Wheeler Called Programmer CEOs on Set-Top Plan Days Before CO Letter

In the calls to programmers, Wheeler asked the CEOs to negotiate with the FCC from the starting point of the agency's proposal rather than the multichannel video programming distributors-backed apps plan, several content industry officials told us. “It should be no surprise that Chairman Wheeler has been in touch with the companies on specifics” of options to address programmer concerns in the set-top proceeding, an FCC spokeswoman told us. “Chairman Wheeler has been clear from the beginning of this proceeding that any Commission rules would fully safeguard copyright agreements.”

CO’s “principal reservation is that, as currently proposed, the rule could interfere with copyright owners’ rights to license their works as provided by copyright law, and restrict their ability to impose reasonable conditions on the use of those works through the private negotiations that are the hallmark of the vibrant and dynamic MVPD marketplace,” said Register of Copyrights Maria Pallante, who signed the CO’s 18-page letter sent to House lawmakers Wednesday. She said the CO is “hopeful that the FCC will refine its approach as necessary to avoid conflicts with copyright law and authors’ interests under that law,” citing commissioners’ remarks during a July oversight hearing (see 1607120078).

The CO never filed comments with the FCC but the commission “did request our advice on the copyright issues raised by its proposal,” and the letter “elaborates” on that advice and guidance offered in Capitol Hill meetings on the topic, Pallante said. “As Chairman Wheeler has said, the Commission will ensure programmers’ contracts and copyright are protected as we move ahead with rules to give consumers more choice for accessing content as required by law,” an FCC spokeswoman said. “We appreciate the Copyright Office’s input.”

The NPRM “would seem to take a valuable good -- bundled video programming created through private effort and agreement under the protections of the Copyright Act -- and deliver it to third parties who are not in privity with the copyright owners, but who may nevertheless exploit the content for profit” Pallante said. “Under the Proposed Rule, this would be accomplished without compensation to the creators or licensees of the copyrighted programming, and without requiring the third party to adhere to agreed-upon license terms.” So “it appears inevitable” that negotiated conditions “would not be honored,” she said. She also cited what she sees as possible “tension with Congress’ judgment in enacting the Digital Millennium Copyright Act” and, in considering enforcement issues and overseas pirating, said a “reasonable concern is that, in response to the Proposed Rule, this market might expand to encompass devices designed to exploit the more readily available MVPD programming streams without adhering to the prescribed security measures.”

Some content companies told us they expect Wheeler to move away from the FCC plan now that CO condemned several of its central tenets. Another content industry official said Wheeler was briefed on CO's position weeks ago, and knew the release of the letter would strengthen the content company position that the FCC proposal would violate their copyright. “It is long past time for the FCC’s leadership to walk away from its deeply flawed set-top box scheme,” Pai said.

Wheeler said work on a report and order on new set-top rules is in progress, and it will protect copyright and contracts and consumer privacy and be simpler to implement. “You can take that to the bank,” he repeated several times. It's unclear how the order would take the CO opinion into account, since Wheeler said the FCC order won't violate copyright law and he values and respects the office, but the commission has “a congressional mandate” to provide retail set-top box choices to consumers. "The Copyright Office’s letter focuses solely on concerns raised by content companies on the FCC’s initial February proposal,” emailed an FCC spokeswoman. “Since then the Commission has engaged with multiple stakeholders. Final rules will incorporate the feedback we received to ensure copyright is protected.”

Public Knowledge and the Electronic Frontier Foundation immediately sought to push back on CO attacks on the set-top NPRM. “This letter is another example of how the Copyright Office has become dedicated to the interests of some copyright holders -- as opposed to providing an accurate interpretation of copyright law,” Public Knowledge Senior Staff Attorney John Bergmayer said in a statement. “Among the letter's many inaccuracies is a failure to understand that many of the outcomes it posits as negative consequences of the FCC's proposal already exist in the marketplace today, without harming either the interests of pay-TV providers or programmers. For instance, the Copyright Office mistakenly says that CableCARD devices are ‘hard-wired’ devices -- but with just one CableCARD device, a family can already watch its cable subscription on multiple devices throughout the home. … The FCC must reject the Copyright Office's attempt to broadly expand the scope of copyright law at the expense of competition, consumer welfare, and other policy goals -- while running roughshod over fair use, a critical and constitutionally-required component of copyright.”

“The letter is wrong as a matter of law, and it’s also bad policy,” said EFF Senior Staff Attorney Mitch Stoltz in a blog post. “Rather than promote innovation, the Copyright Office offers ideas that would be hostile to choice and innovation in all kinds of information technology, not just pay TV. … If the law were actually as the Copyright Office says it is, the Internet as we know it would be impossible -- or it would look a lot like today’s cable TV.”

“I’ve reviewed the letter and unfortunately I think it’s an example of agency capture by I guess what you’d call 'big content,'” Georgetown Law professor Rebecca Tushnet told us. She argued that CO’s letter fails to discuss actual copyright laws that the proposal would interfere with and that, despite the letter’s length, there’s “not a lot of different arguments in it.” She said she has noticed other examples of CO capture over the past year.

“We are pleased to receive the Copyright Office's analysis of the set top box rule,” said House Commerce Committee Vice Chairwoman Marsha Blackburn, R-Tenn., who cited CO concerns in July along with Rosenworcel. “They have confirmed to us this rule as proposed, would both violate and degrade existing copyright law.” Blackburn joined Reps. G.K. Butterfield, D-N.C., Doug Collins, R-Ga., and Ted Deutch, D-Fla., to request the analysis.

Google Fiber, Incompas and Hauppauge criticized the MVPD-backed apps proposal. in ex-parte filings posted Wednesday and Thursday in docket 16-42. The MVPD plan won't interact well with universal search functions and doesn't allow third-party boxes to have DVR functionality, Incompas and Google Fiber said. The apps proposal “imposes unnecessary complexity to design and license a product,“ Hauppauge said.

The FCC should “reject half measures and false promises and bolt together a rule that will give consumers real choice, preserve functionality and unleash innovation,” said Incompas CEO Chip Pickering in an emailed statement on Wheeler's comments Thursday. Pickering previously suggested (see 1608010056) that aspects of the MVPD-backed apps proposal be “bolted-on” to ideas from the NPRM that would allow third-party makers to offer MVPD content in their own third-party user interface. That sort of “unbundling” of content would likely also be counter to the CO opinion outlined in the letter, a content company official told us.