September 19, 2005
A federal appeals court vacated the FCC’s broadcast flag rules in May 2005, putting the question of whether to authorize a flag regime back before Congress. A close examination of the FCC flag proceedings prior to the court’s decision offers important lessons for the legislative debate. Even though the FCC approved as “flag compliant” all 13 technologies it considered, the nature of the approval process led technology companies to withdraw valuable product features under pressure from third parties. This demonstrates that a flag regime does indeed carry risks to innovation, as some critics of the flag have argued. It also suggests that the structure of any approval process is crucial. If Congress elects to reinstate a broadcast flag regime, it should take care to guarantee that the process will be open, predictable, and will avoid preferential treatment for technologies endorsed by particular industries or established companies.