2014 June

The FCC Can’t Exempt Netflix from Paying for Interconnection

Posted by | Broadband Internet | 2 Comments

When the Federal Communications Commission (FCC) announced it would investigate the fees Netflix pays Internet services providers, it was careful to avoid any implication that it intended to impose new regulation. At the time, I considered it likely that Netflix’s factual admission against its own interest — that the fees it pays Comcast and Verizon are “too small” to harm consumers — was the primary reason for the FCC disclaimer.

A subsequent review of relevant precedent revealed another powerful reason for the FCC to reject the interconnection rights sought by Netflix: Even if the FCC were to reclassify broadband Internet access as a Title II service while leaving Netflix unregulated, the FCC would lack legal authority to require Internet service providers to interconnect with Netflix at no charge. Read More

‘Clean’ STELA Is the Right Approach as the Clock Winds Down

Posted by | Satellite, Video | No Comments

We’ll be marking the middle of summer with Independence Day celebrations next week, yet there is still no Senate Commerce Committee bill regarding the reauthorization of “STELA”, which is set to expire at the end of the year. The delay is likely due to the desire of some to use STELA as a vehicle for enacting piecemeal changes to the video laws. In the meantime, however, the STELA clock continues to wind down. At this hour, it should be clear that neither industry nor consumers would be well served by a video reform race against the clock.

Meaningful video reform would require a more thorough examination of the video marketplace and the potential impact of changing the laws that govern it. As CBIT noted in its recent white paper, “The Future of Broadcast Television”, the video reform debate has thus far been narrowly focused on only two options: (1) Preserving the status quo or (2) eliminating only the video regulations that enable television stations to meet their unique “public interest” obligations. Neither option is intended to harness market forces to meet consumer demand. Eliminating distortions in the video marketplace would require a truly comprehensive approach to video reform that does more than the limited options presented by industry.

With only six months left on the STELA clock, Congress is running out of time to adequately consider a more comprehensive, market-oriented approach to video reform. Though the current legislative framework undoubtedly distorts the video marketplace, rushing piecemeal reforms through the STELA reauthorization process would only result in more market distortions. Congress should take the time to do it right and consider video reform in the #CommActUpdate process, not STELA.

Congress Never Intended to Expand Traditional Telephone Regulations to Internet Service Providers

Posted by | Broadband Internet, Regulatory State | No Comments

FCC Commissioner Michael O’Rielly, who helped craft the Telecommunications Act of 1996 when he was a staffer at the House Energy and Commerce Committee, has frequently pointed out that Congress never intended for the FCC to regulate the Internet. He knows because he was in the room when the 1996 Act was born. Though the DC Circuit Court of Appeals recently decided that Congress was ambiguous on this point, evidence indicates Commissioner O’Rielly is correct.

Shortly after the 1996 Act was passed, several senators, including prominent Democratic Senators John Kerry and Ron Wyden, sent a letter to then FCC Chairman William Kennard regarding the intent of the 1996 Act. (Download available HERE.) The letter states their “wish to make it clear that nothing in the 1996 Act or its legislative history suggests that Congress intended to alter the current classification of Internet and other information services or to expand traditional telephone regulation to new and advanced services.” (Emphasis added.) Read More

Netflix Admits Interconnection Costs “So Small” They Don’t Harm Consumers

Posted by | Broadband Internet, Video | 11 Comments

Federal Communications Commission (FCC) Chairman Tom Wheeler announced last Friday that the agency would investigate whether consumers are being harmed by so-called “interconnection” agreements between Netflix and Internet service providers (ISPs). The Chairman stated that the information is being collected to “find out what is happening”, and that the agency is “not suggesting that any company is at fault.”

Though this disclaimer was likely motivated partly by the recent kerfuffle over the Chairman’s initial net neutrality proposal, he has another reason “to be clear” that the agency is only “collecting information, not regulating”: Netflix has already admitted publicly that “interconnection” fees are “so small” that they don’t affect consumers. Read More

CBIT White Paper: The Future of Broadcast Television

Posted by | Satellite, Video, Wireless | One Comment

Click HERE to download the complete paper in PDF.

Executive Summary

The migration of consumers from over-the-air television to other video platforms has prompted a debate about the role that television (TV) stations should play in the future communications marketplace. This debate has focused on only two options, each of which is supported by a competing segment of the video marketplace:

  • Broadcasters support maintaining the regulatory status quo; and
  • Multichannel video programming distributors (MVPDs) support maintaining only the unique “public interest” obligations imposed on TV stations by the regulatory status quo while repealing the regulatory provisions that enable TV stations to meet those obligations.

Neither option would harness the power of the free market to determine the future of broadcast television. Though the first option would continue to rely on government intervention to preserve free over-the-air television, the second option would bear even less resemblance to a functioning free market. Repealing only the regulations that enable TV stations to meet their unique public interest obligations would effectively result in the forced abandonment or sale of TV stations at fire-sale prices, thus destroying the legitimate, investment-backed expectations of TV stations through government action. It would be the antithesis of a free market approach.

This paper proposes a free market alternative that could unleash the broadcast industry’s full competitive potential and usher in a new wave of innovation and investment in communications: Enabling TV stations to innovate and compete in the MVPD and wireless broadband market segments through comprehensive, market-based regulatory reform. This alternative would allow TV stations to transition their businesses to a free market approach by eliminating the following anticompetitive regulations:

  • The free television mandate,
  • The broadcast MVPD prohibition,
  • The Federal broadcast tax,
  • Broadcast ownership limits,
  • Broadcast programming restrictions, and
  • Broadcast spectrum limitations.

This pro-competitive approach would enable the elimination of regulations that are necessitated by the government-mandated broadcast business model while respecting the investment-backed expectations of TV station owners. The result would be a truly comprehensive approach to reforming broadcast regulation that would promote competition, investment, and innovation by allowing market forces to determine the future of broadcast television stations. Read More

Outdated Policy Decisions Don’t Dictate Future Rights in Perpetuity

Posted by | Satellite, Video, Wireless | No Comments

Congressional debates about STELA reauthorization have resurrected the notion that TV stationsmust provide a free service” because they “are using public spectrum.” This notion, which is rooted in 1930s government policy, has long been used to justify the imposition of unique “public interest” regulations on TV stations. But outdated policy decisions don’t dictate future rights in perpetuity, and policymakers abandoned the “public spectrum” rationale long ago. Read More