A federal appeals court has ruled that the FCC's differential treatment of low power TV stations when it comes to carriage rights on cable vs. satellite MVPD services is not unconstitutional, at least as argued by an LPTV seeking satellite carriage.

The court ruled that the FCC properly denied a request by WVUX-LD Fairmont (Clarksburg), West Virginia, that the FCC compel DBS carriage since low powers do not have must-carry rights on satellite.

Some low powers do qualify for cable must-carry and WVUX owner Michael Karr argued, among other things, that that differential treatment was a violation of the constitutional right to equal protection under the laws, which is guaranteed by the 14th Amendment.

Also: FCC Doesn't Suddenly Grant Must-Carry to LPTVs

The court said that Karr had not demonstrated that "the differences in mandatory carriage obligations for cable and satellite TV providers under the Communications Act violate such rights," pointing out that his station "was treated the same as all other low power stations with respect to satellite carriage."

The court said it could not consider Karr's other constitutional arguments because they were not raised sufficiently in the FCC proceeding for the commission to have the opportunity to pass judgment on them.

Defending the decision in a brief back in September, the FCC, backed by the Justice Department, said that while some low powers are eligible for cable must-carry, the statute (Communications Act) is clear that is not the case with satellite even for similarly situated stations.

Cable must-carry applies to full power TV stations and certain “qualified” LPTVs. To qualify, a low power station must be within 35 miles of a cable headend and there must be "no full power television broadcast station licensed to any community within the county or other political subdivision … served by the cable system."

Satellite must-carry is a bit different. No satellite carrier has to carry local TV stations, but if they carry one in a given market then they must carry all of them, though only full power stations. WVUX-LD petitioned the FCC for a declaratory ruling and demand for carriage from Dish Network and DirecTV, which the FCC denied, citing the statute language that satellite must-carry does not include “low power TV stations,” and saying that language was “fatal” to the petition.

Karr argued that a footnote in a 2016 Government Accountability Office report on low power TV (“17 Federal law requires cable and satellite operators to carry the signal of qualified LPTV stations serving their markets”) was “persuasive authority.” But the FCC said the footnote was just wrong and that an inaccurate statement does not trump the clear language of the statute.

Karr also made a First Amendment argument--that the disparate treatment by cable and satellite was an unconstitutional abridgement of speech, one of the constitutional arguments the court said it was not addressing.

Also: New LPTV Association Launches

But the FCC and Justice did in their brief last fall. They said the complaint does not allege that the differential treatment of cable and satellite in statute is an attempt to disfavor the speech of one over the other, while WVUX’s speech rights are not implicated since it is free to broadcast and has no inherent right to have its signals carried by satellite.

Karr can appeal the decision to the three-judge panel or to the full court (en banc). ■

Cable operators continue to try and get the FCC to cut to the chase and even up the regulatory fees satellite operators and cable operators pay the FCC, but at the least say the FCC should continue to raise the DBS fee. 

Related: ACA Says It's Past Time for DBS to Pay Fair Share 

The FCC used to charge satellite operators per license rather than per sub, but decided a half-deade ago to start charging DBS per sub and put them on a glide path to parity with cable, raising their fees annually.  

But cable operators, who never liked the glide path strategy, have been urging the FCC to just start charging MVPDs the same fee rather than "perpetuate the long-inexplicable disparity between cable/IPTV and DBS regulatory fees." 

In reply comments to the FCC on its latest annual fee assessments, ACA Connects and NCTA-The Internet & Television Association, the cable ops pushed back on comments by DBS providers that the added 12 cents per sub fee the FCC is proposing in its latest glide-path increase should not be levied. 

They said DBS arguments are predictable, meritless, and should be repudiated, then added that rather than not raise the fee on DBS, the FCC should complete the phase-in. 

The FCC charges its fee based on how many full time employees it takes to regulate a particular service. Satellite operators argue that is fewer than cable, so their fee should be smaller. The cable ops call that a "Straw man," and attempt to knock it down with the observation that the FCC has said the DBS fee "is based on the significant number of Media Bureau FTEs that work on MVPD issues that include DBS.” 

As to the FCC not yet phasing the fee up to meet cable, they say the FCC "still proposes that DBS providers pay a much lower fee than other MVPDs to support the Media Bureau’s work, with no justification other than the observation that the Commission has adopted a phase-in approach for DBS fees each year since FY 2015." 

Cable operators are telling the FCC there is no justification for continuing the glide path toward DBS paying the same FCC regulatory fees as cable operators. 

The FCC's operations are funded by fees levied on regulated entities, including broadcaster, cable operators and satellite operators. 

