Schatz Dials Down Requirements of Senate Set-top Rider During Appropriations Markup

Schatz “importantly made some revisions as to who would be doing the study and the content of the study,” said Appropriations Financial Services Subcommittee ranking member Chris Coons, D-Del., in an interview after the markup. Coons said Schatz, an Appropriations Committee member and ranking member of the Communications Subcommittee, secured the changes in the day before the Thursday markup.

A day earlier, Coons had told us much was still up in the air on the rider about the FCC’s set-top box rulemaking, which provoked privacy and copyright concerns from Coons. He thought it may stay in the appropriations bill and distinguished it from a poison pill rider (see 1606150060). That’s in contrast to Schatz, who weeks ago told us such a rider would be a “nonstarter” and “poison pill” in the Senate (see 1606020070). The Democratic caucus has been split on the issue in both the Senate and House, with several prominent Democrats questioning the NPRM and some calling for a pause and further study.

Senate appropriators didn’t reveal the text of the Financial Services bill until after the Thursday markup. The text shows that the Senate's original set-top rider mirrored the language of a House rider. That original rider language would have compelled freezing any FCC efforts on the set-top proceeding until 180 days after completion of a cost-benefit peer-reviewed study by an institution of higher education or an individual faculty member at one. The FCC would have had to seek comment on the study with no fewer than 90 days for that cycle and then address any concerns in a report. The study would have had to address the effect on “all parties in the video programming marketplace,” programming diversity, intellectual property and content licensing and consumer privacy and legal remedies for the violation of such privacy obligations. Senate Appropriations Democratic staff initially feared the House language amounted more to a delay tactic than substance.

'Not Yet Settled'

The Schatz amendment removed the language compelling cost-benefit analysis and instead would say the study has to evaluate “the availability” of the proposal. It also slashed the language demanding a higher education institution or faculty member do the study and instead called for a GAO study. It also would clarify that the GAO study should examine the impact on “relevant” parties in the video programming marketplace rather than all. A GAO study on the set-top NPRM was already requested April 1 by House Communications Subcommittee Chairman Greg Walden, R-Ore., and Rep. Yvette Clarke, D-N.Y. (see 1604010053).

“I think this issue is not yet settled, but the discussions have been productive over the last 48 hours or so,” Schatz said in an interview Thursday. “I think there’s always room for improvement.” He told us he doesn’t know what the FCC thinks of the modified provision text.

Public Knowledge and the Computer & Communications Industry Association blasted the rider after the markup. “Congress has twice asked the FCC to examine this monopoly control over set top boxes to free both prices and innovation, most recently in 2014,” CCIA President Ed Black said. “It makes no sense to use a back-door policy rider to delay the very reforms the full Congress asked the FCC to consider. This delay by rider would just allow the cable industry more months to gouge customers. Why would we do that?” Public Knowledge is “disappointed,” said government affairs associate counsel Kate Forscey, saying the rider “would further forestall a truly competitive video marketplace, for which consumers and creators yearn and which the FCC now stands poised to deliver.”

During the Appropriations Committee markup, Coons and committee ranking member Barbara Mikulski, D-Md., complained of what they considered insufficient funding for the FCC. Mikulski is “absolutely concerned about the steep funding cuts” for the FCC but backs the “relatively clean” bill, she said. Coons cited the “obvious difficulties” in developing the bill amid the “tight” funding allocation. He noted anti-net neutrality riders were excluded from the bill. The FCC would receive $341 million, $43 million less than in FY 2016.

Coons unsuccessfully offered an amendment that would have increased the FCC’s funding to $356.7 million, losing in a 14-16 vote. Sen. Tom Udall, D-N.M., allied himself with Coons and said the funding is “fully offset” and the FCC has important responsibilities in terms of public safety and spectrum auctions. Coons said insufficient funding could end up “delaying future auctions.” Appropriations Financial Services Subcommittee Chairman John Boozman, R-Ark., urged opposition to Coons’ FCC funding amendment and said the bill already provided the agency a “higher level than I would have provided, if it were up to me,” crediting Coons with the level already in the bill. He said the FCC’s higher funding last year was largely due to headquarters transition expenses and slammed FCC Chairman Tom Wheeler for ignoring congressional intent to protect broadcaster joint sales agreements and he wants to craft new JSA limits, after the recent 3rd U.S. Circuit Court of Appeals media ownership ruling.

Provisions on Cuba, Repacking

Udall secured inclusion of his Cuba Digital and Telecommunications Advancement Act (S-1389) in the Financial Services bill. “Currently Cuba is one of the least wired countries in the Western Hemisphere,” and it behooves the U.S. government to allow U.S. internet companies to begin building Cuba’s infrastructure, Udall said. Sen. James Lankford, R-Okla., was initially dubious, asking: “Does this require them to take out the firewall?” Udall said it didn't. The proposal was included without contention. Sen. Shelley Moore Capito, R-W.Va., secured report language on access to broadband in rural areas, not discussed during the markup but mentioned in the bill report. It would insert a section called "Connect America Fund II Accountability" and asked for relevant updates. "The Commission's updates should include information about the effectiveness of the FCC Form 477, which requires broadband providers to self-report data about where they offer broadband service, and whether improvements to the Form 477 or to the Commission's oversight of the CAF-II program are necessary to ensure that taxpayer dollars are used effectively and efficiently," that new section said.

Senate appropriators’ accompanying report included nearly four pages on FCC provisions. It cited last year’s appropriations law grandfathering broadcaster JSAs, a provision now unnecessary due to FCC limits that the 3rd Circuit removed. Appropriators are including a provision “to reiterate Congress’ strong support for the continuing operation of existing TV JSAs, regardless of the assignment or transfer of the stations involved in those agreements, and strongly opposes any new Commission action to attribute JSAs,” the report said.

Appropriators are “gravely concerned” about the broadcast repacking process to follow the FCC’s broadcast TV incentive auction, the report said. They worry both the money and time allotted is insufficient. The report demands the FCC “immediately notify” Commerce and Appropriations committees “should additional relocation funding be necessary or should problems arise in meeting the Commission’s transition deadline,” it said, compelling a report no later than 240 days after the completion of the forward auction on the effect on rural areas, the construction schedule for relocation and how translators are faring. Appropriators cited the importance of the ATSC 3.0 standard in the repacking and “urges the Commission to move forward” with the standard “as expeditiously as possible so that TV broadcasters may purchase the facilities they need without wasting limited funds on outdated, unnecessary equipment.”

The report also includes sections on wireless support, enhanced underwriting announcements, rural call completion problems, USF waste, fraud and abuse, mobile broadband coverage drive testing and concerns about inaccuracies in the National Broadband Map, difficulties with the FCC’s Electronic Comment Filing System, broadband connectivity on tribal lands, IT overhaul and the consumer complaints database. The report and legislative text were not available online at our deadline Thursday but were expected to be publicized online soon. A committee aide noted the 30-0 approval is the first unanimous approval of the Senate Financial Services bill. Boozman has predicted his bill would see floor action late compared with other appropriations bill, likely in July (see 1605190050).