Broadcasting&Cable

CenturyLink says Verizon is trying to have it both ways on the competitiveness of the business broadband market, and thus the need for potential new rate regulations. In a letter to the Federal Communications Commission, CenturyLink pointed out that stumping for its purchase of XO Communications, Verizon included an economic study entitled “Whitepaper on the effect of Verizon’s XO acquisition on business data services.” "[A]lthough the Verizon-INCOMPAS [BDS revamp] proposal is predicated on a lack of BDS competition, the Whitepaper emphatically concludes that 'there will continue to be extensive competition for [BDS] provided over fiber, cable, and copper by a wide range of providers' following the proposed transaction," said CenturyLink.

FCC chairman Tom Wheeler has based his proposed revamp of BDS (formerly special access) on a Verizon/INCOMPAS proposal. Incumbent carriers other than Verizon—CenturyLink, AT&T—do not support the proposal. Cable Internet service providers also feel targeted since it could mean imposing new rate regulations on them. “CenturyLink’s characterization of the Verizon/INCOMPAS joint proposal is wrong," said Kathy Grillo, Verizon senior VP and deputy general counsel. "Our joint proposal is not a commentary on the current state of competition. It is a compromise intended to resolve an issue that has been overhanging the industry for years.

House Judiciary Committee Ranking Member John Conyers (D-MI), has joined with House Republican leaders to call for the Federal Communications Commission to release the text of its set-top proposal before it votes on it. An FCC spokesperson said that the chairman does not release items until after the final vote. That request for the text came in a letter to FCC Chairman Tom Wheeler Sept 16 and followed similar calls by Senate Republicans in an FCC oversight hearing.

Before a vote such items are considered works in progress--they can still be adjusted and edited--and Chairman Wheeler clearly signaled this week that the set-top proposal was not done. Also calling for release of the proposal text were House Commerce Committee Chairman Fred Upton (R-MI), Communications Subcommittee Chairman Greg Walden (R-OR), and House Judiciary Committee Chairman Bob Goodlatte (R-VA). In the letter, they say that the proposal would benefit from a public vetting and, absent that, it is hard to know what the FCC is planning or its impact. Republican members of the commission, notably FCC Commissioner Ajit Pai, have also called for releasing the document. "Without further delay, we request that you release the text of the proposal," they said, which "raises issues of significance to both of our Committees." They said they also wanted stakeholders to have "time to meaningfully discuss the implications of the proposal."

It appears that any Federal Communications Commission action on the Nexstar-Media General license transfers will have to wait until the spectrum auction is concluded, absent a waiver the applicants have sought. The Justice Department on Sept 2 signaled that the deal was OK on antitrust grounds, with the provision that Nexstar must first divest a handful of stations. Justice vets deals for antitrust issues, while the FCC conducts a broader, public interest, merger review inquiry. Although the FCC usually coordinates its review with Justice and weighs in soon after, the commission has said that it would not approve any TV station transactions during the spectrum incentive auction involving stations potentially implicated in that auction. Since Media General indicated its participation in the auction—it was allowed by the FCC to signal, and did signal, that it was applying to be eligible—FCC action on the transfer could provide information from which auction information might be gleaned in violation of the FCC's rule about not disclosing that information to the public. Nexstar and Media General sought a waiver of that Prohibited Communications Rule in hopes the deal approval would not have to wait until the end of the auction to get a decision. They pointed out that they were unable to file the transfer application before the Jan. 12 deadline for applying to the auction. On Jan. 27, Nexstar announced a deal, trumping the previous agreement between Media General and Meredith. The FCC has not acted on that waiver request, an FCC source confirmed. Meredith had argued last January, in saying its deal was better than Nexstar's, that the inability to file the new deal before the auction deadline could hold up approval until the auction was concluded. The spectrum auction is currently in stage two and, if past is prologue, would likely not end at the earliest for a couple of months and, if it has to go to further stages, possibly not until early 2017.

The US Court of Appeals for the DC Circuit has set oral argument for Nov 10 in telecommunication regulators' challenge to the Federal Communications Commission's decision on effective competition. The commission, with the strong backing of cable operators--the National Cable & Telecommunications Association and American Cable Association both intervened in the court challenge on the FCC's side--voted to reverse the rebuttable presumption and assume cable systems face local market competition--primarily given the ubiquity of DBS--unless telecom regulators or other challengers could prove they did not. A finding of effective competition lifts basic cable price regulations. Not surprisingly, the National Association of Telecommunications Officers and Advisors (NATOA) opposed the move and sued the FCC.

The major associations representing billions of ad dollars have called on Congress to exercise its oversight to protect consumers and the economy from the Federal Communications Commission's proposed broadband privacy regulatory framework.

