Opponents, Proponents Disagree About Licensing in FCC Set-Top Plan
Opponents and proponents of the app-based set-top order scheduled for the FCC's Sept. 29 meeting (see 1609080085) disagree on how intrusive the proposed rules will be for programmer contracts, according to recent ex parte filings, news releases and interviews with industry officials. The plan would create an “unworkable de facto compulsory licensing regime that requires creators to allow their work to be shared across multiple platforms without compensation and without regard to the creators’ rights to exclusively control their distribution,” said a large group of programmer associations, including MPAA, RIAA and the Copyright Alliance, in a statement Wednesday.
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The proposal would give the commission some authority over only licenses between multichannel video programing distributors and third-party set-top manufacturers, not the programming agreements between content creators and multichannel video programming distributors that control such things as channel placement, Public Knowledge Senior Staff Attorney John Bergmayer told us. Since the proposal leaves the content inside apps that are negotiated by programmers and MVPDs, the oversight isn't as intrusive as the content creators claim, Bergmayer said.
"The apps-based approach taken in the proposal is one that the content owners explicitly urged us to adopt," an FCC spokeswoman told us. "The proposed licensing body has no role over private programming license agreements." The agency has a "limited role" in the licensing process between MVPDs and device makers, she said.
Since the license between MVPDs and the third-party box makers would be for their content, FCC oversight of those licenses is analogous to the commission's involving itself in agreements between programmers and MVPDs, a content industry official told us. Though he praised the FCC plan for allowing the content to remain inside the MVPD apps, the current proposal still triggers those same concerns about the licensing body, the content official said. NAB made similar comments in a recent ex parte filing: “NAB cannot support any order that permits the Commission -- let alone Commission staff -- to substantively alter broadcasters’ privately negotiated agreements concerning the use of their content or the application of those agreements to third-party set-top-box licensees.”
Since the text of the circulated item hasn't been released, the precise language on the set-top proposal's licensing body is unknown. “The license will not affect the underlying contracts between programmers and pay-TV providers," the agency said in a fact sheet on the draft item released last week. “The FCC will serve as a backstop to ensure that nothing in the standard license will harm the marketplace for competitive devices.”
The process in the draft item is similar to the one used now for CableCARD but will operate more effectively, an FCC official told us. Licensees will get access to content in the MVPD apps only after they agree not to alter or interfere with content or advertising, the official said. A content industry official told us the draft item lists some possible terms of the licenses as forbidden and others as allowed. The FCC official said the draft item doesn't give the commission any authority over agreements between programmers and MVPDs, and that the agency will review the license only to make sure it doesn't contain unreasonable or anti-competitive provisions.
The commission needs to police the licensing body to prevent anticompetitive behavior as occurred with CableCARD, Bergmayer said. Without oversight, MVPDs and programmers that will make up the licensing body would be able to create licensing terms so onerous that no company would find it profitable to become a third-party set-top maker, Bergmayer said. Such anticompetitive behavior is why few retail set-top companies emerged during the CableCARD regime, Bergmayer said. Programmers are being “highly hypocritical” since they themselves asked the FCC to bar MVPDs from discriminating against programmer apps in the set-top proposal, Bergmayer said.