STELA

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

What Does the Shift Toward Online Video Streaming Mean for Regulatory Policy?

Posted by | Broadband Internet, Video | No Comments

A flurry of announcements that HBO, CBS, and Lionsgate and Tribeca Enterprises will stream video content online has prompted plenty of speculation about its potential success or impending failure. Some claim it proves that all consumers want to purchase video programming on an ‘à la carte’ basis. Others claim that HBO’s online service is “doomed before it even starts.”

I’m inclined to side with Representative Bobby Rush, who is optimistic that the trend will positively impact the video marketplace while remaining mindful that it’s too soon to predict the ultimate fate of à la carte video streaming.

No matter how these services fare among consumers, however, the fact that a cable channel (HBO), a broadcast network (CBS), and a major movie studio (Lionsgate) have all chosen to experiment with a new distribution model offers valuable insight to policymakers. 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

Local Choice Proposal for Partial Á La Carte Is Irreconcilable with the Ideals of Constitutional Government

Posted by | Video | No Comments

I’m starting to get worried that the partial à la carte mandate in the decidedly Orwellian “Local Choice” proposal wasn’t merely an August reverie. The leaders of the Senate Commerce Committee, which floated the proposal to the press, have neither disavowed it nor introduced an alternative. Could the Committee actually be serious about a proposal that is so flatly irreconcilable with the ideals of constitutional government?

I hope not. The proposal is a blatant case of the government concealing an effort to pick winners and losers in the marketplace behind a masque of consumer protection. Its approach to problem solving goes like this:

  • Disputes between video programmers and video distributors sometimes result in blackouts that prevent consumers from watching certain channels.
  • The government should protect consumers from blackouts by mandating that programmers sell their channels on an à la carte basis.
  • Both cable and broadcast channels have been blacked out during disputes.
  • The Local Choice proposal would nevertheless apply the à la carte mandate only to broadcast channels.
  • Consumers would receive no protection from blackouts involving cable channels.

The proposal doesn’t explain why consumers don’t need to be protected from cable channel blackouts — like the one involving Dodgers baseball games in Los Angeles — because Senate Committees aren’t in the habit of admitting to industry favoritism. Read More

Does Senator Thune Embrace the Underlying Principle of ‘Strong’ Net Neutrality?

Posted by | Broadband Internet, Video | One Comment

Last Friday Broadcasting and Cable reported that the Senate Commerce Committee is proposing to replace market negotiations for retransmission consent with mandatory à la carte pricing for broadcast programming. The ‘local choice’ proposal would require TV stations to either (1) provide their programming to pay-TV operators for free or (2) offer their programming to pay-TV subscribers for a set per-subscriber price on an à la carte basis.

By eliminating any potential for market negotiations between pay-TV operators (who transmit the video content to subscribers) and TV stations (who provide the video content), the proposal would have the effect of separating content from distribution. It just so happens that this is the same goal that pro-net neutrality groups seek to achieve. 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

Conservatives Want to Let STELA Expire or Keep It Clean

Posted by | Video | One Comment

The House Judiciary Committee passed a clean STELA bill this morning (H.R. 5036), which joins the clean bill passed by the Senate Judiciary Committee last month. In the meantime, conservatives have started taking an interest in STELA. They rightly recognize that the truncated STELA reauthorization process “is rife with opportunities for various special interests to try to put the government’s thumb on the scale.”

In a letter to sent to Senator Thune on Monday, Americans for Limited Government (ALG) wrote that a “true first step to deregulate the marketplace would be to simply allow STELA to expire,” not “cherry-pick deregulating the retransmission consent process.”

Yesterday Frontiers of Freedom urged Senators Thune and Wicker “to reject the inclusion of ancillary provisions which will create a decidedly anti-free market framework designed to pick winners and losers in the video marketplace.”

The American Consumer Institute (ACI) also favors a clean STELA reauthorization until a “genuine effort to deregulate the video marketplace can be undertaken.” It notes that “any anemic attempts at deregulation that apply to only one of the many players in the dynamically competitive marketplace could inadvertently jeopardize much needed comprehensive reforms.” Read More