Rosenworcel, Wheeler Seen Not Close Enough on Set-Top Item

In a news conference Tuesday, Wheeler pointed to the joint statement issued from all three commission Democrats as evidence suggesting the disagreement was limited to the details of the order. “We are still working to resolve the remaining technical and legal issues and we are committed to unlocking the set-top box for consumers across this country,” said Wheeler, Rosenworcel and Commissioner Mignon Clyburn in the joint statement.

The offices are “going back and forth on both edits and content,” Wheeler said. He said this isn’t unusual, but statements from commissioners about the timeline of the editing process suggest pulling the item was unexpected. Commissioners Ajit Pai and Mike O’Rielly told reporters that they received what they believed was the final version of the order at 9 p.m. Wednesday, and weren’t told the item was being pulled until 30 minutes before Thursday’s meeting. Clyburn told us she didn’t know until Thursday morning that the item was to be pulled. “All that‘s happened here is the deliberative process that continues to go on,” Wheeler said. “Bad process leads to bad outcomes,” Pai said of the delayed item. Clyburn said she supports easing the burden on consumers and the opportunities the draft item would create.

Though the item was pulled from the meeting agenda, it remains under sunshine rules, preventing lobbying. That’s atypical for an item on circulation, a communications lawyer said, and the draft set-top order was described as returning to being on circulation in the statement from the three Democratic commissioners. The item doesn’t need further public comment or a Further NPRM, Wheeler said Thursday. Proposals to improve the retail set-top market have been up for comment for “years,” Wheeler said. “This is not one where the public hasn’t had an opportunity to comment.” Pai disagreed: “To me the proposal doesn’t need more time behind closed doors.” The delay is seen as a boon to the item's opponents, since it provides more time for them to attack it, industry officials said.

Wheeler and Rosenworcel are believed to be negotiating over provisions in the item concerning FCC oversight of contract terms, said content and multichannel video programming distributor officials. Wednesday, the draft order closely resembled a programmer-backed proposal that would involve a two-year period after the launch deadline for set-top apps during which the FCC wouldn’t act on any complaints about the terms of licenses for MVPD content displayed on third-party devices. After the two years, the FCC would “conduct a reevaluation of the marketplace,” said Disney, Time Warner, Scripps, Viacom, CBS and 21st Century Fox in an ex parte filing on a Wednesday conference call arranged by an aide to Rosenworcel to “clarify” the programmer position.

Another ex parte filing said Rosenworcel’s office also consulted Incompas Wednesday on alternative methods for the FCC to act as a regulatory “backstop” to the set-top plan’s licensing regime. One such alternative is “a reciprocal certification regime” that would require MVPDs and device manufacturers to mutually certify their compliance with a list of criteria intended to prevent anticompetitive practices.

Rosenworcel was also contacted Wednesday by Rep. Tony Cardenas, D-Calif, according to an ex parte filing. Cardenas expressed concern about the item’s effect on programmers and repeated his belief the item should be delayed in favor of a FNPRM, the ex parte filing said. “I had a productive conversation with Commissioner Jessica Rosenworcel yesterday,” Cardenas said in a released statement after the draft item was pulled. “She understood the concerns of Congress, consumers, and content creators regarding the FCC’s jurisdiction on copyright issues, and I am confident she has been an instrumental voice throughout this process.”

Weighing In

Several other legislators also weighed in on the delayed vote.

It's "an unequivocal loss for the tens of millions of Americans across the country who are forced to spend their hard-earned money on overpriced set-top box leases,” said Sen. Edward J. Markey, D-Mass., in a statement. “I urge the Commission to complete this rulemaking as soon as possible.” The process of creating a set-top plan has been “clouded with uncertainty and indecision around both what the commission is proposing and whether the proposal is supported by legal authority,” said Commerce Committee Chairman Fred Upton, R-Mich., and Communications Subcommittee Chairman Greg Walden, R-Ore., in a statement. “It’s time for the commission to engage in the transparent process that the public deserves. It's time for Chairman Wheeler to release the text and seek public comment." The delay is going to cost her constituents money, subcommittee ranking member Anna Eshoo, D-Calif., said in a statement. "I will not give up the fight to help my constituents break open the box that results in consumers paying exorbitant fees to cable providers each year.”

Opponents of the set-top plan were largely pleased. The FCC “made the right decision this morning to delay its vote,” said Comcast Senior Executive Vice President David Cohen in an email. “Heavy-handed government regulation, based on questionable legal authority in a fast-moving marketplace will stop the apps revolution dead in its tracks, and delay consumer choice.” To "the extent that Commissioner Jessica Rosenworcel's continued concerns about the wisdom of Chairman Tom Wheeler's proposed approach were responsible for deferring the vote, I commend her for this,” said Free State Foundation President Randolph May. “It appeared that, in the rush to act, the Commission's Democrat majority was prepared to jeopardize copyrights and consumer privacy, while, at the same time, deterring future innovation and investment.”

Entities that supported the FCC’s plan viewed the delay as a setback, though they saw the Democratic commissioners' agreeing on a joint statement as a positive sign, "We are disappointed,” said the New America Foundation’s Open Technology Institute. “We recognize the desire to get these reforms right, but consumers can't afford to wait another two decades.” FCC members are “smart, well intentioned, and we believe they will find common ground that will open the market and promote innovation,” said Incompas CEO Chip Pickering in a statement. “Unfortunately, the decision to push back the vote shows the substantial obstacles to making any progressive communications policy that benefits diverse content creators and paying customers alike in the face of organized opposition from monopolies and corporate lobbyists,” said Free Press Policy Director Matt Wood in an email. “Now that the vote has been delayed, the FCC should focus on strengthening this proposal -- and that means standing up to an industry that will never stop trying to kill competition and keep prices high.”