John Eggerton

Time Warner Would Pay $1.75 Billion Break-Up Fee If AT&T Fails

Time Warner has agreed to pay a $1.75 billion break-up fee to AT&T if it accepts a competing offer from the telecommunication company’s mega-deal, while the phone company is on the hook for $500 million if it can’t obtain the necessary regulatory approvals for the $108.7 billion merger.

According to an 8-K document filed with the Securities and Exchange Commission Oct 24, Time Warner will have to pay the break-up fee if the AT&T deal is terminated if the programmer enters into an “alternative acquisition agreement” that did not result in a material breach of the original deal with AT&T. AT&T is on the hook to pay Time Warner $500 million if the deal is terminated for circumstances “relating to the failure to obtain approvals, or there is a final, non-appealable order preventing the transaction, in each case, relating to antitrust laws, communications laws or utilities laws.” Either party can cancel the deal if it does not close by Oct 22, 2017, or in the case of special extensions, April 22, 2018.

AT&T-Time Warner Expect to Grow Ad Platform

With its huge distribution footprint and data about its consumers, AT&T and Time Warner expect to be able to create innovative advertising products, in addition to new forms of content that would appeal to an increasingly mobile viewership for video. “We can make the advertising more interesting for your house, versus somebody next door,” said Time Warner CEO Jeff Bewkes.

With AT&T offering addressable advertising across new TV and mobile platforms, viewers would see products they’re interesting in. “That means more consumers get a better experience viewing. They get less interruptions, and it means that more of the cost of programming can then be borne by advertisers and consumers get a break,” Bewkes said. “So the benefit for consumers is pretty good, very good, and the benefit for advertisers is terrific because if you look at what’s happening in that world, advertisers need more competition and this will give another outlet, not just Google and Facebook, which have been gaining all of the traction. Now you have yet another advertising choice that’s equally efficient,” he said. AT&T CEO Randall Stephenson also said that the feedback the company gets is directly from its millions of customers to fuel innovation.

Microsoft Has Issues With FCC Set-Top Proposal

Executives from Microsoft met with Federal Communications Commission officials recently—including a top advisor to FCC Chairman Tom Wheeler—armed with some issues related to Chairman Wheeler's set-top box proposal, currently circulated to the commissioners for a vote, including that the company does not want the FCC to apply overbroad privacy certifications to navigation device makers or expand the definition of personally identifiable information (PII).

The company focused on the assertion that "the privacy protections that exist today for consumers of pay-TV providers will be preserved no matter what device is used.” Microsoft said that the FCC needs to clarify that any obligation to apply multichannel video programming distributor (MVPD) privacy rules "should apply only to data that is derived exclusively from the MVPD data stream. Overbroad application of the certification requirement would interfere with the collection and use of data to support other legitimate functions of multi-use devices, including operations to maintain the security of the device."

FCC Fighting 'Hostile Workplace' Charges

The Federal Communications Commission is the target of a lawsuit related to allegations that FCC employees were repeatedly watching porn at work, creating a hostile work environment for a fellow employee. The suit stems from 2012. On Oct 19, both the FCC and the plaintiff were granted more time by the Washington, DC US District Court for discovery in the ongoing case, with the FCC planning to depose the plaintiff and the plaintiff planning to depose an additional FCC employee. That plaintiff, a 30-year vet of the agency, filed suit charging she had been subjected to a hostile work environment, gender discrimination and two counts of retaliation. In April of 2016, the court dismissed three of the five charges against the commission—the FCC wanted four of the five dismissed and a summary judgment in its favor on the fifth.

Advertisers Offer Broadband Privacy Alternative

With the Federal Communications Commission preparing to vote Oct 27 on a proposal that could for the first time sweep web browsing and app use histories into an opt-in regime, disallowing the sharing of that info by Internet service providers unless consumers give affirmative permission, critics are pulling out the stops to stop it. The FCC released its agenda for the Oct. 27 meeting and broadband privacy was still teed up.

