By Jim Barton
Senior Vice President, Research and Development, and CTO
TiVo Inc.

Anyone who develops an innovative product almost certainly does so with the hope that the world will recognize its advantages. Mike Ramsay and I felt this way when we founded TiVo. After all, the benefits of pausing live television, time-shifting programs and fast-forwarding through commercials are clear and compelling. Or so we thought.

Early on, we realized the difficulties of communicating solutions to an audience who

wasn't even aware that a problem existed. After eight years of sustained efforts, we have succeeded in educating consumers well enough that the digital video recorder (DVR) market is growing quickly, and the technology has become fundamental for most of the major television distributors—both satellite and cable companies.

But DVR technology represents a threat to established players. The DVR can disrupt advertising and broadcast-scheduling strategies as well as programming-distribution channels, thereby intruding on the comfortable lives of television industry executives. The incumbent TV industry powers have therefore resisted the spread of DVR technology in many ways, and they will continue to do so until they foresee greater potential for profits from the technology than for losses.

As hard-drive capacity explodes, another disruption is taking place, this time in long-term storage of recorded content. TV content providers generate a great deal of revenue from the sale of programs and movies on DVD. But a viewer who can simply store a copy of every episode of a series has little need to purchase the DVD. The threat of legal action has been placed on the table to attempt to force DVR providers to limit the storage provided in DVRs.

At the same time, advances in DVR technology have made it possible to move programs easily between personal devices for convenient viewing. These same TCP/IP-based technologies can be used to distribute television programming to the viewer via the Internet and broadband connections. It is just now becoming possible for producers of new television programming to distribute their products directly to individual viewers, bypassing cable and satellite television operators. The expanding use of the networked DVR will contribute to disruption among those distribution monopolies.

The next beachhead of resistance to DVR technology will be the U.S. Congress. Work is ongoing in Washington to develop legislation that rewrites key elements of the Telecom Act of 1996. One key concept being developed is "net neutrality," wherein broadband Internet providers are restricted from blocking or otherwise tampering with Internet traffic on their networks.

One way broadband pro­viders that are also TV-programming distributors can resist the coming disruption is simply to block program distribution over their broadband networks. There have already been instances of broadband providers' blocking voice-over-Internet Protocol telephony on their networks, so this is a very real threat.

U.S. policy makers must maintain an environment that allows innovation to continue to drive the creative disruption that has served the country so well in the past.