People are now able to record home copies of digital TV content, including pay TV. The emerging method of recording is via digital devices - so-called PVRs in the form of TiVo or set-top box from cable companies. It's pretty clear that the next generation of these devices will include DVD burners. The cost of these burners is coming down along with other hardware, and they won't increase the cost of the PVRs much. Once a single company offers this feature, it will be recognized as a huge advantage and the feature will need to be copied by everyone.

One big problem now is that your pay TV content (e.g. HBO) is now available for record/copy/lend or P2P distribution with little or no effort on the home user's part. Currently it takes a bit of work and you often end up with a lower-quality product such as a VCD. The theory was that the cable companies, consumer electronics companies, and pay-TV services would sit down and hash out an agreement. That now appears to be... improbable.

Part of the issue is a desire to be able to circumvent the box/PVR and plug digital cable directly into the television. This would enable a much larger consumer audience to access (and be charged for) services such as video-on-demand, pay-per-view and specialized program guides. This is good for the suppliers of such services and for the cable companies - who usually get a percentage of these transactions. It's not so good for the consumer electronics companies (which would have to reengineer their TVs and would lose sales of set-top boxes) and for some other cable companies, which see the set-top boxes as bigger money-makers.

One curve ball here is that some content suppliers make a significant amount of revenue on selling DVDs of their own shows. If consumers get to make DVDs themselves, they see that revenue stream drying up. This is just dirt-sucking stupid, since the DVD market is so driven by 'extras' content that home users just can't duplicate. But I digress.

A second curve-ball comes from the fact that cable operator see satellite- delivered video as a major competitor and if they impose significant restrictions on consumer choice, then people may find it worthwhile to put up a dish.

Thus we come down to an odd situation where the red corner contains the tag team of HBO and Showtime, but the blue corner contains Starz! (the #3 pay-TV operator) along with most of the cable companies and all of the consumer electronics companies. This split is largely because HBO/ Showtime make original content and derive a lot of revenue from DVD sales; Starz! does not.

Starz! describes its preferred policy as "copy once" meaning that consumers would be allowed to record pay product once. HBO/Showtime want "copy never." CE companies wants "consumer choice" - which generally means unlimited copying.

Until this catfight settles down, it's unlikely the FCC will issue any rules anytime soon. When the masters squabble, the servants stay silent.

http://www.tvweek.com/topstorys/053104pay.html