Advertising associations, which see the new regime as a definite damper on the online ads that underwrite all that free web content, offered up a proposal which was essentially that the FCC not make web browsing or app history sensitive information subject to opt-in requirements, except when it involves information otherwise classified as sensitive. The proposal would require opt-in for traditional (under the Federal Trade Commission regulatory regime that used to apply to broadband categories) sensitive information, geolocation, children’s information, health information (e.g., pharmaceutical prescriptions or medical), financial information, Social Security numbers, and the content of communications (emails, texts, etc).

USTelecom: FCC Should Opt Out of Broad Web Info Regulations

Add USTelecom to those trying to get the Federal Communications Commission not to apply a broad opt-in regime to the use and sharing of web browsing and app use histories by Internet service providers. FCC Chairman Tom Wheeler, in pivoting from a blanket opt-in for most third party sharing of user info to what was billed as a more Federal Trade Commission-like sensitivity approach based on the kind of info being shared and used, added web browsing and app use to the information classified as sensitive and needing opt in.

USTelecom, advertisers and others are trying to get the FCC back off that approach and instead only require opt in for web browsing and apps that include other traditional categories of sensitive information—health, finance, kids, Social Security numbers, geolocation and content of communications. In meetings with FCC officials this week, USTelecom president Walter McCormick and other USTelecom executives said that it was "essential that government agencies speak with one voice," which means the FCC should harmonize its regulations with the Federal Trade Commission and "should not expand the definition of sensitive information to include such a broad area as all web-browsing history," according to an ex parte filing with the commission. "Any other approach contradicts the more flexible regime applicable to the rest of the digital advertising ecosystem and has not had thorough enough examination as to its broader economic impact to be mandated by rule at this time," they said.

Sen Markey Stumps for Privacy Proposal

Sen Ed Markey (D-MA) put in a last-minute push for the Federal Communications Commission's broadband privacy proposal, which is on the agenda for an Oct. 27 vote. Sen Markey joined various groups also pushing for the new regulations—Public Knowledge, Center for Digital Democracy, Color of Change, Consumer Federation of America—on a conference call with reporters to urge the FCC to proceed with that vote.

Sen Markey is also a big backer of set-top reforms that the FCC was also scheduled to vote on before the chairman pulled the item from Sept's meeting. Sen Markey several times said the FCC needs to stay on course for the Oct 27 vote, calling it a "critical moment" for privacy. The senator said that just as the country has to make sure Russia doesn't compromise our privacy, no one else should.

FCC's Forward Auction Closes After Only One Round

According to the Federal Communications Commission, the second stage of the forward portion of the FCC’s broadcast incentive auction went only one two-hour round, is now closed and the FCC will have to move to yet another round of reverse auction broadcasters bidding at a lower clearing target.

There was no one immediately available for comment, but the FCC's website said that "Bidding in the forward auction has concluded for Stage 2 without meeting the final stage rule and without meeting the conditions to trigger an extended round." That one round of the forward auction ended with only $21,519,907,210 bid. That is below the closing bid total for round one of the forward, not surprising given that there was less spectrum up for bid, though that could also have boosted the price if demand stayed the same given the reduction in supply. Clearly the $56.5 billion broadcasters were asking—this time 114 MHz (90 MHz minus the guard bands) down from 126 MHz (100 MHz minus guard bands)—was still too rich. Forward auction bidders weren't ready to up their bids from last time, and they took no time in making that clear.

House Republicans Press Wheeler on Inspector General Independence

House Commerce Committee Chairman Fred Upton (R-MI) and Communications Subcommittee Chairman Greg Walden (R-OR) are challenging the independence of the Federal Communications Commission Inspector General's (IG) office following its finding that FCC Chairman Tom Wheeler did not leak information about the existence of a compromise on Lifeline subsidy reforms in order to blow up the deal. Chairman Upton and Chairman Walden want the FCC to supply some specific information about the "interdependence" of the FCC and IG.

