[News]
Philips loses "all confidence" in BPDG consensus

A new Philips press release says Philips has "lost all confidence" in the BPDG consensus.

In essence, through their private contractual relationships, this small group of studios and companies would control digital TV technology and how people use their TVs, DVDs, and other devices in the privacy of their homes.

"The current direction," Blanford said, "is not in the interest of sound public policy, is not in the interest of the affected industries, and is certainly not in the interest of the consumer."

Philips has expressed concerns (not explained in detail in the press release) including the risk that the BPDG's rules would forbid home recording of digital TV broadcasts onto recordable DVD media.

The Philips press release is included below in its entirety. This statement makes Philips the first BPDG participant from within the consumer electronics industry to dissent broadly from the process. Who's next?

Philips Consumer Electronics North America CEO Warns Congress That Plan Will
Raise Costs, Complexity, and Confusion for Millions of Consumers In Digital
TV Age

   Calls on Congress to Create Forum to Build Consensus on Copyright
   Issues

   WASHINGTON, April 25 /PRNewswire/ -- Lawrence J. Blanford, the
   President and CEO of Philips Consumer Electronics North America,
   warned Congress today that if certain Hollywood studios get their way,
   millions of consumers will have to replace their DVD players to watch
   digital TV programs that they have recorded.

   Testifying before the House Energy and Commerce Subcommittee on
   Telecommunications and the Internet, Blanford said that certain
   studios, working with a small group of hardware companies known as 5C,
   are devising a plan for controlling the content of digital broadcast
   TV that raises serious issues of cost, complexity, reliability and
   confusion for consumers. "This proposal," he said, "threatens the fair
   use rights of the consumer and introduces unnecessary levels of
   complexity and costs in consumer devices."

   Blanford also expressed concern that consumers may have less control
   over what they see and record. The technology that supports the
   emerging plan is inherently powerful; it has the potential to remotely
   disable a device that is recording a movie or other program in a
   consumer's home.

   In essence, through their private contractual relationships, this
   small group of studios and companies would control digital TV
   technology and how people use their TVs, DVDs, and other devices in
   the privacy of their homes.

   "The current direction," Blanford said, "is not in the interest of
   sound public policy, is not in the interest of the affected industries
   and is certainly not in the interest of the consumer."

   Blanford warned that Philips, which has been participating in the
   industry working group -- the Broadcast Protection Discussion Group
   (BPDG) -- that is pressing this plan, has "lost all confidence" that
   the group will achieve consensus, "or that it will allow for serious
   consideration or adoption of technology solutions of equal merit
   presented by other interested parties."

   "Private industry should be given a chance to reach a consensus," he
   added, "but the process should be cleansed by the sunlight of
   government. Further discussion should be held in an open forum, with
   the involvement of those who are entrusted with the development of
   public policy."

   As a result, Blanford called on Congress "to reassert its role in this
   critical public-private partnership by providing an appropriate,
   public forum to continue these industry discussions and to foster
   workable solutions on a timely basis." He said that Philips would
   offer "complete support to such an effort, including offering related
   Philips technologies to all comers, under open, fair and easily
   available terms." He also called on other companies to join this
   discussion to assure that "we get this right."

   The issue at hand is how to develop a technology to protect the
   content of digital TV against unauthorized retransmissions over the
   Internet. Philips wholeheartedly supports the goal but believes that
   it must be achieved in a way that protects the "fair use" rights of
   consumers to the content that they enjoy through their TVs, DVDs, and
   other recording devices.

   "This issue will affect consumers, studios, consumer electronics, and
   information technology companies for years to come," Blanford said.
   "We need an approach that will be fair to everyone."

   The problems, he explained, arise from a faulty process. The BPDG was
   created to discuss approaches to address the challenge of preventing
   digital TV broadcasts from being re-transmitted over the Internet, and
   to do so in a way that allows technology to thrive and the consumer to
   be protected.

   A group of companies within the BPDG, however, is pressing an approach
   through which all manufacturers of TVs, DVDs, and other devices will
   have to sign up for an overly broad, burdensome and private license,
   which will govern the encryption technologies that must be in these
   devices and the process to enforce copyright protection. This small
   group of companies will mandate the technologies, control the rules
   that govern the technologies, and change those rules whenever they
   desire.

   Most alarming, the public, consumers, licensees, and public officials
   have not been part of the process that developed the 5C approach, and
   they would be shut out of its implementation.

   "In short, private interests are taking control of the balance among
   consumer rights and commercial interests and, as a result,
   establishing public policy," Blanford said.

   "Philips cannot, and will not, accept that. We believe other companies
   will not accept that. Congress should not accept it either."

   About Philips

   Royal Philips Electronics of the Netherlands (NYSE: PHG) is one of the
   world's biggest electronics companies and Europe's largest, with sales
   of $28.8 billion (EUR 32.3 billion) in 2001. It is a global leader in
   color television sets, lighting, electric shavers, medical diagnostic
   imaging and patient monitoring, and one-chip TV products. Its 186,000
   employees in more than 60 countries are active in the areas of
   lighting, consumer electronics, domestic appliances, components,
   semiconductors, and medical systems. Philips is quoted on the NYSE
   (symbol: PHG), London, Frankfurt, Amsterdam and other stock exchanges.

   News from Philips is located at www.news.philips.com

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   SOURCE Philips Consumer Electronics

   /EDITORS' ADVISORY: ATTN Broadcasters: Philips b-roll (via beta copy,
   fiber transmission and satellite feed), is available 24/7 from PR
   NEWSWIRE
   (212-375-0021)./

   /CONTACT: Katrina Blauvelt of Philips Consumer Electronics,
   +1-770-821-2236, or katrina.blauvelt@philips.com , or Larry Haas of
   Manning, Selvage & Lee, +1-202-261-2878, or larry.haas@mslpr.com , for
   Philips Consumer Electronics/

   /Web site: http://www.news.Philips.com /