retransmission consent

Tech Knowledge Reply Comments in FCC ‘Set-Top Box’ Proceeding

Posted by | Broadband Internet, Video | No Comments

On Monday, Tech Knowledge filed the following reply comments at the Federal Communications Commission in its proceeding to impose wholesale unbundling regulations on cable and satellite video programming in the guise of regulating set-top boxes. The complete comments as filed can be downloaded from the FCC’s website in PDF format HERE. (Note, the HTLM version of the reply comments printed below does not contain the footnotes or appendices provided in the PDF version that was filed at the FCC.)

Executive Summary

The arguments made by proponents of the Wholesale Proposal affirm that its true purpose is to limit MVPDs’ ability to exercise editorial discretion by forcibly overwriting MVPDs’ video interfaces. The Communications Act, previous FCC findings, judicial precedent, and scientific studies in behavioral economics all demonstrate that the interface between consumers and MVPDs’ video programing is itself a form of speech or is otherwise entitled to First Amendment protection because it is intrinsic to MVPDs’ exercise of editorial discretion.

Consider Amazon’s example in its comments in this proceeding — that the Wholesale Proposal would enable Amazon to suggest that an MVPD subscriber watch Amazon’s own programming rather than an MVPDs’ program. In the context of the printed news, that would be equivalent to a rule permitting the Washington Post (a newspaper owned by Amazon CEO Jeffrey P. Bezos) to slap a new front page on the Washington Examiner that contains the Post’s chosen headlines and a message directing Examiner subscribers to read the Post instead. Though the Examiner’s subscribers would still have access to the Examiner’s content as a technical matter (by turning the page), the rule would have the effect of compelling the Examiner to publish (or subsidize the publishing of) that which it does not want to publish (the Post’s headlines and advertising messages) while effectively overriding the Examiner’s editorial decisions about what should be considered the “front page news” of the day. Similarly, the Wholesale Proposal would force MVPDs to publish that which they do not want to publish (i.e., mandatory “information flows”) in order to enable third-parties to direct MVPD subscribers to watch third-party programming (and its associated advertising) that displaces MVPDs’ own decisions regarding what programming should be highlighted on the video interface’s “front page.” Whether applied to print or video, such a rule would cut straight through the heart of the First Amendment’s guarantee of press freedom.

Shifting control over the video choice architecture (and corresponding profits) from MVPDs (and the video programming vendors with whom they negotiate content licenses) to Internet software companies (and their affiliated video programming vendors) would threaten the free flow of information and ideas by concentrating control over the video interface in the hands of a few, giant Internet software companies. Read More

Tech Knowledge Comments on FCC Proposal to Force MVPDs to Offer Unbundled Wholesale Services

Posted by | Broadband Internet, Freedom of Speech, Satellite, Video | No Comments

Today Tech Knowledge filed the following comments at the Federal Communications Commission that address an FCC proposal to force MVPDs to offer unbundled wholesale services in the guise of creating competition in the artificial market for set-top boxes (a proposal dubbed Unlock the Box by FCC Chairman Tom Wheeler). The complete comments as filed can be downloaded in PDF format HERE. (Note, the HTLM version of the comments printed below does not contain the footnotes provided in the PDF version available at the link above and filed at the FCC.)

Executive Summary

The Wholesale Proposal Is an Impermissible Common Carriage Requirement

The FCC’s proposed regulations (the “Wholesale Proposal”) would do more than merely create competition in a market for the “equipment” used to access MVPD services that is artificially separated from the underlying MVPD services themselves; the proposed rules would effectively require MVPDs to provide unbundled, nondiscriminatory access to video programming “information flows” that are an essential part of otherwise fully integrated MVPD services. The avowed purpose of the Wholesale Proposal is to enable third parties to combine MVPD’s unbundled programming with “ancillary features” to provide entirely new, “differentiated” services in competition with MVPDs’ underlying services — the same justification that has traditionally been used to impose resale and other wholesale obligations on common carriers under Title II. The FCC cannot accomplish this result in the guise of promoting competition in an artificially created market for “equipment,” because mandatory wholesale requirements are fundamentally common carriage, and the Communications Act prohibits the FCC from treating MVPDs as common carriers. Read More

New STELA Bill, Still Not Clean

Posted by | Video | No Comments

Recent news reports indicate that the Senate Commerce Committee has dropped the à la carte and Internet provisions in its STELA reauthorization bill (called STAVRA). But the bill is still not ‘clean’.