“In order to address our committee’s concerns regarding the independence of the FCC’s Office of Inspector General and the impact on accountability in the FCC’s decision-making and management, we request… information necessary to understand the practical and working relationship between the Office of the Chairman and the Inspector General.” The IG report found that Chairman Wheeler did leak the information, but that he had the authority to make nonpublic information public, and that there was no evidence of a motive beyond what FCC spokesperson Shannon Gilson, who said she had recommended the chairman release the info, said was "providing the press with information about the compromise Lifeline proposal to address the confusion that was already surrounding the item in the media."

Group of 76 Organizations Leads Parade for FCC Action

Looking to light a fire under the Federal Communications Commission, a group of 76 organizations have written FCC Chairman Tom Wheeler and the other commissioners to urge them to take action on three items and issues currently before the commission. Those are the set-top box proposal, broadband privacy and the zero-rating plan investigation. The groups asked the commission to "liberate" consumers from the set-top "monopoly", "promulgate rules that foster trust in the integrity of broadband privacy", and "prohibit abusive data caps and zero rating plans that violate net neutrality." The letter reads, "Each of these issues has been discussed by policymakers fo ryears, if not decades. Further delay would put internet users' privacy in jeopardy and undermine longstanding efforts." Among the many signatories to the letter, which was dated Oct 17, are Public Knowledge, Free Press, Demand Progress, the Center for Digital Democracy, and the Benton Foundation.

Reverse Auction Closes With Broadcasters' New Exit Price at $54.6 Billion

The second stage of the Federal Communications Commission's reverse portion of the spectrum incentive auction closed after 53 rounds, and wireless operators will now have to pay broadcasters at least $54,586,032,836 to get access to the 114 MHz of spectrum that will be on the block in the forward auction.

In the reverse auction, broadcasters are competing to give up spectrum or move to new channels in exchange for a government payment — low bidder wins. The $54.6 billion total is a sizeable drop in price from stage one, substantially closing the gap between broadcasters' asks and wireless companies' offers, who will get to start bidding on the 114 MHz of spectrum (actually less since some of that is guard band -- buffer spectrum -- in their own stage two forward auction starting next week.

Obama Administration Gets Earful on Broadband Research Agenda

The Obama Administration is getting plenty of input on what information it should be collecting to help guide its mission of promoting universal broadband deployment, adoption and competition. Comments were due Oct 11 on the National Telecommunications & Information Administration and National Science Foundation joint National Broadband Research Agenda, one of the September 2015 recommendations of the Broadband Opportunity Council (BOC), which was created in March 2015 by President Obama and co-chaired by the Commerce Department (NTIA is an arm of Commerce) and the Department of Agriculture, both of which oversaw billions in stimulus funds for broadband buildouts.

The Benton Foundation, American Library Association, Media Mobilizing Project, New America’s Open Technology Institute, and Public Knowledge, said that the research must take into account the specific needs of seniors, low-income families, persons with disabilities, people living in rural areas, all population groups they argue are usually ignored when developing new broadband policies. They also want the research to look at how to reach vulnerable communities during the IP transition, when some may be "left without robust access." Mobile Future, representing wireless broadband providers, wants the research to focus on "existing regulatory and financial barriers to infrastructure deployment" as part of an effort to eliminate them. Their goal is reasonable costs and processes for rolling out 5G networks, so they want the government to study the impact of fees for rights of way, for example, or delays in processing applications, connecting to polls or accessing municipal infrastructure.

UltraViolet Action Petitions NBC, MGM to Release Trump Tapes

UltraViolet Action, a women's advocacy organization fighting sexism, says it has collected over 115,000 signatures on its own petition demanding that MGM and NBC release tapes of the Republican presidential nominee Donald Trump on reality show The Apprentice. The petition was launched Oct 10—MoveOn has launched a similar petition—and, according to the group, had 30,000 signatures in less than four hours.

UltraViolet Action cited a Huffington Post story featuring alleged transcripts from The Apprentice in 2010 where Trump is commenting on a music star's makeover and saying insulting things about her skin quality, suggesting he is a "skin man." Trump has been on the defensive since last week, when The Washington Post reported on tapes of his misogynistic conversation with then Access Hollywood's Billy Bush. Trump has said he was not proud of the comments but repeatedly dismissed them as "locker-room" talk rather than actual conduct.