That came in a letter to Senate Commerce Committee Chairman John Thune (R-SD) and Ranking Member Bill Nelson (D-FL), who are presiding over an FCC oversight hearing Sept. 15 at which all the commissioners are scheduled to testify. In the letter, they say that the FCC's Notice of Proposed Rulemaking (a final order has yet to be voted) would "create restrictions that are unnecessary, overly burdensome, and outside the FCC's statutory authority." FCC Chairman Tom Wheeler has proposed new rules, which include requiring broadband subscribers to affirmatively agree to sharing their information with third parties for marketing purposes. The advertising trade groups say the FCC would be creating new restrictions on data collection that is central to "economic success and consumer benefits."

The American Cable Association has told the Federal Communications Commission that it needs to rethink its requirement of an unlimited data usage offering for the top two performance tiers as a quid pro quo for getting broadband buildout subsidies. Verizon told the FCC that there was no evidence that such an offering was reasonably comparable to urban broadband offerings, the standard the FCC used for requirements for lower tiers of service. ACA said it agreed that the FCC's rationale was "thin" and suggested the CAF approach needed to be fattened with more data.

"Given that it has provided insufficient support for its proposal, the Commission should reconsider its decision, gather evidence about data usage," ACA told the FCC, "allowances in urban offerings for these top two performance tiers, and use these data to establish a 'reasonably comparable' requirement for data usage allowances."

House Communications Subcommittee Chairman Greg Walden (R-OR) vowed that Congress is ready to overturn the Federal Communications Commission's recent ruling that prohibits broadcasters from buying newspapers in the same market. "I believe their view of media ownership is about as outdated as... the brick (mobile) phone," Chairman Walden said on Sept. 7. "We will be introducing legislation soon to repeal the media crossownership rule. The time has come to recognize that it is completely unnecessary in the marketplace that exists today. If the FCC can't figure it out... we will help them do that with legislation to repeal the crossownership rule." Chairman Walden also alluded to "issues at the FCC" and vowed "you're going to see some legislation," but he offered no details.

A spokesman for the House Commerce Committee later said that there is no specific timetable for such legislation. He said Chairman Walden ad-libbed those remarks during his address about technology developments to the National Association of Broadcasters' "Broadcast Innovation: Today, Tomorrow and Beyond" briefing at the Newseum in Washington, DC In his remarks, Chairman Walden chastised the FCC for not even being able to produce its quadrennial media ownership review on time.

The Federal Communications Commission has released details of its annual "What You Owe" message to licensees in six categories of regulated services. Sept 6’s posting provides details of the Assessment of Regulatory Fees for Fiscal Year 2016, which the Commission issued on Sept 2. Industry-specific fact sheets about the fees are posted on the FCC website. The regulatory fee payments must be received by Sep. 27, 2016. The notices also include information about exemptions from the fee payments.

"What You Owe" advisories have been issued for media services licensees (radio and television, including low power stations), cable TV systems (including direct broadcasting satellite providers), commercial wireless services, international and satellite service licensees and interstate telecommunications service providers. The regulatory fees vary depending on the nature of each licensed business. For example, cable and DBS fees are based on the number of subscribers or on a CARS license. Fees for AM and FM radio station licensees are based on class of station and market population served.

The Federal Communications Commission is trying to spur separate competition to cable-leased set-tops in the delivery of video programming, but according to one federal court, the two are inseparable. A panel of the US Court of Appeals for the Second Circuit has upheld a lower court decision dismissing a class action suit against Time Warner Cable for allegedly tying premium cable services to leasing cable boxes, finding that for the purposes of antitrust law, at least, cable boxes and the premium cable service they transmit are not separate products so can't be anticompetitively tied. "A cable box must be cable-provider-specific, like the keys to a padlock," the court found. "Although the plaintiffs frame their claim as a tie-in, the core issue is a cable provider's right to refuse to enable cable boxes it does not control to unscramble its coded signal." The decision was handed down Sept 2.

A new federal court ruling leaves some doubt as to who can enforce consumer protections on search engines and other edge providers and perhaps other parts of the economy as well. A panel of the US Court of Appeals for the Ninth Circuit ruled that the Federal Trade Commission was precluded from using its consumer protection authority to sue AT&T for not telling customers of its grandfathered mobile broadband "unlimited" data plans that their data use was being throttled once it reached a certain threshold. The Federal Communications Commission is pursuing a similar complaint against AT&T, which is not affected by the ruling.

But the decision could have wider implications for consumer protection and privacy regulations. The court ruled that the FTC could not enforce consumer protections—including against unfair and deceptive practices on the privacy front—on any of the activities of a common carrier, including its noncommon carrier businesses. That could conceivably immunize the non-common carrier holdings of broadband common carriers like AT&T and Verizon—or Google Fiber—from Federal Trade Commission consumer protection regulations, and, if those holdings were edge providers, the FCC could not regulate them either, at least under the current interpretation of FCC Chairman Tom Wheeler, who says the FCC lacks authority to regulate the edge.