It appears that the bill still contains a provision codifying the FCC’s decision to prohibit independent TV stations from jointly negotiating retransmission consent agreements. Like the FCC rule, this prohibition would apply in all TV markets, including markets that lack effective competition among pay-TV providers. Under the bill, TV stations in these markets would be required to negotiate separately with a pay-TV operator who Congress has determined possesses monopoly market power. Pay-TV operators with monopoly market power don’t need government help in their negotiations with broadcast TV stations. Read More

Thune’s Slippery Slope Toward Susan Crawford’s Dumb-Pipe Dream

Posted by | Video | 2 Comments

Senator Thune, the ranking Republican on the Senate Commerce Committee, is crusading to force TV stations to offer their channels directly to pay-TV customers on an individual, ‘á la carte’ basis. Thune bills his ‘Local Choice’ proposal as a ‘new’ idea, but there is nothing new about government meddling in the relationships between cable networks and content providers. The intellectual basis for Thune’s á la carte proposal is no different from the basis which underpins arguments in favor of ‘net neutrality’.

Debates over á la carte access to individual TV channels and net neutrality appear to be unrelated on the surface. But beneath the overheated rhetoric, they share the same DNA. Cable operators are the central player in both dramas. They play the role of an ‘Internet service provider’ (ISP) who provides access to the Internet in net neutrality debates, and the role of a ‘multichannel video programming distributor’ (MVPD) who provides access to cable TV in á la carte debates, but the ‘pipes’ that cable operators use to provide both services are exactly the same — it is only the jargon (ISP versus MVPD) and the legal rules that change.

The fact that the intermediary roles played by cable operators as ‘ISPs’ and ‘MVPDs’ are fundamentally the same is why Senator Thune’s support for an á la carte mandate in his Local Choice proposal is so alarming. It would force cable operators to offer each local TV channel to their subscribers on an á la carte basis at an individual price set by the TV station and would prohibit any opportunity for cable operators and TV stations to engage in market negotiations regarding channel pricing and packaging. Read More

Congress Doesn’t Need to Intervene in Retransmission Consent Negotiations

Posted by | Video | 2 Comments

In his written testimony for today’s Senate Commerce Committee hearing on the video marketplace, Comcast executive vice president David Cohen says the company does not support addressing retransmission consent issues through the STELA process or other legislative action. He notes that broadcasters and pay-TV providers have, “in the vast majority of cases, succeeded in negotiating retransmission consent agreements,” and that “most parties involved in such negotiations will continue to act responsibly and bargain in good faith and in a manner that reflects consumers’ best interests.”

Comcast’s vote of confidence for market negotiations is consonant with the views of free market groups that have weighed in during the STELA reauthorization process, including Americans for Limited Government, Frontiers of Freedom, the American Consumers Institute, and the Center for Boundless Innovation in Technology (CBIT). These free market advocates recognize that piecemeal changes often result in more market distortions and obstruct efforts for more comprehensive reform. 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.

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

The Anticompetitive Effects of Broadcast Television Regulations

Posted by | Video | No Comments

Shortly after Tom Wheeler assumed the Chairmanship at the Federal Communications Commission (FCC), he summed up his regulatory philosophy as “competition, competition, competition.” Promoting competition has been the norm in communications policy since Congress adopted the Telecommunications Act of 1996 in order to “promote competition and reduce regulation.” The 1996 Act has largely succeeded in achieving competition in communications markets with one glaring exception: broadcast television. In stark contrast to the pro-competitive approach that is applied in other market segments, Congress and the FCC have consistently supported policies that artificially limit the ability of TV stations to compete or innovate in the communications marketplace. Read More

Network Non-Duplication and Syndicated Exclusivity Rules Are Fundamental to Local Television

Posted by | Video | No Comments

The Federal Communications Commission (FCC) recently sought additional comment on whether it should eliminate its network non-duplication and syndicated exclusivity rules (known as the “broadcasting exclusivity” rules). It should just as well have asked whether it should eliminate its rules governing broadcast television. Local TV stations could not survive without broadcast exclusivity rights that are enforceable both legally and practicably.

