STELA Draft Clears House Communications Subcommittee

"This truly is prime-time legislation, and we are ready to move forward,” said bill author and subcommittee Chairman Greg Walden, R-Ore., who introduced it earlier this month, at the Tuesday markup.

Subcommittee members quickly agreed to a proposed amendment from Walden and ranking member Anna Eshoo, D-Calif. “Our amendment keeps the door open on the successor to the CableCARD, which I have pushed for, as you know,” Eshoo said. “It’s not my preferred approach, but Mom never said I'd get 100 percent and she was right.” House Commerce Committee ranking member Henry Waxman, D-Calif., backed the amendment and criticized “notoriously energy inefficient” set-top boxes. “We've agreed to repeal the integration ban.” The amendment doesn’t restrict the FCC from readopting the integration ban in the future, which is important if the cable industry creates any problems, Waxman added.

The amendment replaced the draft’s original integration ban language to read that the relevant integration ban parts of the law shall no longer have effect. “No later than 180 days after the date of the enactment of this Act, the Commission shall complete all actions necessary to remove the sentence” it described, the text read. The amendment also placed in brackets the controversial language halting the FCC’s actions on sharing agreements until the agency completes its media ownership quadrennial review -- a provision that was a major source of concern among Democrats. Brackets indicate the lawmakers would continue to discuss and debate the provision.

TiVo Not Happy

NCTA applauded the elimination of the ban, while TiVo voiced concern. “TiVo continues to oppose any effort to undercut reliance on the same security interface by set top boxes leased by cable operators and purchased by consumers at retail, which has been instrumental in providing consumer choice and spurring competition in set top boxes,” TiVo General Counsel Matt Zinn said in a statement. The STELA draft would “violate the long-held heritage of welcoming competition cable has always embraced,” Zinn said.

Republicans and Democrats had remained divided Monday when delivering opening statements at the start of the hearing. Eshoo had recounted Walden calling her over the weekend and expressed hope “for working out [a compromise] at least so far on the set-top box issue,” she said. Eshoo had described alternatives to the bill’s language, she said. “There’s no question that you have the votes,” Eshoo told Walden Monday night. “You have the majority of votes, so if you want to roll us, you can. But that has never been the tradition of the committee, it really hasn’t.”

On Tuesday, Eshoo backed Walden when he hammered home on the quadrennial review. “It’s their responsibility to do this,” Eshoo said, saying FCC Chairman Tom Wheeler seems committed to doing so, unlike the former FCC chairman. “We should find common ground on this issue,” Walden said Monday in opening statements of the markup session, referring to the FCC failing to complete its media ownership quadrennial review.

"We've done it,” said committee Chairman Fred Upton, R-Mich., of the STELA draft. “No one is entirely happy, that’s for sure.” But Upton praised what he considered to be the consumer good of STELA reauthorization and called the draft “a good product” with an important manager’s amendment.

Unsuccessful Amendments

Several other members proposed and withdrew amendments in the course of the markup. Committee Vice Chairman Marsha Blackburn, R-Tenn., offered an amendment she said could be called the “'what is good for the goose is good for the gander’ amendment,” which would have forbidden satellite companies from paying broadcasters that own radio stations for use of TV programming, with an exception only if the radio stations pay recording artists for use of their songs. “Everybody but AM/FM radio pays,” Blackburn said. “It’s the government-sanctioned taking of a creator’s property.” Eshoo backs this amendment and said “the lobbyists did a hell of a job with the Congress to get this exception in,” slamming the model as unfair. Rep. John Shimkus, R-Ill., pushed back against the amendment, citing the value of “local, small-town radio.”

Rep. Ben Ray Lujan, D-N.M., proposed two amendments. One called for a report on designated market areas and another would have allowed carriage of stations in counties that are adjacent and underserved. Rep. Steve Scalise, R-La., offered an amendment that would kill the buy-through requirement and allow cable operators to take broadcast stations off the basic tier, reflecting broader concerns he had voiced with the video marketplace. Scalise had pushed for broader video marketplace revamp provisions in the STELA draft, which were removed before the draft was released, according to industry lobbyists. On Monday, Scalise lamented “the heavy hand of government” in the video marketplace and wants a broader congressional review of these laws, he said.

Eshoo suggested an amendment that would compel the FCC to, within six months of the bill’s enactment, “complete a rulemaking proceeding to determine whether, during retransmission consent negotiations or after the parties to such negotiations reach an impasse resulting in the expiration of an existing retransmission consent agreement, the blocking of online content owned by or affiliated with a television broadcast station ... constitutes a failure to negotiate in good faith.” Eshoo compared her concerns to those expressed when she introduced in December her Video CHOICE Act, which targeted retrans blackouts. “We've got to get some starch in our spines on this thing,” Eshoo said, citing disappointment the STELA draft didn’t address this issue. “I'm going to be the broken record on it.”

Rep. Doris Matsui, D-Calif., lauded Eshoo for her focus. “A few weeks ago, we saw a groundbreaking content deal between ABC and Dish, which is the first to raise the possibility of a pay-TV provider using a media company’s content for a new online service without requiring customers to subscribe to the video portion of their cable or satellite subscription,” Matsui said. “As video programming migrates to the Internet, we are also starting to see more disputes between content providers and broadband providers. For example, a recent video streaming deal between Comcast and Netflix illustrated how the quality of over-the-top content could be impacted. Just yesterday, reports surfaced that Comcast and Apple are in talks to create a streaming-television service. Content has become the golden ticket.” Matsui suggested this shift raises important questions of consumer content access.

"For consumers’ sake, we hope Congress realizes that collusion under any circumstances is the wrong policy for our nation,” American Cable Association President Matthew Polka said in a statement after subcommittee passage of STELA. Polka pointed out the effects of what he sees as collusion in retransmission consent negotiations, and ACA and its customers are “quite distressed with Section 3 of the discussion draft passed today in that it provides broadcasters with a statutory right to engage in this highly dubious practice,” Polka said.

The draft now advances to consideration by the full House Commerce Committee. STELA expires at the end of the year, and Judiciary and Commerce committees in both chambers have jurisdiction.