Wheeler puts pay-TV back on defense with revised set-top proposal

Tom Wheeler, Chairman of the FCC
FCC Chairman Tom Wheeler
Editor's Corner Dan Frankel

To borrow hack football analogies — hey, the season just started! — the pay-TV industry was about to kill the clock on the FCC’s quest to regulate set-tops, but agency Chairman Tom Wheeler just forced a fumble.

Now, with the introduction of Wheeler’s revised app-based set-top regulation proposal last week, the industry and its programming allies are back on defense, making statements, and filing comments and ex partes, trying to explain why a revised regulatory plan underpinned by their core idea — to base it on multiscreen apps — shouldn’t move forward. 

“While we appreciate that Chairman Wheeler has abandoned his discredited proposal to break apart cable and satellite services, his latest tortured approach is equally flawed,” said Comcast VP of Government Communication Sena Fitzmaurice in a statement last week.

“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,” added Charter.

Like it or not, momentum has swung back in favor of Google and the FCC. Wheeler now has a Sept. 29 vote queued up for the FCC Commission to move forward with the new NPRM. And I think it’s safe to assume that the Chairman moved forward with his new plan knowing he’ll have support from fellow Democrat Jessica Rosenworcel, whose abandonment of Wheeler’s original “Unlock the Box” plan over the spring led us here. 

Operators, programmers, and the organizations and guilds who represent them, haven’t seen the details of the new plan, but appear poised to once again battle Wheeler, as he continues the FCC’s decades-long quest to open the largely proprietary leased pay-TV set-top business to third-party device makers including Google, Amazon and TiVo.

Starting in February, when the Commission voted 3-2 to move Unlock the Box forward, the pay-TV industry — led by the NCTA — ran an effective campaign, convincing Congressional lawmakers, media conglomerates, advertisers and entertainment labor guilds that Google was trying to steal their business. 

Indeed, a message that went something like, “Google is trying to take our information streams in a device world already being democratized by TV Everywhere apps” proved to be an effective pitch, eventually prying Rosenworcel — a linchpin to Wheeler’s plan, alongside fellow Commission Democrat Mignon Clyburn — from the Chairman’s three-member Commission majority. 

But with Wheeler giving the NCTA and the rest of the industry what they wished for with a proposal based on operators' own apps, the argument against this time is going to have to be a lot more nuanced and complicated. 

For example, the Motion Picture Association of America said the proposal mandates a “compulsory license that the FCC does not have the authority to grant.” 

The MPAA said it “does not support compulsory licenses, has never supported compulsory licenses, and we cannot do so here. Whether through a licensing body subject to FCC review or otherwise, the FCC must not encroach upon copyright holders’ discretion in how they expertise or license the exclusive rights Congress granted them in section 106 of the Copyright Act…”

This complicated counter-argument runs up against a pretty practical, straightforward explanation from the plan’s backers as to why the FCC must form an independent licensing body to oversee the initiative: simply put, an overseer is needed to make sure that operators make their apps — which they fully control — available to a broad assortment of third-party devices. 

“We learned our lesson with CableCard,” said an FCC official last week, recalling how operators undermined a previous attempt to disrupt set-top leasing by dramatically limiting access for third-party vendors

Early on, operators appear to have some of the same Congressional lawmakers who opposed “Unlock the Box” back in their corner. For example, the top Democrat on the Energy and Commerce Committee, Rep. Frank Pallone (D-N.J.) said this week that Wheeler’s revised plan “will not work” or benefit consumers. 

But to me, again, the optics involved with dissenting on Wheeler’s new plan appear to be a lot more challenging.

Public Knowledge shot back that “Congressman Pallone’s skepticism about the FCC’s revised set-top box proposal could unfortunately cost consumers tens of billions of dollars in inflated cable charges.”

In rebutting the lawmaker’s comments, the progressive group might have set the template for the whole argument. Reading between the lines, I hear something like, “You don’t have AllVid to complain about anymore. You got the apps you wanted. Maybe, just maybe, the FCC and Google were right all along.” 

Maybe you just don’t want to be regulated. --Daniel