The apps-based set-top box plan outlined in an FCC draft order circulated Thursday (see 1609080085) is different enough from the plan proposed in the preceding rulemaking notice filed in docket 16-42 that it could be vulnerable to an Administrative Procedure Act challenge, some attorneys and industry officials told us Friday. By circulating an order instead of a further NPRM, the FCC is preventing anyone but large programmers, companies and trade associations with the means to lobby the agency from weighing in, said cable consultant Steve Effros, who has been backing a different set-top solution. “This totally lacks integrity, and it makes a mockery of the Administrative Procedure Act,” Effros said. “What about the rest of us?”
Monty Tayloe
Monty Tayloe, Associate Editor, covers broadcasting and the Federal Communications Commission for Communications Daily. He joined Warren Communications News in 2013, after spending 10 years covering crime and local politics for Virginia regional newspapers and a turn in television as a communications assistant for the PBS NewsHour. He’s a Virginia native who graduated Fork Union Military Academy and the College of William and Mary. You can follow Tayloe on Twitter: @MontyTayloe .
A draft order that would require pay-TV carriers to provide content via apps to third-party devices was circulated to the FCC eighth floor Thursday, as expected (see 1609060080). It's intended for the agenda of the Sept. 29 FCC meeting, said Chairman Tom Wheeler in a Los Angeles Times op-ed, and said an FCC fact sheet. As expected, the draft item replaces the set-top box plan proposed in the NPRM with a plan based on free apps that don't require a specific platform or technology and uses a licensing regime overseen by the commission. Larger multichannel video programming distributors will have two years to comply with the new rules, while midsize MVPDs will have longer. The smallest MVPDs -- under 400,000 subscribers -- would be exempt, the fact sheet said.
House Communications Subcommittee Chairman Greg Walden, R-Ore., will introduce legislation to repeal broadcast cross-ownership rules, he said at an NAB Broadcast Innovations event (see 1609070065) Wednesday. The FCC's view of media ownership is “outdated,” Walden said. The cross-ownership rules are unnecessary and the commission should have repealed them, Walden said. “If the FCC can't figure it out . . .we will help them do that,” Walden said. Such legislation would be moving forward “soon,” Walden said. He also noted coming legislation that would make FCC processes more transparent and “more public.” Congress will continue “to work to improve their process,” Walden said of the commission. Public policy is “best done” when stakeholders can comment on in-progress rules “in real time,” Walden said. Sen. Brian Schatz, D-Hawaii, speaking at the event, and Walden said legislators will monitor the incentive auction and ensuing repacking process.
The FCC could take up a proceeding on approving ATSC 3.0 before the end of 2016, NAB CEO Gordon Smith said at NAB's Broadcast Innovations event Wednesday. FCC Chairman Tom Wheeler told Smith the new standard would become a priority for the commission after "a few things" are taken off the FCC's agenda, Smith said. If a new standard is approved in 2016, broadcasters could be transmitting in the new standard by summer 2017, Smith said. ATSC 3.0 would allow broadcasters to offer better visuals and audio, such as UltraHD, said NBCUniversal Senior Vice President-Advanced Technology Glenn Reitmeier on a panel. Cable and satellite providers don't require regulatory approval to offer services like UltraHD, so it's important for broadcasters to have the new standard approved, Reitmeier said.