FCC Proceeds with 2020 Regulatory Fees 

On May 13, the FCC proposed to proceed with collecting $339 million in regulatory fees for 2020 despite the COVID-19 pandemic's hit on media outlets. That includes continuing to increase the fee DBS operators pay to get it closer to that paid by cable MVPDs. 

The FCC back in 2015 decided it was time to stop charging DBS a per-satellite-license fee and start charging them according to how many FCC staffers were involved in regulating them, as they do for cable, traditional and IPTV. 

But NCTA-The Internet & Television Association and ACA Connects told the FCC, in comments on that May proposal, that it needs to get off the stick and start charging all MVPDS on the same basis ASAP.  

"[C]able, IPTV, and DBS providers are all MVPDs that equally utilize Media Bureau resources and should be assessed the same regulatory fee for Media 

Bureau activities," it said. "However, even five years after the Commission recognized that DBS operators share fully in the benefits of Media Bureau activities and use Media Bureau resources, and so should pay Media Bureau regulatory fees, the Commission again proposes to continue a 'phase in' approach to the fees DBS providers pay – which would leave cable operator fees to increase yet again, and perpetuate the long-inexplicable disparity between cable/IPTV and DBS regulatory fees. It is long past the time to abandon this approach."

The FCC has proposed to continue raising the DBS regulatory fee to get it closer to the fee cable operators pay and wants to know whether changes in the fee process passed by Congress in the RAY BAUMs FCC reauthorization act affects that decision.

That is according to the FY 2019 regulatory fee Notice of Proposed Rulemaking adopted this week by the FCC. The FCC has to collect $339 million in regulatory fees to cover its operating expenses.

The FCC is proposing to raise the cable fee from 77 cents to 86 cents, and DBS from 48 cents to 60 cents.

Fees are based on how many full time employees (FTEs) it takes to regulate a particular service.

The FCC's Media Bureau has to collect $67.02 from cable, IPTV and DBS in 2019 and proposes to assess Cable and IPTV at the same per-sub rate, but DBS is treated differently, or at least has been.

Satellite broadcasters used to be assessed a smaller, per-license fee, but the FCC in 2015 changed that to the same per-sub fee basis it uses for cable and IPTV, and began lowering cable fees and raising satellite.

That per-sub satellite fee began at 12 cents per sub, but the FCC has been raising it annually to move closer to the cable/IPTV rate, increasing it to 27 cents, 38 cents, 48 cents, and the new, proposed, 60 cents. It has been cutting the cable rate at the same time, from 96 cents in 2017 to 77 cents in 2018, but it is proposing raising it to 86 cents unless it decides to increase DBS to match cable and IPTV.

DirecTV owner AT&T and Dish have asked for no increase, while cable operators have argued that the FCC should move immediately to parity.

Instead, the FCC has continued to raise the rate, but it is also asking if it can, or should, continue to do so. "[W]e invite comment concerning whether this continued 'phase in' is still permissible under the RAY BAUM’S Act and whether this continued 'phase in' is still good policy," the FCC said. "In the alternative, we seek comment on including DBS fully in the cable television/IPTV rate, which would then be approximately 77 cents per subscriber per year [for both cable and DBS], or adopting a different rate for DBS."

The fight over renewing the satellite TV license for another half a decade has begun in earnest.

The National Association of Broadcasters is circulating a policy paper on Capitol Hill advocating for not renewing the STELAR law (Satellite Television Extension and Localism Act) when it expires at the end of 2019.

STELAR, which was last renewed 2014, reauthorizes the satellite compulsory distant signal license for five years. But last time around it was also a vehicle for some cable-friendly changes to retrans, including renewing the FCC's enforcement of good faith retrans negotiations and extending the commission's prohibition on coordinated retrans negotiations among noncommonly owned TV stations in a market from the top four to all stations.

NAB says it expects MVPDs to push for renewal, but contends there is no justification for compelling the out-or-market carriage to broadcast affiliate-unserved homes given that that number is dropping and in all 210 markets DISH and DirecTV are providing local-into-local TV station carriage.

As for the half-million homes that are still getting imported TV signals thanks to STELAR, NAB says they can be "better served through private business negotiations between satellite companies and local broadcasters."

NAB says the provisions set to expire--and which it argues should expire--are the "discounted" compulsory license, the retrans exemption for the imported out-of-market signals, and the good faith negotiation requirement. 

"There is no policy justification or technological reason for STELAR to be reauthorized. The time has come to stop subsidizing billion-dollar satellite TV companies and to instead provide viewers with the local news, weather and emergency information they want and need. Congress should let STELAR expire," NAB said.

