Sallet Says FCC Set-Top NPRM Will Respect Content Copyright Interests

An FCC draft cable set-top box NPRM "fully respects" content copyright interests, General Counsel Jonathan Sallet said Wednesday at an Incompas conference. The draft, which the agency is to consider Feb. 18, is intended to encourage competition and give consumers more choice in the cable set-top retail market, he said, lauding the vision and principles of the 1996 Telecom Act. Meanwhile this week, filings on lobbying for and against the NPRM were posted in docket 15-64 (see here and 1602100036).

Sallet also said the FCC was focused on the competitiveness of the special access market for dedicated business services, and on whether regulatory changes were needed to address possible market power. Market data would be key, but the FCC also needs to gauge the potential business and consumer ripple effects, including for 5G mobile broadband, he said. Sallet largely followed his prepared remarks but also responded to questions from Incompas President Chip Pickering.

Sallet said FCC Chairman Tom Wheeler wants to ensure consumers aren't locked into renting set-tops from cable companies and other pay-TV providers. Sallet said 99 percent of pay-TV customers lease set-tops from their providers, spending about $230 each on average per year, or about $20 billion a year collectively. He said consumers would still be able to lease boxes under the FCC proposal, but should have other choices. There are practical ways to encourage competition, including through open standards, he said. Responded Pickering: "In other words, may the best box win." Incompas has supported untying set-tops from the multichannel video programming distributors that almost exclusively provide them to most pay-TV customers, so the encrypted content they carry can be received via not just those set-tops.

Sallet recognized there are copyright concerns and called it “critical that copyright be protected” as a matter of law and because it stimulates innovation, investment and creative works. “The chairman's proposal fully respects the copyright interests of content creators. Programming now distributed by the MVPDs will continue to be distributed by the MVPDs, with full protection of its content, including the ability to ensure that only paying subscribers gain access to copyrighted materials and that any restrictions on copying programs, for example, are preserved,” he said.

“The only difference is this: Consumers will be able to use the device or app of their choice to access the pay-TV content, bringing the kind of competition that traditionally lowers price and boosts quality,” Sallet said. “This is no more a threat to copyright than the traditional ability of consumers to watch pay-TV on the TV set of their choice, the TV device -- or if you think about the mobile world, the ability of consumers to download the apps they want, like Netflix or Amazon Video, onto the mobile devices they choose."

Sallet said the set-top rulemaking the NPRM would launch is a great opportunity for all stakeholders to comment and help the FCC work out concerns. “We encourage people to come talk to us,” he said. “This is how we learn, this is how we get to a better answer at the end of the process.”

Sallet noted the FCC is also carrying out two special access proceedings, a broad rulemaking and an investigation of incumbent telco pricing practices. He said the commission is seeking “to determine the extent to which market power continues to exist for these services, and to decide what is the appropriate regulatory regime if, where, and when economic analysis of the data shows that competition is limited.” Telecom matters to consumers even if they don't realize it, he said. “For example, the structure and effective performance of the market for dedicated business data services may be fundamental to the deployment of 5G wireless broadband, which will require many more cell sites and thus much greater demand for the special access services we call backhaul. Similarly, when retailers and other companies can enjoy lower prices for competitive telecommunications services, economic forces can translate their lower costs into lower prices for consumers of a wide variety of goods and services.”

The FCC wants to “start with the facts and be grounded in the facts,” Sallet said. He said numerous parties in the special access proceedings have provided real economic expertise and analysis. He said innovation policy in general is hard because the potential beneficiaries of new services, better quality and lower prices often aren't involved in a proceeding. “Identifying a constituency that doesn't yet exist is always a challenge,” he said. “It's about the facts on the ground, but it's also an understanding that the whole purpose of innovation is to make sure that tomorrow doesn't have to be the same as today. And that's the kinds of policies I believe the commission looks to when it's assessing market conditions.”

Sallet said the 1996 Telecom Act culminated a congressional trilogy that started with satellite-TV competition a provisions in 1992 cable law and spectrum auction provisions in a 1993 budget law. The Telecom Act didn't anticipate all the broadband Internet market developments of the past 20 years, but it did anticipate many of them and enabled virtually all of them, he said. “It is about ensuring that American consumers are able to decide which innovations succeed and which innovations fail, which value propositions stimulate consumer demand and which are met with indifference.” Others have been commenting for much of this week on the act's 20th anniversary (see 1602090048 and 1602080062).

Then-Vice President Al Gore deserved much credit for the act's underpinnings, said Sallet, noting he worked with Gore in the Clinton administration. He said the principles Gore espoused in a 1994 UCLA speech were “prescient” and were basically followed in the act, which amended the 1934 Communications Act. He said the 1996 act's principles are broad and flexible and have stood the test of time: looking to competition as the best way to encourage innovation and provide consumer benefits; using governmental authority wisely to promote and protect competition, by eliminating artificial barriers to market entry, for example; and keeping an eye to the future and the consumer fallout of action or inaction. He said the FCC's broadband reclassification under Title II adhered to those principles. “Those who assert that Title II is suited only to monopoly regulation miss an important point,” he said. “Pro-competition provisions were written into the DNA of Title II.”