Set-Top Plan Could Run Afoul of APA, Critics Say

A senior FCC official told us passages in the NPRM seeking comment on an apps-based solution and another on a standardized licensing regime constitute enough notice under the APA. Outside lawyers said it could be argued those passages are insufficient. Some public interest groups have praised the draft notice, but reaction from Comcast and other multichannel video programming distributors interests hinted at legal challenges, and aides to House Republicans condemned the FCC process. “This is just further evidence of the FCC’s broken process and should serve as yet another example of the dire need for FCC process reform,” a Republican committee aide for the House Commerce Committee told us.

FCC officials told us Thursday the new proposal abandons the three streams of information that the original NPRM proposed pay-TV carriers pass on to third-party set-top makers. Though much of the February set-top NPRM dealt with aspects of those streams and other parts of parts of the proposal, it does contain a section on proprietary apps, with roughly three paragraphs of questions about the apps-based approach supported by the pay-TV members of the Downloadable Security Technology Advisory Committee. But those requests for comment are preceded in the NPRM by a warning that the commission has “doubts that such an approach could assure a commercial market for navigation devices.” The NPRM also briefly touches on a licensing system that sounds similar to the one in the draft item, in a section called “Licensing Alternatives.” Should the FCC “require industry parties to develop a standardized license and certification regime?” the NPRM asked.

Those brief mentions aren't enough to let the public know the system outlined in the draft item was coming, one cable attorney told us. The FCC choice to push for an order instead of an FNPRM indicates Chairman Tom Wheeler is focused more on issuing a final order than on a transparent process, the attorney said. Georgetown Law Institute for Public Representation Andrew Schwartzman, who opposed MVPDs in several proceedings but has also challenged many FCC rulemakings, told us APA challenges are “frequently pursued, but much less frequently successful.” Since the test of whether such a challenge is successful is if the final rules were a logical outgrowth of the proposed rules, the commission will be able to point to the copious discussion of an apps-based approach in the record as evidence the draft item follows logically from the NPRM, he said. A similar APA challenge against the FCC Communications Act Title II regulation of broadband service was unsuccessful, Schwartzman noted.

In an ex parte filing posted online Friday, Dish Network and EchoStar said the APA should prevent the FCC from applying any final set-top rules to DBS providers. The NPRM didn't provide enough notice about the technological differences that would be needed for the original FCC plan to apply to satellite, so the rules in the draft item shouldn't apply to DBS, the filing said. A senior FCC official said Thursday the draft item does include rules for DBS. “The unique attributes of satellite MVPDs make a one-size-fits-all approach in this proceeding impossible,” Dish and EchoStar said.

Comcast said in a statement Thursday the draft item violates the Communications Act. The draft item “perpetuates many of the concerns that led hundreds of Members of Congress, content creators, diversity and civil rights organizations, labor unions, and over 300,000 individuals to object to his original flawed approach, including problems with privacy, copyright protection, content security, and innovation,” Comcast said. Wheeler's “tortured approach” would “ stop the apps revolution dead in its tracks,” Comcast said. “The FCC shouldn’t dictate a single, one-size-fits-all answer,” said Tom Struble, TechFreedom Policy Counsel in a statement. "Wheeler, true to form, leapt to the assumption that the FCC needed to be ‘The Decider.’” Free State Foundation President Randolph May said he seriously doubts the FCC has the legal authority to implement the draft item. Congress “certainly didn't contemplate the development of a Commission-imposed compulsory license under which owners of copyrighted programming must make available their programming to all on a non-discriminatory basis,” May said in a statement.

Incompas CEO Chip Pickering praised the set-top plan for incorporating “the “competition and innovation principles” on parity and availability that were requested by public interest groups. He said “those principles called on the FCC to ensure their proposal rejected closed, monopoly-like apps in favor of an open user interface, real integrated search, consumer friendly functionality and enforceability.” The order will require “vigilant oversight” to prevent pay-TV from manipulating the rules to “maintain their stranglehold over set-top boxes,” said New America Open Technology Institute Policy Counsel Joshua Stager in a statement.

"The law is clear and simple,” said Senate Commerce Committee Chairman John Thune, R-S.D., in a statement. “The FCC does not have the authority to impose technology mandates or to police copyright as Chairman Wheeler has proposed.” Wheeler will testify before Thune Thursday during an oversight hearing. Wheeler's new proposal “reflects significant and constructive input from key stakeholders,” said House Communications Subcommittee ranking member Anna Eshoo, D-Calif. “This is a path forward to advance competition and consumer choice as Congress intended.”

"The FCC continues to pursue intrusive mandates that are opposed by industry stakeholders and numerous members of both parties," said House Communications Subcommittee Vice Chairman Bob Latta, R-Ohio. "While I’m glad to see them abandon the misguided, destructive mandates in AllVid, the Commission’s most recent proposal injects themselves into private licensing negotiations, an unprecedented step that goes far beyond the agency’s purview.”