Monty Tayloe

The FCC should reinstate most of the CableCARD rules stripped away by the U.S. Court of Appeals for the D.C. Circuit in its EchoStar decision, TiVo said in a petition for rulemaking filed Tuesday (http://bit.ly/12VRaSI). The court decision stripped away the “Second Report & Order pertaining to Section 629,” including rules governing CableCARDs and encoding rules. By vacating a number of technical standards that applied to cable operators along with the encoding rules that were at the center of EchoStar, “the Court created an unhealthy amount of uncertainty in the industry -- uncertainty that harms innovation and competition as well as settled consumer expectations,” said TiVo. To comply with the court’s ruling that the FCC did not have the authority to apply encoding rules governing copy protection to DBS, TiVo’s petition asks the commission to leave the rules that affect DBS out of the rulemaking. Since the court didn’t “make any findings adverse to any of the other regulations” aside from the rules that applied to DBS, “there is nothing in EchoStar to impede the Commission from re-instating the non-controversial standards-reference regulations adopted with the Second R&O, and from re-instating the Encoding Rules, sans the language that included DBS operators in their scope,” TiVo said. Restoring the rules would promote competition and clear up confusion about the state of CableCARD regulation, TiVo said. “Given Section 629’s requirement that the Commission assure the competitive availability of retail navigation devices, it is the Commission’s statutory responsibility to resolve any uncertainty or ambiguity concerning its rules,” TiVo said. The set-top box maker pointed to the Media Bureau’s CableCARD waiver granted to Charter Communications as evidence of a need for more clarity on CableCARD regulation. “The Media Bureau’s Order speculated about, but did not purport to resolve, the status of earlier and later rules in the wake of EchoStar’s rejection of only the Second R&O,” TiVo said. “Charter formulated arguments suggesting that every FCC rule pertaining to CableCARDs and common reliance was now subject to reinterpretation and dismissal,” said TiVo. The Media Bureau didn’t comment. “I have a hard time seeing what choice the FCC has,” said Public Knowledge Senior Staff Attorney John Bergmayer. “They have a statutory obligation to do something about this -- I would expect to see most of the rules come back,” said Bergmayer. CEA also said it supports the proposed rulemaking. “They have the ability to reinstate them, it’s not a heavy lift,” said CEA’s Julie Kearney. The NCTA and American Cable Association -- both of which have opposed CableCARD requirements in the past -- did not comment on TiVo’s petition. “The petition doesn’t indicate any market impediment as a result” of the rules being vacated by EchoStar, said Davis Wright cable attorney Paul Glist, who has represented companies seeking CableCARD waivers. “This shouldn’t be controversial,” said TiVo General Counsel Matt Zinn. “These are the rules we've all lived by for years.”

The FCC’s 15th annual video competition report, in the same format as last year’s report, contains few surprises, said agency official in interviews. “It’s very close to last year’s report,” said an agency official. The report is due to be voted on by the commission Friday, the first time in several years the commission has kept to the annual schedule mandated by the 1996 Telecom Act. The 14th report was released last year, but the 13th came out in 2009. The 14th report contained data on the rise of online video distributors, the cost to multichannel video programming distributors of acquiring content, the effect of ISP data caps on competition (CD July 23/11 p6).

The FCC should avoid specific “prescriptive” regulations and focus on flexibility in new rules on accessibility for user interfaces and video programming guides, said several cable providers and the NCTA. They commented on the commission’s rulemaking on implementing Sections 204 and 205 of the 21st Century Communications and Video Accessibility Act (http://bit.ly/19qAKaI). The deadline for comments on the proposed new rules was Monday. “Overly prescriptive regulations could freeze current technologies and solutions in place, hamper investment, and stymie advancement,” said Comcast. Although consumer groups filing comments in docket 12-108 asked for some specific rules, they also urged flexibility in the language of the rules. “We do not believe that the manner of viewing video programming will be limited to ’television sets’ in the future; nor will the manner of obtaining video content be limited,” said the American Council of the Blind. “The FCC must regulate with the proverbial eye toward the future."

