Laboring Away: FCC Proposes TV Set-Top Rules and Lawmakers Feud Over Internet Transition

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Robbie's Round-Up for the Week of September 5-9, 2016

Washington is back in full-swing after the Labor Day holiday. Congress is in session, elections are heating up, and the Federal Communications Commission released its “robust and diverse agenda” for its September 29 open meeting. Headlining the FCC meeting are proposed rules to unlock the TV set-top box marketplace, rules that FCC Chairman Tom Wheeler unveiled on Thursday. In Congress, several lawmakers called for a reconsideration of the ICANN Internet transition. One Member even launched a website with a countdown until “Obama gives away the Internet.” It’s good to be back, right?

Chairman Wheeler’s Set-Top Proposal

Chairman Wheeler unveiled his latest proposal on set-top boxes, the devices that decode pay-TV subscriptions (e.g., the cable box). A common consumer complaint is the price of renting these set-top boxes. A lack of competition in the set-top market is seen as the culprit. Ninety–five percent of pay-TV subscribers lease set-top boxes from their pay-TV provider. According to a study cited by Chairman Wheeler, 84 percent of consumers feel their cable bills are too high.

The main proposal: Rather than have consumers rent their set-top box month after month, pay-TV providers will be required to provide apps -- free of charge -- that consumers can download to the device of their choosing to access the programming and features they pay for.

Features of the proposal identified in a FCC Fact Sheet released this week:

  • Optional rentals: Consumers will no longer have to pay monthly rental fees for a box, though consumers may choose to keep their set-top box and enjoy their pay-TV programming as they do today.
  • Integrated search: Consumers will be able to search across all pay-TV content. This proposal could benefit independent and minority programming. Small and independent programmers will be better able to reach broad audiences under the new rules, even if they are not carried by cable or satellite, because their content will be easily searchable on the same device as pay-TV content.
  • Copyright protection: The proposed rules maintain strong protections for copyrighted content, with existing content distribution deals, licensing terms, and conditions unchanged.
  • Technology-Neutral Standards: The proposed rules do not mandate a specific standard for app development. Rather, the rules require pay-TV providers to make software available on all widely deployed platforms.
  • Consumer Protections: The proposal seeks to ensure that important consumer protections like emergency alerting, privacy, and accessibility will apply by requiring compliance as a condition of the license and requiring third parties to make pledges to consumers to enable enforcement by the Federal Trade Commission and State Attorneys General.

Industry Concern
The principal trade association of the cable industry, the National Cable & Telecommunications Association (NCTA, where Chairman Wheeler was president from 1979-1984) argues that the proposed rules will exceed the FCC’s authority. In particular, NCTA takes issue with role of the FCC in the licensing process, saying, “...the Chairman isn’t just proposing a ‘standard license’ but a centralized licensing organization that would exist in perpetuity. The work of this licensing body would be subject to intrusive FCC oversight, creating a bureaucratic morass and improperly involving the FCC in private licensing arrangements in a way that will slow the deployment of video apps, ignore copyright protections and infringe on consumer privacy. “

NCTA joined a chorus of other pay-TV providers who insist the rules would impose an “overly complicated government licensing regime” and have an adverse effect on the thriving apps-based market. In a statement, pay-TV provider Charter Communications said, “Enabling consumers to use apps instead of set-top boxes may be a valid goal, but the marketplace is already delivering on the goal without overreaching government intervention. The FCC’s mandate threatens to bog down with regulations and bureaucracy the entire TV app market that consumers are increasingly looking to for innovation, choice and competition.”

The proposal will be voted on at the FCC’s September 29 meeting.

Internet Governance Transition
Several Republican lawmakers took steps to disrupt the National Telecommunications and Information Administration’s (NTIA) plan to transition its control of the Internet domain naming system to a private nonprofit organization, the Internet Corporation for Assigned Names and Numbers (ICANN). NTIA's current contract expires at the end of September and instead of renewing the contract, NTIA plans to cede oversight of the Internet Assigned Numbers Authority to ICANN. This has been an ongoing debate -- in fact, I wrote about it in one of my first Round-Up posts. So, let’s take a trip down memory lane, and read that section in full:

On Sept 22 (2015), Republican leaders of the Judiciary committees in Congress sent a letter to the Government Accountability Office questioning whether the Obama Administration’s proposal to give up oversight of parts of the Internet address system is unconstitutional.

