MPAA, Hollywood studios line up against net neutrality

by Brooks Boliek, Hollywood Reporter

When the FCC convenes its second hearing on what it calls "network management" Thursday, it will have covered both coasts and the universities that played midwife to the Internet.

Thursday's hearing at Stanford University in California and February's at MIT in Boston complete an arc that could be described as the Internet's Fertile Crescent.

These campuses are the staging ground for what could be the government's foray into the Internet's next phase. While the commission calls it network management, most of the people with a stake in the hearing call it network neutrality -- a hotly debated policy notion that likely will define just how far a company can go to control what and how fast information flows over the Internet's backbone.

Proponents of government action argue that a net neutral policy is necessary to overcome budding abuses perpetrated by the big network companies. They argue that many of the big cable and telephone companies are creating a bottleneck for traffic that offends the companies' business or other sensibilities.

The fight creates strange bedfellows and divided industrial families. Two industries that often have been at odds -- big copyright holders and the big network companies -- are battling government regulation.

Meanwhile, independent producers fear that without government intervention they will be shut out of the remaining distribution system open to them.

The studios contend that a government net neutrality doctrine will interfere with their quest for an anti-piracy holy grail and their ability to deliver movies using the Internet. Movies are a bandwidth hog, and to get them to people fast will require some technological sleight of hand.

"Our worry here is to make sure our content is properly protected in this modern world and we have access into these lines," MPAA president and CEO Dan Glickman told The Hollywood Reporter. "If it looks like to us our access on the aftermarket, particularly the Internet, is restricted or we aren't able to protect our content, it impacts our ability to make the product to begin with."

Glickman made a splash at ShoWest when he used his state of the industry speech to highlight the major studios' opposition to a net neutrality doctrine.

He rationale was simple -- money. As boxoffice dwindles in importance to secondary and tertiary markets, the Internet becomes the studios' growth play.

"Movies don't monetize in the theatrical experience," he said. "I know you've heard this, but the average (major) movie to make and market costs $100 million. In order for us to make money on the movie, we have to make it in the aftermarket."

That aftermarket is threatened if the government makes the net neutrality idea a concrete regulation.

"This kind of cosmic regulation of the Internet would stand in our way by preventing freedom and flexibility by network operators to use these valuable tools to protect our content," he said.

That puts the studios at odds with the independents, who feel that the big boys cut them out of broadcast TV and cable and are now trying to cut them out the Internet.

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