It’s not clear if the FCC and Department of Justice will approve the Comcast/Time Warner Cable deal, but if they do, the companies could walk away from it if imposed conditions affect broadband pricing, analysts, cable attorneys and industry executives said in interviews last week. While a host of conditions ranging from divestitures to rules requiring greater transparency have been suggested by filers in docket 14-57, most industry observers told us those that could regulate broadband pricing have the highest potential to make the transaction unprofitable in Comcast’s eyes. “Anything that Comcast perceived as indirect price regulation of broadband” could cause it to walk away from the deal, Guggenheim Partners analyst Paul Gallant said.
The FCC shouldn't reclassify small- and medium-sized broadband providers under Communications Act Title II, but if it decides to adopt that approach, it should forbear from applying all common-carrier rules to smaller ISPs, the American Cable Association said in comments posted Tuesday in docket 14-28. “Smaller ISPs do not have the incentive or ability to engage in unreasonable or discriminatory practices, much less anticompetitive acts, which harm consumers and edge providers,” ACA said. The FCC “does not have the legal authority” to reclassify, ACA said, because it can't provide a “reasoned basis for the change.” NCTA and Comcast have made the same argument, and observers expect it to be a key part of any court appeal of Title II net neutrality rules (see [Ref:1412310041]). “The courts have made clear that the Commission may not impose Title II regulation based simply on its notions of good policy,” ACA also argued. An entity is a common carrier under the Communications Act, in part, if it "holds itself out to serve indifferently all potential users,” ACA said. ISPs are not “'holding themselves out’ as common carrier providers of pure transmission service,” ACA said. Under a Title II approach, “immediate and blanket forbearance would mitigate many of the potential and significant harms” of reclassification, ACA said. Without Title II regulations, “smaller ISPs have delivered innovative, high-performance broadband Internet access service at competitive rates to consumers,” ACA said. It said Title II regulations “are demonstrably, if not inherently, unnecessary to protect competition, consumers, or the public interest.” ACA, NCTA and the Wireless Internet Service Providers Association also asked the commission in a letter to Chairman Tom Wheeler on Friday to hold an en banc hearing “to examine the significant economic impact” of net neutrality rules on small broadband providers. The Regulatory Flexibility Act requires the agency as part of rulemaking to examine the regulatory burdens on small businesses of new rules, as well as alternatives available for small businesses to comply, the groups wrote. The FCC is reviewing the letter, an agency spokeswoman said.
Cable associations and satellite providers disagreed whether the FCC has the authority to create a regulatory fee category that would apply to all multichannel video programming distributors. The split became clear in reply comments posted in docket 14-92 Tuesday. “It is long past time to end the competitive disparity that the current regulatory fee structure perpetuates,” the American Cable Association and NCTA said in joint reply comments. The associations devote too little attention to the FCC’s authority to enact such a system, DirecTV and Dish Network said in their own joint reply comments. “Such hand waving cannot suffice” when the law prohibits the cable proposal, the DBS companies said. CenturyLink and HyperCube Telecom also filed reply comments in the proceeding, focusing on how new regulatory fee rules would apply to toll-free services.
Comcast’s willingness to hire representatives with a background at the FCC gives the cable operator an advantage when dealing with the agency, said attorneys and executives -- some former FCC officials themselves. Though industry observers disagree over whether that advantage stops at merely having one’s phone calls returned or extends to more palpable agency favors, all said inside knowledge of FCC processes and personnel gives Charter Communications, Comcast and Time Warner Cable a boost when dealing with the commission.
Industry observers, FCC commissioners and analysts are divided over whether an FCC rulemaking notice seeking comment on extending multichannel video programming distributor (MVPD) privileges to some online video services will have a strong effect on the video industry. “We expect Internet-based linear programming services to develop as a competitor to cable and satellite,” as a result of the shift, FCC Chairman Tom Wheeler said in a statement released with the NPRM.
The FCC proposes to modernize its definition of multichannel video programming distributor in a rulemaking notice adopted Friday. It proposes to interpret the definition of an MVPD "to include providers that make multiple linear streams of video programming available for purchase, regardless of the technology used to distribute the programming," it said in a news release. This approach would ensure that nascent, Web-based video programming services "will have access to the content they need to compete with established providers," it said. “Video is no longer tied to a certain transmission technology, so our interpretation of MVPD should not be tied to transmission facilities,” Chairman Tom Wheeler said in a statement. Under the proposal “any providers that make multiple linear streams of video programming available for purchase would be considered MVPDs, regardless of the technology used to deliver the programming,” he said. The NPRM asks for comment on an alternative interpretation that would require an MVPD to have control over a transmission path, and whether the proposals "would affect the regulatory status of IP-delivered video services by cable operators and [direct broadcast satelite] providers." Comments and replies are to be due 30 days and 45 days after publication in the Federal Register.
The FCC rulemaking proposing to extend the online public file obligations to pay-TV operators and radio stations could simplify some tasks for cable and small radio stations, but also could impose unnecessary burdens, some cable and radio attorneys said. The NPRM was released last week. The commission proposed ways to ease the burden of complying with such an obligation on its database, and Commissioner Ajit Pai urged the FCC to consider the limited resources available at smaller stations, including AM stations, when making any decisions.
House Commerce Committee ranking member Henry Waxman, D-Calif., sees the potential for a Capitol Hill net neutrality debate to upend any attempt to overhaul the Communications Act, he said. House and Senate Republicans have said they want to update the act, with a focus in earnest set for next Congress.
Programmers’ bundling of content is driving up the cost of cable packages beyond the most basic services, said Mediacom Group Vice President-Legal and Public Affairs Tom Larsen in meetings last week with FCC Commissioner Mignon Clyburn, Media Bureau Chief Bill Lake, aides to Chairman Tom Wheeler, aides to Commissioner Jessica Rosenworcel, and Media Bureau and Office of General Counsel staff, said an ex-parte filing posted in RM 11728 Monday. Larsen discussed the arguments for limiting a content company’s ability to require bundles laid out in a Mediacom rulemaking petition (see 1410020048), and said the issue also makes it harder for cable operators to increase broadband capacity. “The cost demands associated with the programmers’ practices impeded expansion of broadband service into new areas,” Larsen said. Adopting rules preventing such practices is within FCC authority under the Communications Act, he said.
FCC Wireline Bureau Deputy Chief Matthew DelNero urged state and local governments Tuesday to comment on the IP transition rulemaking the commission adopted in late November seeking input on how the agency should deal with the transition away from copper. The FCC also approved a related declaratory ruling at its November meeting on FCC ability to require approvals for copper retirements (see 1411210037). The NPRM sought comment on how states, localities and tribal nations should be involved in IP transition rulemaking, along with clearer rules for determining when to allow incumbents to retire a “last-mile” service and battery backup standards. The FCC believes comments from states and localities will be particularly valuable on IP transition rules because they’re “the ones who are closest” to on-the-ground conditions in different parts of the U.S., DelNero said during an FCC seminar. The NPRM is awaiting Federal Register publication, he said.