Piracy of Live Sports Broadcasting Over the Internet
"Thank you Mr. Chairman for organizing this hearing to discuss digital piracy and the impact it has had on sports broadcasters and their ability to maximize revenues. I am very pleased to attend today's hearing so that this Committee can begin to investigate new challenges facing intellectual property owners. Understandably, the legitimate sale of broadcast rights represents a major source of profit for sports rights owners, and they have a vital interest in ensuring the value of their broadcast rights are maximized at the very moment the event occurs. However, I believe that this issue not only impacts those who own broadcasting rights in sporting events, but it also affects our digital community as a whole. Accordingly, I believe that we must consider the broader impact of any policy proposals some of our witnesses may outline today. We must avoid rushing into broad Internet restrictions and enhanced Internet Service Provider (ISP) obligations that would allow them to determine piracy activity by invading individuals' privacy and freedom in accessing Internet content.
The Internet, with its low barriers to entry, has provided a venue for entrepreneurs of diverse backgrounds to compete against larger businesses in a variety of industries. Social networking and video streaming sites in particular have created a virtual platform for individuals from around the world to connect, freely express themselves, and share ideas without censorship. However, sports broadcasters and others owning copyrighted material argue that the increasing resourcefulness and crafty maneuvers Internet pirates employ to avoid legal liability warrant this Committee's attention.
In recent years, live sports broadcasts have become particularly susceptible to Internet piracy. For example, the television rights to broadcast NFL games represent some of the most lucrative and expensive rights of any American sport. As discussed in our hearing in October of this year, the league should have a top notch retirement and pension plan with the amount of money they generate in negotiating their broadcasting contracts. Yet, they and other representatives from the industry want this Committee to consider an issue that stands to cut into their profit margins.
Due to the NFL's antitrust exemption created under the Sports Broadcasting Act of 1961, the league has been able to pool their teams' broadcasting rights to make specific financially beneficial contracts with broadcasters. According to current NFL media rights deals, all three major American networks; CBS ($3.73 billion), Fox ($4.27 billion), and NBC ($3.6 billion), as well as cable television's ESPN ($8.8) are paying a combined total of $20.4 billion dollars to broadcast NFL games through the 2011 season. Illegal piracy and live video streaming offer individuals who are unable to attend or afford tickets to these sporting events immediate, live, and usually free access. However, the sports and broadcast industry are concerned that continued unrestricted digital piracy will eventually impact consumers and the industry may attempt to recoup their losses by increasing ticket prices or by charging more for legitimate online access to live sporting events.
In the same manner that the music and recording industry was able to find a resolution to curb illegal downloading and file sharing, I believe the sports broadcasters can find a way to coexist with an open Internet and enforce their intellectual property rights in a manner that doesn't unduly impact the entire digital community. Moreover, some of the third party websites that provide live video streaming have been working with the leading industry copyright holders to enforce intellectual property rights. For example, Justin TV gives copyright holders the authority to take down content that infringes upon their ownership rights. While I am uncertain that this should be a standard template, it does represent a workable relationship that has been able to produce some positive gains for all interested parties.
Finally, I would like to state for the record my increasing concern with the negotiations surrounding the Anti Counterfeiting Trade Agreement (the ACTA) the United States Trade Representative has been discussing with several global trading partners. Although the particulars of this agreement are shrouded in secrecy, it has been reported that certain proposals being discussed include mandated Internet Service Provider obligations that raise constitutional questions regarding privacy and other civil liberties. Worldwide leaders in industries owning significant intellectual property rights are lobbying in support of the trade agreement. I know that some of our witnesses today will express an international dimension to Internet piracy because streaming sites can operate from overseas, taking advantage of larger broadband capacity and the lack of uniformity in international standards of copyright enforcement. The ACTA proposes to negotiate a new trade agreement to combat piracy activities that significantly affect commercial interests rather than the activities of ordinary citizens. The negotiations are scheduled to conclude next year. I am concerned that any efforts to introduce or globally mandate network level filtering may lead to unfettered, invasive ISP inspections of citizens' Internet communications to determine the source of digital piracy activity.
While we cannot support Internet piracy and the illegal live streaming of sports broadcasts via third party websites, we cannot forget the many opportunities and benefits the Internet has provided for the American public. Therefore Mr. Chairman, as we discuss these issues today, I look forward to hearing from our panel of witness and gaining a comprehensive understanding of the problem so that we can look to effective solutions to combat digital piracy while maintaining the openness and accessibility of the Internet."