NCTA Chief Presses for Set-Top FNPRM, Dismisses Markey/Eshoo Defense of Order

NCTA President Michael Powell pushed back Tuesday against the trio of Capitol Hill Democrats who pressed the FCC to sign off at commissioners' Thursday meeting on Chairman Tom Wheeler's set-top box proposal. The Hill Democrats spoke during a news media call Tuesday alongside other backers of the draft order. One Senate Democrat already expects industry pushback following the order’s approval and warned of the need for strong FCC enforcement, but Powell questioned how the lawmakers know enough to endorse the draft order circulating. He backs a Further NPRM on the issue, as did scores of House Democrats last week (see 1609230058).

“The [FCC] since it released its proposed rules in February has shown a tremendous willingness to listen to stakeholders, particularly by adopting an apps-based approach that the pay-TV industry has proposed,” said Sen. Ed Markey, D-Mass., who organized Tuesday’s call with House Communications Subcommittee ranking member Anna Eshoo, D-Calif.

Cable and satellite companies “may seek to circumvent this action” and charge monthly fees “in other ways to compensate for their lost revenue,” Sen. Richard Blumenthal, D-Conn., cautioned. “My hope is the rule, that the action by the FCC anticipated this Thursday, will break open the market and be a significant win for consumers. … But let’s be very clear that past is often prologue.” The Thursday vote represents an action that “should have been done long ago,” Blumenthal said, calling Communications Act Section 629, upon which the order is based, “effectively overlooked by the agency for the past 20 years.”

The draft item has now gone through so many changes from the original NPRM, it's not clear how Eshoo, Markey and Blumenthal can be sure enough about what the rule does to endorse it, said Powell in an interview Tuesday. “I don't think there is anyone in this town who at this point can reasonably assess what is going to be put on the commission floor for decision.” No new version of the draft item had been circulated to eighth-floor offices as of late Tuesday, an FCC official told us. That means the commissioners voting on the complex item will have very little time to examine it before voting, Powell said. “We don't know what this consists of, what massive changes have been made,” Powell said. “There is more interest in just being finished and winning than there is in solving the problem,” he said. “That's a poor way to run a railroad.” The FCC didn't comment.

Programmers are showing openness, insisted Eshoo. “Very importantly, the programmers filed an ex parte letter to the Commission relative to solving the issues that have been raised relative to licensing, and they agree with the Commission and the chairman’s latest proposal. Which I think really moves again the ball down the road. We are just a couple days away from the commission taking the vote. A constituent said to me over the weekend, ‘There are marriages that haven’t lasted as long as we’ve had to wait for these changes.’” Eshoo told reporters she referred to a Sept. 22 ex parte filing in docket 16-42 reporting on a meeting involving officials from 21st Century Fox, CBS, Scripps Networks Interactive, Time Warner, Disney and Viacom. The filing (see 1609230058) said the organizations appreciate the revisions but had “continuing concern with the regulatory construct” in the order, focusing on licensing among their concerns. “This ex parte is significant because it expresses movement,” Eshoo argued.

Eshoo dismissed the far larger share of Hill Democrats who have questioned Wheeler’s order. She specifically said the 63 House Democrats that Rep. Tony Cardenas, D-Calif., led in last week's letter to Wheeler -- outlining concerns and asking for a delay through a further NPRM -- were ignorant of the order’s substance. Eshoo went to the signers and “asked them why they had signed it,” she said. “There was silence.” She asked if the Democrats knew the revised order did much of what the industry wanted. “They were not aware of that,” Eshoo said. “Maybe at the top of the letter, it should have said regarding: throwing sand in the gears. Because the members that I approached really had a lack of understanding of where the commission was and what the revised proposal contained and what it would do for their constituents.”

“I wholeheartedly respect people who disagree -- that is okay,” Cardenas emailed us in response. “But it does not change the facts. And the facts are every Member who signed the letter agrees that the current FCC proposal is unclear. Members have been working on this issue for over a year; this is not something new. What we are asking for is simple -- for more clarity around how the FCC Set-Top Box proposal will impact the industry and American workers, especially content creators.”

The item has changed so much and sparked such vociferous opposition that the correct way to proceed would be to issue an FNPRM, Powell told us. The FCC should pause for 30 or 60 days to “more thoughtfully consider these last minute transformative changes” he said. When Powell chaired the commission, he would delay an item at any individual commissioner's request, as a courtesy, he said. “It's pretty tough to ask a commissioner to digest an item in a 24-hour period that has had a bunch of substantive changes,” Powell said. The FCC plan is complex, and would take years to fully take effect, he said. Taking an extra 30 days to examine the item won't stop the FCC from accomplishing its goals, Powell told us.

Other backers during Tuesday’s call included Black Entertainment Television founder Bob Johnson, now chairman of RLJ Entertainment, Consumers Union Deputy Director David Butler, Best Buy Senior Director Parker Brugge, Writers Guild of America, West’s Ellen Stutzman and Public Knowledge Senior Counsel John Bergmayer. “Year in and year out, pay-TV providers get very low marks from consumers,” said Butler. “We believe it will ultimately benefit the consumers,” said Brugge. Bergmayer called the proposal a “reasonable approach” that “responds to legitimate issues that have been raised by critics.” Johnson said the order would mean a “level playing field,” which is what minority programmers should want: “I applaud this. It’s going to be beneficial to hundreds of minority programmers who are trying to get access.” Some fear the order “will cause them to be dropped by the cable operators because their cost of programming to the cable operators may not match the cable operator’s belief that they are delivering programming that appeals to the audience,” said Johnson, disagreeing with that rationale.

Consumers "should not have to wait one more billing cycle,” Markey said. “Finalize these rules without delay.”

During Tuesday’s Senate Commerce Committee FTC oversight hearing (see 1609270033), Sen. Jerry Moran, R-Kan., asked FTC commissioners about the cooperation with the FCC in the set-top proceeding on privacy enforcement. “We did in our comment note that third-party manufacturers of set top boxes ought to be required to make consumer facing statements in which they indicated that they would comply with the rules that would apply to cable companies," FTC Chairwoman Edith Ramirez responded. "And by doing this, it would facilitate the ability of the FTC to enforce in this arena. And I am aware that Commissioner Wheeler has indicated an intent to include that in the rule and again that would allow us to take action in appropriate circumstances.” When Moran pressed her on whether data should be treated differently depending on the regulator and data sensitivity, Ramirez said it’s “important for there to be general harmony in the way that data is treated and in keeping with that and to that end the FTC has submitted comment to the privacy rulemaking that the FCC is engaging in. … It will be appropriate for us to endeavor to harmonize. But there’s no question that different agencies with different authority will be examining these issues.”