AT&T to Get Tough on Piracy

(page 2 of 2)

In a recent bake-off held by the Motion Picture Association of America, sources say Vobile tested better than a dozen or so other systems when it came to identifying pirated content—even clips that had been altered by hackers hoping to avoid detection. It did so without generating many false positives or instances where it claimed piracy when none had occurred. That's considered critical for any filtering system, as Net service providers fear the backlash that would occur if they wrongly accused customers.

Customer Appeal

Soon after the June ending of the MPAA bake-off, Disney and NBC Universal got interested. AT&T first learned of the Santa Clara startup through its chairman, Vernon Altman, a senior partner at Bain & Co., who also knows CEO Stevenson. Sources say AT&T's Stevenson, Disney CEO Bob Iger, and NBC Universal's Jeff Zucker have been involved personally in the discussions.

AT&T is proceeding cautiously. Sources say it has been testing Vobile's technology since early spring. But besides the laborious job of tuning the technology to work inside a massive network, AT&T is also working on a plan for marketing the approach to consumers. One possibility is to focus at first on using the technology as a way to filter illegal content, such as child pornography. "This could make it all seem a lot more innocent," says Forrester Research (FORR) analyst James McQuivey.

Proponents also could argue that the technology could give consumers access to higher-quality content. Rather than mess with virus-infested video from illegal file-sharing sites, consumers who ask for a given show might be invited to buy a higher-resolution copy from a legal site.

Exclusive Content

But clearly, the focus of the effort is more about business than law enforcement or creating a virus-free Web. And Ma Bell is likely to argue that it will free up huge amounts of bandwidth now taken up by pirated content. This could reduce the amount AT&T would need to invest to continue expanding network capacity, and possibly boost download speeds.

AT&T also stands to get a reliable content recognition system that would help it stand out from the scores of phone companies, cable providers, and Internet service providers trying to land content deals. What's more, if AT&T can convince consumers to let it monitor what they're watching through so-called opt-in agreements, it could offer far more detailed information on their likes and dislikes, in turn enabling AT&T and its partners to land lucrative deals with advertisers hungry for such data.

Sounds simple, but the reality might be far different—and marked by lawsuits rather than win-win business deals. Having full knowledge of what's on the network could make distributors more liable to copyright lawsuits, say some legal experts. And while AT&T may think it's going to win over hordes of consumers by striking exclusive content deals, it may lose just as many who don't want Ma Bell acting like Big Brother, says EFF's Van Lohmann, citing research that almost 20 million Americans—and one in five Net users—engages in file-sharing. He adds, "Certainly, you're going to have a lot of unhappy customers."

Burrows is a senior writer for BusinessWeek, based in Silicon Valley .