NAB Asks FCC To Act on Nexstar/Media General

The National Association of Broadcasters has joined with a number of diversity groups in asking the Federal Communications Commission not to wait until after the incentive auction is over, which is likely a couple months away at least and perhaps more, to act on the Nexstar/Media General merger request. NAB said that given that the Justice Department has already approved the deal subject to some station spin-offs including to a minority owner, which would boost diverse ownership, and the fact that the FCC has exceeded the 180-day informal shot clock for the deals, it told the FCC it needed to "fulfill its duty to process the transaction immediately."

The FCC said it would not act on license transfers sought by stations participating in the auction unless the transaction were filed by a date certain, which Nexstar and Media General missed by only a few days. Since Media General had indicated it would be participating in the auction—it was allowed by the FCC to signal, and did signal, that it was applying to be eligible—-FCC action on the transfer could provide more specific information about the auction, which is potentially in violation of the FCC’s rule against public disclosures. Nexstar and Media General sought a waiver of that Prohibited Communications Rule in hopes the deal approval would not have to wait until the end of the auction for a decision.

Charter Sues Louisville Over Disparate Video Treatment

Charter Communications has filed suit against the city of Louisville (KY) over what it says are materially more burdensome regulations and franchise obligations it is subject to relative to video competitors Google Fiber and AT&T's U-verse. Wearing its First Amendment hat, Charter said that the government "may not favor one similarly situated member of the press or other speaker over another without special justification," which it said Louisville Metro lacked.

Given that the city refused to lighten Charter subsidiary Insight Kentucky Partners's regulatory load to bring it in line with its competitors, Charter said it had no choice but to head to court. (Charter acquired the Louisville market in 2016 after merging with Time Warner Cable.) The suit was filed in the US District Court for the Western District of Kentucky. Charter's main points are that it is simply asking for the equal treatment state and federal law allows; that consumers will suffer if competitors can move its wires around without telling Charter and that treating competitors differently hurts, rather than promotes, cable competition.

FCC: EAS Test Will Help Refine Second-Language Alerts

When asked by reporters about reports from state Emergency Alert System (EAS) coordinators that some of the emergency alerts sent out during the recent national test of the EAS system did not go through in Spanish, Admiral David Simpson, chief of the Federal Communications Commission's Public Safety & Homeland Security Bureau, said that illustrated the value of the test. The FCC was conducting the test in coordination with the Federal Emergency Management Agency (FEMA), with a focus on FEMA’s Integrated Public Alert and Warning System (IPAWS) that disseminates the alerts to the various participants. "That's exactly the kind of thing we wanted to test," Simpson told reporters following the test. "We believe this will give us the data necessary to refine the transmission of that second-language version of the same alert."

Asked whether he thought the test was more successful than one in 2011, Simpson said it was hard to compare given the work it took to achieve that first test. But he did say that the recent test had "built upon" that foundation. "We were in a better place to capture results, not just from broadcasters themselves but from disability rights organizations as well as communities in general." He said if it was better, it was only because the previous test had laid the table for them. Simpson said that over 22,000 stations had reported back with info on the test (as required), and the FCC was massaging the data along with FEMA, stakeholders and state commissions.

Civil Rights Groups Seek Set-Top Sunshine

In a petition to the Federal Communications Commission, 19 civil rights groups including the NAACP, National Action Network, and the Multicultural Media, Telecom and Internet Council (MMTC) have asked that FCC Chairman Tom Wheeler lift the "sunshine rule" restrictions on outside parties contacting FCC decisionmakers about the set-top box revamp. Chairman Wheeler pulled the item from a planned public meeting vote last week and placed it on circulation—where it could be voted outside a public meeting—but invoked sunshine prohibitions on outside contacts as work continued on the item. The groups pointed out that sunshine restrictions are usually lifted when an item is pulled.