Broadcasters’ appeal to have their case for an injunction against online TV service Aereo reheard by a full panel of judges was denied Tuesday by the 2nd U.S. Circuit Court of Appeals in New York after a 10-2 vote. The failure of the appeal of denial by a three-judge 2nd Circuit panel of an injunction preventing Aereo from retransmitting TV stations’ content is not unexpected, said several broadcast attorneys and one of the appellants, Fox. The denial likely won’t have much effect on the several remaining court battles involving Aereo and competitor FilmOn, broadcast attorneys told us, though a dissenting opinion from 2nd Circuit Judge Denny Chin could boost future broadcaster appeals. “They can use Chin’s dissent as a roadmap of sorts in formulating their arguments,” said Fletcher Heald’s Harry Cole, who’s not involved in the case. Fox “will now review our options and determine the appropriate course of action, which include seeking a hearing in the U.S. Supreme Court and proceeding to a full trial on the merits of the case,” said the 21st Century Fox subsidiary in a statement.

Since that means the shareholders will still own both TV stations and newspapers, it doesn’t change status regarding FCC cross-ownership rules, said Fletcher Heald attorney Peter Tannenwald: “Unless they do something to change the ownership at the beginning it won’t make it any difference.” But Tannenwald said if the companies want to try to use the split to come into compliance with cross-ownership rules without receiving an FCC waiver, they could do so by more clearly separating the ownership of the two companies. Tribune said each of the companies will have its own board and senior management team, and “revenues in excess of $1 billion.” “This doesn’t remove the need to ask the question” about possible cross-ownership violations in the proposed Tribune/Local TV merger, said Free Press Senior Policy Director Matt Wood. He also said the spinoff doesn’t do anything to fix Free Press concerns about media consolidation. “We still see reduced journalism and reduced diversity of viewpoint,” he said.

The FCC should revisit rules barring foreign investment in broadcasting and relax regulations on AM radio to promote minority media ownership, said FCC Commissioner Ajit Pai at a Minority Media & Telecom Council breakfast Wednesday, part of the MMTC’s Access to Capital conference. Commissioner Jessica Rosenworcel also attended the breakfast, and also suggested possible rule changes to favor minority media ownership. Pai called the foreign investment rules “an anachronistic relic,” and said changes to them would help minority businesses by increasing the availability of capital, which he called “the lifeblood of a business."

A House Communications and Technology Subcommittee hearing on proposed reforms limiting the FCC’s power to review transactions and issue new rules is unlikely to lead to new legislation, said several industry and legislative officials in interviews Tuesday. Thursday’s hearing resurrects two bills that fizzled in the Senate in 20ll (CD March 27/12 p1). HR-3310 would consolidate numerous FCC reporting requirements into one annual report to Congress, and the more expansive HR-3309 would require the FCC to consider market forces before issuing rules, allow two commissioners to discuss commission business without issuing an ex parte and limit the power of the agency’s bureaus.

An FCC rule that will require all broadcast stations to post detailed information about their political ad sales online instead of just maintaining hard copies in their offices will be burdensome and difficult for smaller stations to comply with, said Fletcher Heald’s Peter Tannenwald, an attorney for many independent broadcasters. The rule is already in effect for the big four network affiliates in the top 50 markets, and set to apply to all broadcasters starting July 2014, but the FCC asked for comments on possible changes to its implementation, in a June 27 public notice (CD June 27 p20).

Tribune will likely avoid falling afoul of FCC ownership rules through shared service agreements in St. Louis and Denver, said Free Press Policy Director Matt Wood. He also pointed to previous Tribune efforts to sell off its newspaper properties as a possible solution to the cross-ownership conflict in Virginia. “There’s not a lot of formal levers for the FCC to grab onto,” he said, describing the deal as being “not as bad” as a recent plan for Gannett to buy Belo Corp.’s TV stations, which also featured a market overlap (CD June 14 p7). No mention was made of how Tribune and Local TV will get past cross-ownership rules during a conference call Monday held by the companies. The deal would allow Tribune to create “synergies” between its print, video and digital properties, said CEO Peter Liguori on the call. BIA/Kelsey Chief Economist Mark Fratrik said he believes the companies would not pursue the deal without believing it will be approved by the FCC. “They obviously have good legal counsel; good FCC counsel,” he said.

The FCC won’t take up the Bloomberg/Comcast channel placement dispute anytime soon, despite a plea last week (CD June 27 p16) from the financial news channel for the agency to act on the two-plus-year-old matter, several cable industry attorneys told us in interviews. With the recent Tennis Channel program carriage dispute decision against the FCC from the U.S. Court of Appeals for the D.C. Circuit (CD May 29 p1) and a new chairman unlikely to take office right away, the attorneys said the current commission probably won’t quickly resolve the issue. The dispute revolves around conditions of the Comcast/NBCUniversal deal and the placement of the Bloomberg TV network in the same neighborhood as other news networks owned by Comcast.