Content piracy clogging the ‘Net, costing jobs

ISPs have a significant role to play in helping stem the tide of pirated content that is clogging broadband pipes and costing U.S. jobs, NBC Universal Executive Vice President and General Counsel Richard Cotton told the Supercomm audience today.

“Of course counterfeiting and piracy will never go to zero,” Cotton said. “What I believe we need is to send people signals, cues that certain behavior is inacceptable and we haven’t started down that path on broadband internet. We need to do a much better job of educating people that accessing copyrighted content is illegal and that it has consequences.”

One of those consequences is network congestion, Cotton argued, citing research that showed that 50% of Internet traffic is generated by those illegally access copyrighted material.

“We need to move from perception that there are no consequences, that it’s    no problem to an understanding that this is killing U.S. jobs, threatening our greatest industries, and threatening the support system for the content people want,” Cotton said. “The scale of illegal file sharing that is taking place on wired ISP networks is staggering – it consumers 50% of the bandwidth. The FCC studies have shown that one percent of users use 20% of bandwidth and 20% of users use 80% of the bandwidth. A lot of those heavy users are illegally accessing content, which is  imposing huge costs on the system. When we are looking at a national broadband policy, why should everyone be asked to subsidize the 5% that are illegally users consuming so much of the bandwidth.”

Cotton testified before the U.S. Senate Finance Committee earlier this week that piracy also threatens jobs.

“We are not low-cost manufacturers, what drives us in terms of growth are our innovation, ingenuity, technical investment and creativity,” Cotton said. That’s what the U.S. brings to the table in terms of competitive advantage and that’s what drives high wage jobs. We need to be sure we are taking steps to reap the economic benefits of our efforts as opposed to seeing them hijacked by organized criminals internationally. We need to move from a world where counterfeiting and piracy are morally ambiguous things to where those who steal content are seen as reprehensible job killers.”

Companies such as NBC Universal are doing what they can to make it easier for consumers to find and use legitimate content on the Internet, such as that offered by Hulu.com, which NBC helped launch, and at NBC.com and NBCOlympics.com, Cotton said. By offering well-indexed sites and high-quality video, NBC has been able to take back most of the Web eyeballs for things such as Saturday Night Live sketches that were once high-volume items on YouTube.

At the same time, NBC Universal is using content recognition database technology to identify illegal use of its content, and would like to work with ISPs to notify those found using that content that what they are doing is illegal.

“I think that we are headed toward a set of cooperative steps between content creators and network operators,” Cotton said after his speech, in an interview. “The cooperation most immediately will take the form of content operators by crawling the web and identifying individual subscribers who are illegally uploading or downloading copywrited content and network operators forwarding those notices to subscribers and asking them to stop.”

Cotton declined to say new laws were needed, and avoided discussing prosecution of offenders, saying that the goal of content owners is not to prosecute individuals but to use the technology at hand to make piracy much harder for the pirates and to better educate their potential customers as to the illegal nature of their downloads, while making it easier to access legal content.

“The point is, as business models do develop and we are at a point where these business models are not well developed, they are really fledgeling efforts, if they are not nurtured we are in danger of having them overwhelmed and undermined and snuffed out in the crib,” Cotton said.