The same groups also want the FCC to release the text of the latest proposal and allow for further public comment and included that in their petition. "Chairman Wheeler’s refusal to release the new plan for public comment makes a mockery of the process and violates the most basic principles of transparency," said National Urban League president Marc Morial. "And his decision to impose rules that silence our voices, while decisions impacting our communities are settled behind closed doors, is unacceptable. The FCC must ‘unlock the plan’ and allow for meaningful feedback.”

Sen Heller Seeks Privacy-Related Set-Top Vote Delay

Sen Dean Heller (R-NV) has called on Federal Communications Commission Chairman Tom Wheeler to delay his planned Sept 29 vote on proposed new set-top box rules. Most of the Hill pushback on Chairman Wheeler's proposal has centered on copyright and app licensing issues, but Sen Heller is pulling out a different stop, saying his main sticking point is consumer privacy, that and the FCC process that produced the plan.

"I have concerns about how the FCC’s proposal requiring this approach will impact my constituents’ privacy and whether it is technology neutral," said Sen Heller in a letter to Chairman Wheeler. The FCC is said to be planning to require device manufacturers to have to comply with cable privacy regulations to get access to pay-TV user data, since the FCC does not have authority over device privacy, but that bifurcated privacy oversight does not appear to sit well with Sen Heller. "[T]his rule will result in [multichannel video programming distributors] handing over consumers’ personal information to third-party developers using their own platforms without addressing how that information can be utilized and what recourse consumers have if there is a data breach of third-party developers," said Sen Heller. "This is not technology neutral and not beneficial to consumers. That is why I request that you delay voting on this proposal until these privacy concerns are resolved." He also has problems with the process. "These issues also stem from the lack of transparency in the process leading up to the final proposal, the text of which has not been released to stakeholders, Congress, and the American public prior to a vote," he opined. There were calls from both sides of the aisle to publish the text before the vote, including in a further notice of proposed rulemaking, which would have had the effect of delaying the vote for weeks if not months.

FCC May Exit App Standards Oversight in Set-Top Proposal

Apparently, Federal Communications Commission Chairman Tom Wheeler's apps-based set-top box/navigation device proposal is getting a major tweak to get programmers on board. While the proposal was to have had the FCC backstop an app licensing body to make sure agreements were reasonable and not anti-competitive, industry sources said the FCC will no longer have that explicit oversight role and, instead, would review the app standards process after a couple of years and step in then, if necessary.

For the Hollywood studios, having the FCC potentially change the terms of contracts is a nonstarter, as it was for various Hill Democrats, especially on the Justice committees that deal with copyright. The item is still in flux, apparently, but it was moving toward that major adjustment. Chairman Wheeler signaled two weeks ago there would be further stakeholder talks and that he was willing to tweak his proposal to address concerns about the licensing body and copyrights.

Senators Introduce Rural Broadband Bill

Sens Shelley Moore Capito (R-WV) and Kirsten Gillibrand (D-NY) have introduced a bill to boost rural broadband in rural and tribal areas. The Broadband Connections for Rural Opportunities Program Act is meant to close the rural digital divide by providing new federal grants for high-speed broadband buildouts to supplement the money already available through the USDA's Rural Utilities Service. It would also double the RUS broadband program funding to $50 million.

Sens Capito and Gillibrand cited Federal Communications Commission stats saying that 40 percent of rural and tribal areas do not have access to broadband, but also suggested their bill was about competition, not just providing access where none existed. "When high-speed broadband is available, consumers often have only one choice for service and pay more for high-speed plans than consumers in some other advanced countries," they said in a joint release announcing the bill. Internet service providers have long argued that government funds should be targeted to areas without service first, not where government money underwrites competition to existing privacy investment and service.

FTC Chairwoman Ramirez: Set-Top Plan To Include Device Privacy Pledge

Federal Trade Commission Chairwoman Edith Ramirez says she has assurances that as part of Federal Communications Commission Chairman Tom Wheeler's set-top rule plan, device makers will be held to the same privacy requirements the FCC can impose on Internet service providers. That came in an FTC oversight hearing in the Senate Commerce Committee.