The FCC’s broadcast exclusivity rules “do not create rights but rather provide a means for the parties to exclusive contracts to enforce them through the Commission rather than the courts.” (Broadcast Exclusivity Order, FCC 88-180 at ¶ 120 (1988)) The rights themselves are created through private contracts between TV stations and video programming vendors in the same manner that MVPDs create exclusive rights to distribute cable network programming.

Local TV stations typically negotiate contracts for the exclusive distribution of national broadcast network or syndicated programming in their respective local markets in order to preserve their ability to obtain local advertising revenue. The FCC has long recognized that, “When the same program a [local] broadcaster is showing is available via cable transmission of a duplicative [distant] signal, the [local] broadcaster will attract a smaller audience, reducing the amount of advertising revenue it can garner.” (Program Access Order, FCC 12-123 at ¶ 62 (2012)) Enforceable broadcast exclusivity agreements are thus necessary for local TV stations to generate the advertising revenue that is necessary for them to survive the government’s mandatory broadcast television business model.

The FCC determined nearly fifty years ago that it is an anticompetitive practice for multichannel video programming distributors (MVPDs) to import distant broadcast signals into local markets that duplicate network and syndicated programming to which local stations have purchased exclusive rights. (See First Exclusivity Order, 38 FCC 683, 703-704 (1965)) Though the video marketplace has changed since 1965, the government’s mandatory broadcast business model is still required by law, and MVPD violations of broadcast exclusivity rights are still anticompetitive. Read More

FCC Double-Standard for Media Ownership Threatens Competition and Diversity

Posted by | Satellite, Video | One Comment

Today the House Judiciary Committee is focused on issues related to competition in the video marketplace. Earlier today the Committee examined the competitive implications of the proposed merger of Comcast and Time Warner Cable, and this afternoon, it’s examining the compulsory copyright licenses applicable to the retransmission of broadcast television programming by cable and satellite operators (“multichannel video programming distributors” or “MVPDs”) and the related issue of retransmission consent. Though they are separate hearings, the issues in them are intertwined.

In addition to the antitrust laws, the Comcast/Time Warner merger has implications for statutory provisions and FCC regulations governing media ownership. The FCC originally adopted media ownership limits to promote competition and diversity in the mass media marketplace. These goals remain laudable, but the media ownership limits have become laughable. Today’s double-standard for media ownership limits has served the perversely inapposite purpose of increasing the power of MVPDs in the media marketplace. While the FCC has been busy imposing new ownership limits on TV stations, it has also been quietly repealing the few remaining ownership limits applicable to MVPDs. The predictable result of this regulatory disparity has been an increase in vertical and horizontal concentration among MVPDs and programming vendors.

Congressional and FCC proceedings examining compulsory copyright licenses, retransmission consent, and broadcast exclusivity agreements threaten to accelerate the trend toward increased consolidation in the video marketplace. These proceedings are an existential threat to local TV stations. If local TV stations die, CBS and other independent broadcast programmers would be denied a critical “anchor store” for distribution of their programming. Faced with this hardship in today’s competitive market, broadcasters would ultimately be forced to consider vertical integration with cable operators, whose platforms distribute video as MVPDs and all types of content as broadband Internet access services.

The potential unintended consequences of changing only a handful of provisions that govern the complex web of relationships among video distributors and programming vendors is why a piecemeal approach to video “reform” is so ill-advised. A piecemeal approach is more likely to harm competition and reduce programming diversity than promote them. If policymakers want to promote competition and diversity, they should consider video regulation reform in a comprehensive manner. Read More