Some Context: In 2014, the National Telecommunications & Information Administration (NTIA) proposed to end its authority over the servers and other infrastructure necessary for computers around the world to reach websites, in a process known as the Internet Assigned Numbers Authority (IANA) transition. Basically, the idea is to transfer the “phone book of the Internet” from NTIA’s stewardship over to a “global stakeholder community”. The catch? On top of concerns that the transition could give authoritarian regimes an opportunity to seize power over the Internet, some Republican lawmakers argue that the plan could violate the constitutional requirement that only Congress has the power to “dispose belonging to the United States.”

Republican leaders of the Commerce Committees in both chambers -- Sen John Thune (R-SD), Rep Fred Upton (R-MI) and Rep Greg Walden (R-OR) -- are backing legislation that would allow the Internet transition to go ahead as long as Congress is given time to review the details of the plan. That bill, the Dotcom Act, passed the House 378-25 in June, but Sen Ted Cruz (R-TX) has been blocking the legislation from reaching the Senate floor, arguing that Congress should have a chance to deny the transfer of authority.

The IANA Transition is likely to roll ahead, despite the controversies. Expect future conflict between Congress and the Obama Administration as the transition plays out.

Back, to 2016
So what happened this week? More conflict between Congress and the Obama Administration. Chairman Thune, Chairman Upton, Senate Judiciary Chairman Chuck Grassley (R-IA), and House Judiciary Chairman Bob Goodlatte (R-VA) sent a letter to US Attorney General Loretta Lynch and Secretary of Commerce Penny Pritzker raising concerns about the Internet transition.

Sen Ted Cruz (R-TX) also got in on the action, slamming the Internet transition plan on the Senate floor. He said the decision “poses a significant threat to our freedom… it will empower countries like Russia, China and Iran to be able to censor speech on the Internet.”

Sen Cruz scheduled a hearing for Sept 14 that he will chair to “investigate the possible dangers” of ceding control of the government body.

Sen Cruz’s opposition to the handover includes his Protecting Internet Freedom Act (S. 3034). He unveiled the bill with press materials featuring an elaborate video and a dramatic countdown clock with a mission manifesto underneath it. S 3034 would prohibit NTIA from allowing the IANA contract to expire unless authorized by Congress. Rep Sean Duffy (R-WI) introduced companion legislation in the House -- neither bill has been scheduled for a floor vote.

Jamie Hedlund, VP of strategic programs in ICANN's global domains division, argued that opposition was coming from individuals "who don't understand fundamentally what's at issue." House Commerce Committee Ranking Member Frank Pallone (D-NJ) said the Republican response was an "about-face" from previous bipartisan efforts to facilitate the transition, including passage of the DOTCOM Act, which established added congressional oversight. "This backtracking by congressional Republicans seriously undermines American credibility in this process, and threatens to embolden the worst actors of foreign governments in their efforts to control the free and open internet as we know it today," said Rep Pallone.

The Internet transition debate is sure to heat up while Sen Cruz’s clock ticks down. We can tell it’s going to be a fun September.

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Election 2016

Quick Bits

Weekend Reads (resist tl;dr)
coffee iconGiving megaphones to the disenfranchised: Why Internet rights are human rights (Ford Foundation)
coffee iconThe Internet May Be as Segregated as a City (The Atlantic)
coffee iconThe rise of mobile could create “a second-class digital citizenship” of less informed news consumers (Nieman Lab)
coffee iconRemarks of FCC Chairman Tom Wheeler, CTIA Super Mobility Show 2016, Las Vegas (FCC)

Events Calendar for Sept 12-16, 2016
Sept 12 -- Vote on Anti Spoofing and Improving Rural Call Quality and Reliability, House Communications Subcommittee
Sept 14 -- Protecting Internet Freedom: Implications of Ending U.S. Oversight of the Internet, Senate Judiciary Committee
Sept 15 -- Putting Disclosures to the Test, Federal Trade Commission
Sept 15 -- FCC Oversight Hearing, Senate Commerce Committee
Sept 16 -- Economic Conference on Marketing and Consumer Protection, Federal Trade Commission

ICYMI From Benton
benton logoBroadband Needs Assessment and Planning for Community Anchor Institutions, Kelleigh Cole
benton logoAT&T v. FTC Decision and Media Ownership Rules Review, Robbie McBeath

By Robbie McBeath.