Sen Jerry Moran (R-KS) pointed out that the FCC did not have jurisdiction over device manufacturers and had said the FTC would be able to enforce device privacy on the third parties beyond the FCC's reach. The FCC does not have authority over edge providers or device makers. Sen Moran pointed out that Chairman Wheeler had told the committee that he had worked with the FTC in writing the set-top rules and that they would require manufacturers to comply with privacy rules that the FTC could enforce. He wanted confirmation of that. Chairwoman Ramirez pointed out that in comments to the FCC on the set-top proposal, it had recommended that those third parties be required to make a "consumer-facing statement" pledge that they would comply with the same privacy rules the FCC can impose on cable companies, which would allow the FTC to take action where necessary. That is because the FTC can go after violations of that pledge under its authority over unfair and deceptive practices. Chairwoman Ramirez said Chairman Wheeler had indeed indicated his intent to make such a pledge a part of the rules.

Next Presidential Debate Will Include Internet Input

The Open Debate Coalition said that ABC and CNN have agreed to consider the top questions submitted to its PresidentialOpenQuestions.com for the Oct 9 presidential town hall debate at Washington University in St. Louis (MO), the second of three scheduled presidential debates. ABC's Martha Raddatz and CNN's Anderson Cooper are co-moderating the town hall. The coalition said that the agreement came after discussions with ABC and CNN debate producers. The Commission on Presidential Debates (CPD) is requiring moderators to ask questions based on input from the Internet.

"The commission was watching closely as the Open Debate Coalition tested out their innovative bottom-up question submission and voting platform in the primaries this year, and we were impressed with the results,” said Mike McCurry, co-chair of the CPD. “2016's presidential debate moderators will have a rich pool of voter-submitted questions they can draw on that carry greater weight because they are backed by votes from the American people." The CPD is also teaming with Twitter to boost social media involvement around the debates. Coalition members include Americans for Tax Reform, the Progressive Change Campaign Committee, FreedomWorks, NARAL, the National Organization for Women, Color Of Change, Craigslist founder Craig Newmark, and Wikipedia founder Jimmy Wales.

Bridging the Digital (Veteran) Divide

Rep Jerry McNerney (D-CA) has introduced a bill to boost broadband access for veterans, saying they should not be left behind in the push for broadband adoption. Rep McNerney is a member of both the House Communications and Veterans Affairs subcommittees. The bill, the Improving Broadband Access for Veterans Act of 2016, would require the Federal Communications Commission to launch a Notice of Inquiry (NOI) into veterans' current access to broadband and what can be done to increase access.

Boosting that access could conceivably piggyback on current Universal Service Fund subsidies since Rep McNerney's office says the NOI would focus on low income veterans and those in rural areas. "Veterans, who fight tirelessly to protect our country, face many challenges when they return home. Not having internet access makes what is already an incredibly difficult transition process even harder,” said Rep McNerney. The congressman cited a Pew Research study that found that less than half of those living below the poverty have broadband access at home. He also cited National Telecommunications & Information Administration figures showing rural adoption lags urban.

Liberman Broadcasting Asks FCC to Reconsider Comcast Complaint Dismissal

Liberman Broadcasting, parent of Spanish-language network Estrella TV, has asked the Federal Communications Commission's Media Bureau to reconsider its decision to reject Liberman's program carriage complaint against Comcast for lack of standing, saying to read a TV broadcast station out of the definition of video programming vendor is illegal.

On Aug. 26, the FCC's Media Bureau said the broadcasters' retransmission issues with Comcast did not equate to program carriage under the FCC rules because it was not a video programming vendor under those rules and so did not have standing to bring the complaint. But in a Petition for Reconsideration filed Sept. 26, Liberman said the bureau had ignored the plain language of the law when it concluded it was not a video programming vendor--"programming ...provided by a television broadcast station." Liberman says that error alone justifies reconsideration. Additionally, Liberman said it had supplied enough evidence for a prima facie case against Comcast. The FCC said it had not. Liberman also said that the bureau had erred in not considering distribution of Estrella TV outside its broadcast footprint.