“If Congress fails to re-authorize STELAR, hundreds of thousands of consumers, mostly in rural areas, would lose their broadcast channels from satellite," said Trent Duffy, spokesperson for the cable and satellite-backed American Television Alliance. "Congress should not only re-authorize STELAR so rural America can continue receiving all their broadcast channels, but also modernize the retransmission consent rules, which currently favor broadcasters at the expense of consumers and competition.”

In late 2017, after two years of research, analysis and writing, The Carmel Group published the first in-depth report about what we term the Broadband Wireless Access, or “BWA,” industry. Many traditionalists still call it the fixed wireless industry. The full 23-page “2017 BWA Report” is available for download here.

Yet, the lack of industry interest in the story and data behind the “2017 BWA Report” appears to say a lot about yesterday’s and today’s multichannel industry.

What BWA Means
For those unaware, BWA means the delivery of broadband Internet, via a tower and wireless spectrum, to small radio antennas mounted on the sides of buildings. The outside antenna connects to a router inside the structure. The router then distributes the signal to devices and monitors inside the home or business.

For the cord-cutting generation, BWA is Nirvana, because it delivers Netflix, Apple TV, Amazon and YouTube for a tiny fraction of the cost of a cable TV, telco, fiber or satellite package. BWA also delivers quality Voice Over Internet Protocol (VOIP) telephone services. Traditional TV packages are not far off, we believe.

For the operator, it means delivering much of what people – especially younger generations – really want from video, at a tiny fraction of the cost and payback period.

Related: Fixed Wireless Pay TV: Understanding the New DNA

For cable, telco, fiber and satellite, BWA can also mean a chance to meld with and become a hybrid video delivery service, with obvious advantages. Indeed, this melding highlights the meaning behind the name of this blog, “Mixed Signals” (meaning, increasingly, silos break down and each industry combines with – and invests in – the others).

A First Call
On March 19 I received one of the first of its kind: a call from a Detroit-based investment firm that was interested in purchasing a BWA operator of several thousand subscribers, with decent multiples and very respectable cash flow, the partner said. The guy said to me, “This business seems almost too good to be true.”

His core questions centered around items such as the research and study behind the data points, the validity of the methodology, the competition and concerns about the future.

He was also concerned about how cable and telco will react, especially as new 5G technology and the BWA industry grow out. He worried further about a possible dearth of future unlicensed spectrum.

Why Not More?
What has occurred to me weekly since the “2017 BWA Report” came out five months ago -- and what triggered this article -- is something I saw quite a bit when I left Paul Kagan Associates in 1995 to start a rival telecom research operation (but mine focused in the beginning just on the newly emerging Direct Broadcast Satellite industry). That phenomenon was the real lack of serious interest by cable, other related industries and investors in a new technology and new business that challenges the old.

Today, because of the comparison of a handful of important technological and political concerns to those of DBS back in the early 1990s, the BWA industry is on the verge of a similar breakout. (Note that I’m not yet predicting the growth that DBS saw, reaching close to 30 million subscribers in a 20-year time frame, but the BWA industry is projected to nearly double to over eight million subscribers in five year’s time.) BWA is also on the verge of competing mightily with cable.

Yet, despite that promise, there is still very little interest from both within and outside the BWA industry in what the real BWA story is.

Know Your Friends Well
Some say the reason for this dearth of response is a lack of curiosity.

That may be true at a certain level, but I believe that the more important reason is one of fear.

Incumbents are often afraid to address the idea of a future involving a large loss of market share – as was cable with DBS in the 1990s, and cable is today with other technologies, including BWA. In response, they do little or not enough to address that future. I’ll never forget the first time I heard the adage “Know your friends well, your enemies better.”

Interestingly enough, the two companies that have purchased the answers and the data behind the BWA survey data we did are both based overseas. They both mentioned a unique opportunity to invest in and take advantage of a new U.S. (and global) telecom opportunity, involving new spectrum gains, new technology, new equipment and new investors.

Thus, I must again ask the U.S. contingent (and others of the foreign ilk), yet this time in a more complete version: Suffer, Curiosity? Suffer, Fear? Suffer, Knowledge? Suffer, Advantage?

Like DBS, there’s a real chance here not only to benefit financially, but also to improve the quality of life for millions of Americans and other global citizens.

Jimmy Schaeffler is chair and CSO of The Carmel Group, a streaming/broadband, broadcast and pay TV/video consultancy based in Carmel-by-the-Sea, Calif.