Written Testimony of Michael D. Eisner Chairman & CEO, The Walt Disney Company Submitted to the Committee on Commerce, Science & Transportation United States Senate

Business Wire, Feb 28, 2002

Of course, any legislative solutions must be vetted by all the appropriate Committees of the Congress. And, legislation will enjoy smoother sailing if it proceeds from agreement among the affected industries, consumer groups and others with a stake in the digital future. Also, given the complexity of the problem, we need to proceed carefully so as to avoid unintended consequences of any legislative intervention. But, the time to solve this problem is running short and prior attempts at jawboning have not produced a solution.

Some high tech companies, like Cisco Systems, have been helpful in the search for solutions and to them we express our gratitude. Unfortunately, other high tech companies have simply lectured us that they have no obligation to help solve what they describe as "our problem." In fact, at least one high tech executive has described illegal pirate content as a "killer application" that will drive consumer demand for Broadband. Obviously, the development of Broadband networks is an appropriate National goal only if those networks are conduits for legitimate -- not pirate -- content.

I would like to respond briefly to some of the arguments that have been raised against efforts to deal with this problem. First, some argue that it is unprecedented to have government involvement in the mandating of technological standards. That argument is incorrect. There are numerous precedents for a government role here. For example, the Audio Home Recording Act of 1992 required that all digital audio recording devices conform to a specific content protection technology, namely, the Serial Copy Management System (SCMS). And, the Digital Millennium Copyright Act of 1998 requires all analog VCRs to include the Macrovision copy control technology. The All-Channel Receiver Act required all television sets sold in this Country to contain both VHF and UHF tuners. Clearly, there is ample precedent for legislation to mandate technical standards.

There is another issue I'd like to clarify. Disney and other content owners are not seeking to stop home taping or eliminate "fair use." We are not here because we want to hinder libraries and college professors in using portions of creative works for scholarly research. Nor are we here because we want to interfere with consumers who wish to make a home copy of Broadcast and basic cable TV programs for their own personal time-shifted viewing. We are confident that the government can act to facilitate the needed technology standards without endangering home taping or fair use.

Finally, I want to emphasize that Disney has no desire to stifle innovation, development, experimentation and research by our nation's vibrant high-technology companies. We embrace technology -- it is an everyday part of our business. Continued innovation in high tech is necessary for Disney to evolve how we create and distribute our content and to reach consumers in new ways. We are eager to work with the consumer electronics and information technology industries to ensure that the technological standards we seek are NOT an impediment to continued innovation and experimentation.