Congressmen Sensenbrenner and Conyers have introduced (Dec. 16, 2005) the H.R. 4569, the "Digital Transition Content Security Act," which seems to be almost universally referred to as the "Analog Hole" bill. It's incredibly long and complex, but what it does is forbid anyone from making or selling a device for analog-to-digital conversion, or analog-pass-through (or anything else that handles analog video signals and does more than simply display the video) that doesn't recognize, honor, and pass along to the next device, two encoding schemes known as CGMS-A and VEIL.
This combo of CGMS-A and VEIL encoding schemes is designed to set out what is allowed to be done with the video, such as prohibiting further distribution or copying. CGMS-A handles that part with a tiny code in the vertical blanking interval. VEIL is a watermark scheme (embedded in the video image itself) that doesn't seem to do much of anything on it own, but presence of the watermark is supposed to indicate that the video is (or was supposed to be) tagged with CGMS-A limitations. So if a video signal contains a VEIL watermark (and the VEIL mark is supposed to be really hard to remove), but no CGMS-A, or the VEIL mark is inconsistent with the CGMS-A marking, the system is supposed to treat the video as having been tampered with.
The scheme is all sorts of bad. It's a broad mandate to device-makers, the language is confusing, and according to Ed Felten, you can't even review the VEIL standard to see how it works (or how much it would cost, or whether it would be effective) with signing an NDA and paying a hefty licensing fee to the owners of the proprietary VEIL standard. Nevertheless the bill provides civil damages and even criminal penalties for violations.
The idea of the bill is that requiring everyone to implement these copy- and distribution- protection schemes will "plug the analog hole." (And yes, it's really hard to discuss these issues without giggling.) But even if it worked, that's not quite what it would do. When content owners complain about the "analog hole," they generally refer to the inevitable ability of end users to be able to convert digital content to analog. At some point (at least with today's technology), the snazziest super-compressed and encrypted digital media file has to be unlocked, and displayed (often on an analog device, like a typical TV or radio). At this point, pretty much all of that DRM, encryption, etc., has to be removed. A user can hook up an old-school analog VCR or tape recorder, and get an unencrypted copy of the video or audio. I.e., you record something with your fancy DirecTV Tivo thing. The video is encrypted on the box itself, so you can't (without some clever hacks, anyway) hook up any old digital device and snag the video file, then spread it on P2P networks, for example. But you can connect a VCR to those RCA jacks at the back of the box -- the same ones you use to connect your TV, if it's an old-style non-digital one -- and you can press play on the Tivo box and record an analog version of the video content. And it's no longer protected by DRM. (Depending on the box you've got, there might be Macrovision protection that garbles the video as you record it.) This "weakness" is the analog hole.
The scheme that H.R. 4569 would mandate would require the VCR to pass along any CGMS-A/VEIL signals it got, and to honor them. So if you popped a prerecorded videotape (what are those?) into the VCR, and it had CGMS-A/VEIL encoding, the VCR would only allow play according to the CGMS-A/VEIL rules. The bill would also require anything that could digitize that analog video signal (i.e. convert it back into a digital format, so it could be viewed or edited on a PC, put on P2P networks, etc.) to pass along the CGMS-A/VEIL encoding. But HR4569 does not appear to require that the Tivo (or whatever box) pass along the CGMS-A/VEIL encoding to (or somehow insert it into) the analog signal it sends to the VCR or TV. So it seems you'd still be able to get an unprotected analog signal out of your Tivo. And so, even with the broad mandates imposed by the bill, there would still be an analog hole.
A PDF of the bill is available on gpo.gov