CE Nation Challenges Business, Gov't To Keep Pace In A Digital World

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The consumer electronics industry is inherently disruptive with new technology and products altering the status quo and pressuring legislative, legal and regulatory entities to keep pace in the digital age.

Last year consumer electronics related issues continued to play a major role in policy and regulatory discussions within and outside the beltway. It was a transcendent year that saw the Congress return to Democratic Party control after a dozen years with the GOP at the helm.

As usual CEA, still best known for its production of the International CES, continued to work in Washington and in state capitals throughout the country to advance the interests of the consumer electronics industry and to protect the rights of consumers to enjoy fully its members' products.

Environmental issues, intellectual property rights, and the transition to digital television continue to dominate the agenda. As Gary Shapiro, CEA president/CEO, said in a speech last year, "Consumers can have 'home entertainment' everywhere. Not only do consumers want access to their content from every room in their house, but also in the car, on any portable device, remotely through the Internet — anywhere in the world. We have the technology to let them do just that, but we face a few roadblocks."

Shapiro pointed out that those roadblocks can emanate from government agencies, the content community and other industries trying to protect the status quo at the expense of competition and consumer choice.

Choice in broadband, national portability of products and standards, and an adequate balance between copyright and fair-use home-recording rights are critical issues for continued success and momentum in the digital revolution according to Shapiro. "IP-enabled video networks and IPTV services will provide consumers across the nation with a revolutionary way to access their favorite video programs when and where they want," he said, "but we'll only reach that point through the open roads of competition and consumer choice."

The ability of individuals to use their electronic devices as intended — including fairly making copies — while protecting the rights of copyright holders, came under attack again 2006 with attempts by the recording industry to limit consumer rights with a so-called "audio flag."

"The rationale for the video flag is debatable and the audio flag is nonexistent," Shapiro said in testimony delivered last summer on behalf of CEA and the Home Recording Rights Coalition (HRRC) before a congressional committee.

Shapiro explained his concerns about the audio flag and the vital need to preserve the innovation, integrity and usefulness of the products that CEA members deliver to consumers. "The content industry reacts to every new technology with fear, apprehension and cries for government intervention," he said. "Their track record is unbroken: they opposed the player piano, FM radio, television, the cassette recorder, the VCR, the MP3 player and the TiVo. Again, the Recording Industry Association of America (RIAA) is showing up late to the party, with no evidence of harm and demanding that everyone bring their lawful business to a full stop."

In October CEA joined with consumers, artists and innovators to launch the Digital Freedom campaign, a concerted effort to reassert consumers' rights when it comes to new digital technologies, to inform consumers about what they can do with these innovative devices rather than intimidating, threatening and even suing them - tactics that content providers have undertaken.

Advertising and statements from the Motion Picture Association of America (MPAA) and Recording Industry Association of America (RIAA) about the Digital Freedom campaign have implied that CEA is promoting piracy.

Not so, says Shapiro. "The Digital Freedom campaign is promoting the concept that consumers should know and understand their fair-use rights," he said. "The content community's effort to deny the existence of these rights is apparent on the MPAA Web site, which states, 'Piracy is the unauthorized taking, copying or use of copyrighted materials without permission.' This statement emphasizes the point of the campaign," he said. "Exercising fair-use rights is not piracy. Consumers have fair-use rights with lawfully acquired content. Branding them as pirates and spreading fear of lawsuits is not helping consumers who want to use digital technology to create new works."

Shapiro added, "This campaign isn't advocating piracy or stealing, as voices from the opposition suggest. It's a campaign to educate the public and lawmakers about consumer fair-use rights and what you can do with technology. CEA is proud to be part of the Digital Freedom campaign —a campaign already supported by various artists, creators and consumer groups."

The growing need for a comprehensive recycling policy is underscored by the increasing public awareness that millions of electronic devices are discarded each year.

"There's definitely a need for a national framework for electronic recycling," notes Michael Petricone, CEA senior VP of government relations. "The state-by-state patchwork of regulations that has begun to spring up is unwieldy and hugely inefficient," he said, "that's why we continue to advocate for a nationwide solution."

Indeed studies are beginning to show that a national recycling program will actually be the most cost effective solution too. A study released last year by the National Electronics Recycling Information Clearinghouse (NERIC) at the E-Scrap 2006 conference in Austin, Texas identifies a projected $25 million in recurring annual costs or a total of $224 million that will be spent by consumers, state governments and industry in next 8 years. Such costs could be avoided and spent on actual recycling under a national electronics recycling program.

On still another front of critical importance to the association and its members, CEA urged members of the United States Senate to vote "no" on legislation proposed by Senators Chuck Schumer (D-NY) and Lindsay Graham (R-SC) that sought to address China's currency policy by imposing a 27.5 percent tariff on imports from China.

CEA maintained that The Schumer/Graham approach would be tantamount to a tax on American consumers and businesses, since the cost of the tariff would likely be passed on to those purchasing Chinese imports, thereby increasing the cost of a wide variety of immensely popular consumer electronics products.

The transition to digital television reached warp speed in 2006 as American consumers for the first time purchased more digital TVs than analog sets. And this year all televisions will include digital tuners, setting the stage for the end of analog broadcasts now set for February, 2009. There's a possibility that the newly elected Democratic Congress may well revisit the set-top box subsidies program and CEA's Petricone points out that, "We have to be on guard for attempts by some broadcasters to put off the date of the analog cutoff. That would send a very confusing signal to consumers and would be the worst thing we could do."

With these and other issues looming as the new year begins the CEA government affairs staff will again have a busy agenda urging legislators and regulators to facilitate fair competition and fair use of the industry's products, and to eliminate potential roadblocks from the road to innovation and success. That's been a big part of the formula for the industry's spectacular growth thus far and will be a key to its future growth.

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