• by Wendy Davis , Staff Writer @wendyndavis, August 4, 2016

A proposal for new cable-box rules that would let consumers more easily watch programs on tablets and smartphones could conflict with entertainment companies' rights, according to the U.S. Copyright Office.

The proposed regulations could "could interfere with copyright owners' right to license their works ... and restrict their ability to impose reasonable conditions on the use of those works," Maria Pallante, director of the Copyright Office, says in a letter to the Federal Communications Commission.

Pallante's letter comes in response to an FCC proposal for regulations that would allow companies other than cable and satellite providers to develop boxes that can access pay-TV programs. If those regulations go through, consumers could access over-the-top programs and pay-TV programs from a single device.

Currently, customers who purchase pay TV from cable and satellite providers typically rent set-top boxes, at an average cost of $231 a year. Many customers who also watch online video on a TV screen use separate streaming devices -- like Rokus or Amazon Fire TVs -- while people who watch TV shows on tablets or smartphones often do so via apps.

The original proposal garnered support from the White House as well as consumer groups, who say the proposal -- known as "unlock the box" -- could save consumers money.

But cable companies, as well as groups representing the entertainment industry and the ad industry oppose the plan.

The Motion Picture Association of America has argued that set-top boxes developed by non-cable companies could boost piracy by making it easier for consumers to find unlicensed material. "Devices and applications to facilitate piracy exist today, but they will become vastly more attractive and tremendously harmful if the FCC makes it possible to co-mingle authorized content ... with pirated content from the Internet," the MPAA said in comments opposing the proposal.

The Association of National Advertisers said in its comments that the proposal could cause advertisers to lose control over the geographic distribution of their ads. The ANA also warns that the proposal would allow third parties to replace the ads that were supposed to be included with the programs.

Pallante references some of those concerns in her letter to the FCC. "The proposed rule would seem to allow third-party devices and applications ... to replace or alter advertising, or to improperly manipulate content," she writes."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."

She also says the proposed rules would appear to allow third-party devices to "ignore MVPDs' (multichannel video programming distributors') agreements not to alter agreed-upon channel lineups or neighborhooding restrictions."

"In effect, absent a mechanism to allow copyright owners to impose reasonable and appropriate licensing conditions, the proposed rule may be understood to create a new statutory license that requires the entirety of copyrighted programming offered by MVPDs to be delivered to third parties, including for commercial exploitation," she writes.

While Pallante acknowledges that consumers have the fair use right to record programs for later viewing, she also appears to suggest that content owners and cable companies can enter into contracts that would affect people's ability to time-shift and device-shift.

"Existing case law does not purport to set out the full range of permissible activity under the fair use doctrine, and many open questions remain," she writes.

"Questions of fair use require a nuanced approach as the intersection of copyright law with new distribution technologies continues to be the subject of unpredictable litigation," the letter continues. "It is for that reason that many privately negotiated agreements between copyright owners and MVPDs contract around fair use questions to avoid uncertainty."

The letter immediately drew criticism from digital rights groups like Public Knowledge and the Electronic Frontier Foundation.

“Under the Copyright Office's analysis, the interests of consumers are irrelevant, and fair use is an obstacle to be overcome," Public Knowledge senior staff attorney John Bergmayer stated. "The logical consequence of the Copyright Office’s analysis is that rightsholders and distributors should have veto power over fair use and control over all consumer devices."

The EFF adds that cable carriers and the entertainment industry can't contractually eliminate fair use. "While private companies are free to negotiate conditions like these between each other, nothing in the law gives copyright holders the power to impose those conditions on the whole world, snuffing out the rights of users," the EFF says in a blog post. "Copyright holders cannot control the technologies that customers use to lawfully access their works, nor can they invent new restrictions and rights out of thin air."