devices such as the Amazon Fire TV, Roku, and Apple TV, contracts can also include "requirements to exclude applications used for the consumption of pirated works" before allowing pay-TV content on the device.

While the existing CableCard system already allows access to pay-TV content on third-party devices, the Copyright Office argues that this is not equivalent because the CableCard regime is administered by the CableLabs cable industry consortium, "which licenses the CableCARD technology to third-party device manufacturers in written agreements" and can thus "impose and maintain appropriate standards for the delivery of content to consumers."

By contrast, Pallante wrote, the FCC proposal would require pay-TV operators to support content protection systems that are administered by an independent entity that isn't controlled by the cable industry.

The Copyright Office provides some examples of how contracts between programmers and cable companies could be violated, such as:

The Proposed Rule requires MVPDs [multichannel video programming distributors] to make licensed programming feeds available to third-party device or software manufacturers free of charge and without “discrimination,” thus potentially undermining copyright owners’ ability to enforce exclusivity agreements, including “windowing” or “tiering” agreements that make content available on certain platforms before others.

...

Even if third-party devices and applications did not replace the advertising that appears in the programming itself, the Proposed Rule would appear to allow them to add additional advertising as part of the programming stream, e.g., advertising spots before or after an on-demand video, or banner advertising next to or overlaid on top of a program, without any requirement that resulting advertising revenues be shared with either the MVPD or the content creator.

Public Knowledge argued that "While two parties are free to negotiate amongst themselves, they cannot bargain away the rights of third parties. What the Copyright Office advocates is encouraging distributors to negotiate away their consumers’ rights without those consumers’ consent." More specifically, "While your cable provider can agree not to build DVR features into its equipment, that cannot and does not make it illegal for consumers to record their favorite shows at home," Public Knowledge wrote.

FCC finalizing proposal

FCC Chairman Tom Wheeler has insisted that third parties will have to respect copyright under his proposal, but fellow Democratic FCC Commissioner Jessica Rosenworcel has expressed concerns about copyright. Rosenworcel's statements raise the possibility that the plan could be changed significantly before a final version is approved. In the meantime, FCC officials are reviewing an alternative proposal from the pay-TV industry that would require cable companies to deploy video applications for third-party set-top boxes using open standards.

After today's FCC meeting, Wheeler promised that his final proposal will simplify the implementation while protecting "copyright and contract enforcement of copyright" and providing choices to consumers "that they so long have been denied."