Programmers are “strongly opposed” to any set-top licensing scheme that gives the FCC the power to alter the terms of content licenses, representatives of Time Warner, Scripps, Viacom, Disney, CBS and 21st Century Fox said in a Sept. 1 meeting with aides to Chairman Tom Wheeler, staff from the Office of General Counsel, and FCC Chief Technologist Scott Jordan, according to an ex parte filing in docket 16-42. Numerous programmer ex parte filings and industry officials have indicated the FCC is proposing a new apps-based set-top plan that includes commission oversight of a licensing program that would allow third parties to run multichannel video programming distributors' apps on their devices (see 1609060080). Though the ex parte letter indicated programmer support for the FCC’s apps-based direction and plans to enforce copyright rules, the content companies restated their concerns about the licensing aspect. “Any arrangement in which they are forced to allow their content to be distributed on terms or conditions to which programmers would not agree would be tantamount to a compulsory copyright license, which the Commission lacks authority to impose,” the filing said. The American Cable Association also met with FCC officials Sept. 1, to ask that any set-top rules exempt MVPDs with fewer than 400,000 subscribers, and allow those with up to a million subscribers more time to comply, according to an ex parte filing. In a separate letter, TiVo indicated support for the small carrier exemption, and asked that any new set-top rules contain provisions requiring MVPDs to continue supplying CableCARDs. The FCC’s new-set top plan is expected to contain a carve-out for smaller carriers, industry officials told us. In its recent letter, set-top maker Roku asked the FCC not to require that third-party box makers use HTML5, which MVPDs had sought in their own apps proposal. Industry officials and ex parte filings indicate the set-top plan currently pursued by the FCC doesn’t require the use of HTML5, though pay-TV interests are still pushing for it. In a Sept. 2 letter, Best Buy filed in support of the original NPRM, which it said could protect the interests of both MVPDs and consumers.
The FCC approved eliminating the UHF discount 3-2 split along party lines, said an order released Wednesday. “The discount has outlived its purpose and intent and, in the current world, acts only to undermine the national audience reach cap.” The order as expected (see 1607210055) grandfathers ownership combinations that were in existence when the NPRM on eliminating the discount was issued. It doesn’t allow grandfathered combinations to engage in further transactions and doesn’t create a VHF discount.
The latest FCC set-top box plan is expected to be apps based and include a licensing system that would be overseen by the commission and involve public comment, industry officials told us. A draft order on the set-top plan is expected to be circulated on the eighth floor this week, with the expectation that it would be on the agenda for the Sept. 29 commissioner meeting, numerous industry officials told us. Such a vote has been expected (see 1608240064).
Industry requests for rigid timelines for so-called Team Telecom review of transactions don't properly account for ”the complexity of the national security and law enforcement considerations that the Executive Branch must weigh in its review,” NTIA replied in FCC docket 16-155 by Friday's deadline. NTIA also takes issue with a proposal that applications on which Team Telecom hasn't ruled would be approved if the review lasted beyond a certain time period. “The assumption that silence denotes acceptance creates the potential for a license to be granted without full consideration of potential Executive Branch concerns," NTIA said. Nearly all industry commenters that filed reply comments restated their view (see 1608190048) that NTIA should have a rigid timeline to review a transaction, including CTIA, Incompas, Sprint and USTelecom. “The commission should reject proposals resulting in an unlimited Team Telecom review timeframe,” said joint comments by BT Americas, Deutsche Telekom, Orange Business Services and Telefonica Internacional USA. “This proceeding should reform the current process that provides the Executive Branch with unlimited review and no accountability to the Commission or applicants, not extend it,” CTIA said.
Nexstar's proposed $4.6 billion purchase of Media General got approval Friday from DOJ, in a consent decree approving the deal and Nexstar's plan to divest seven stations to comply with FCC ownership rules. “This is a positive step for the transaction's approval,” a Nexstar spokesman told us. The agreement still needs FCC approval. The commission has said the Nexstar deal came too late to be approved while the incentive auction is ongoing. The broadcaster could press for early approval, attorneys told us. That possibility is considered to be more likely as the low returns from the stage one forward auction make a 2017 end to the incentive auction seem more probable (see 1608310070). Nexstar initially predicted its transaction would close in Q3 or Q4.
FCC plans for a new headquarters are entangled in a web of possible conflicts of interest, according to partially redacted documents filed in U.S. Court of Federal Claims in the agency's current landlord's challenge of the bid award process for commissioners' new home (see 1606080069). Current landlord Parcel 49C, an affiliate of Republic Properties, is arguing that there was a conflict of interest in the General Service Administration's selection of a new FCC headquarters in Sentinel Square, near North Capitol and L Sts., NE in Washington's NoMa district. Parcel 49C said CBRE, which GSA contracted to broker the deal, owns Trammell Crow, which owns Sentinel Square, and the relationship wasn't properly disclosed. The matter is further complicated because CBRE also has represented Parcel 49C, though that's not part of the landlord's challenge.