Turns out Jan. 19 will be an inauguration day of sorts--inaugurating the Supreme Court's first consideration of an appeal of the FCC's media ownership rule deregulation.

It will be the fourth oral argument of the January session, with one hour of argument scheduled, though that could spill over depending on how the arguments and Justices' questioning goes.

The FCC and the National Association of Broadcasters both challenged the U.S. Court of Appeals for the Third Circuit

Related: Supremes to Hear Broadcast Dereg Case

In September 2019, a three-judge panel of the Third Circuit threw out, or at least threw back to the FCC, Chairman Ajit Pai's effort to deregulate broadcast ownership and address a lack of diversity. The court said the agency "did not adequately consider the effect its sweeping rule changes will have on ownership of broadcast media by women and racial minorities," something the court had said in a previous media ownership ruling that the FCC had to do next time around. 

The court vacated the FCC's elimination of the newspaper-broadcast and the radio-TV cross-ownership rules; its decision to allow dual station ownership in markets with fewer than eight independent voices after that duopoly created an opportunity for ownership of two of the top four stations in a market on a case-by-case basis (the FCC was not calling it a waiver); and its elimination of attribution of joint sales agreements as ownership, as well as its creation of a diversity incubator program. 

Gray to Supremes: Restore FCC Rule Dereg

The FCC and NAB appealed the decision to the full Third Circuit.

In April 2020, broadcasters and newspaper publishers petitioned the Supreme Court to review the Third Circuit decision.

Echoing the FCC's petition for review also filed in April, media petitioners said that outdated ownership rules remain in force because a divided panel of the court has prevented the FCC from implementing "necessary adjustments to its ownership rules" that the FCC concluded would serve the public interest.

The FCC said that it has been trying to grant the ownership dereg for 17 years, thwarted by a series of decisions by a divided panel of the Third Circuit. It said the most recent decision to vacate "a host of significant rule changes" was based "solely on the ground that the agency had not adequately analyzed the rules’ likely effect on female and minority ownership of broadcast stations." 

The FCC argues that for those 17 years the court has blocked it from exercising its mandate by Congress to repeal or modify any ownership rule it determines is no longer in the public interest.

A feisty FCC Chairman Ajit Pai spent several paragraphs of his blog on the Oct. 27 public meeting agenda making the case for why he was right to deregulate internet access and critics were wrong.

He was commenting on the plan to vote on the FCC's response to a federal appeals court demand that the FCC better explain how its Restoring Internet Freedom order affects various constituencies.

Related: FCC to Vote on Net Neutrality Remand Item

Billing the agenda as Halloween treats, he called the criticism of the Restoring Internet Freedom's elimination of rules against blocking, throttling and paid prioritization a "trick" played by "numerous Washington politicians, far-left special-interest groups, Hollywood stars, and Silicon Valley tech giants."

Referring to the arguments made by some net neutrality rule advocates, Pai dismissed them. "The American people were told that they would get the internet one word at a time. They were told that they would have to pay $5 per tweet. They were told that it would be the end of the internet as we know it. It was frightening stuff to be sure, but it was utter nonsense," he wrote.

Related: Court Upholds Most of FCC ISP Dereg

He said the FCC had ignored those "falsehoods" and the "ruckus" they created, which included death threats, a bomb threat, and harassment. The result, he argued, and ISPs have argued as well, is that network investment hit levels not seen in a decade while remaining "free and open."

He praised ISPs for their performance during the pandemic, saying they have not had to do what networks in some other countries have done, including asking streaming services like Netflix and YouTube to down convert from HD to SD.

Federal Communications Commission chairman Ajit Pai’s monthly drip drip drip of process deregulation has become a flood, at least temporarily, as rules for how broadband subsidy money is spent, how spectrum can be used and who can use it are being modified and waived right and left.

The avowed goal is to keep America connected at a time when broadband is a literal lifeline for a homebound populace. That flood is a pedal to the metal version of the chairman’s aim of clearing out the regulatory “underbrush.” But loosening the rules on how money is spent — many meant to keep tabs on that outflow to prevent waste, fraud and abuse — is not part of the usual game plan for a conservative Republican chairman.

The deregulation is temporary, though how temporary depends on the course of the virus. But each day brings new word of a waived restriction or perhaps a special temporary authority to allow Comcast and Dish Network to lend spectrum to T-Mobile, for example.

Then there is the money flowing for telehealth and distance learning, with restrictions lifted that were put in place to combat the potential of waste, fraud and abuse Pai has long targeted.

Talking about regulating in the age of COVID-19 last Friday, Pai said, “In many ways, we’re still building the plane while flying it.”

Like An Alternate Universe

Democrats supportive of this temporary deregulatory flood sounds like the script from an alternate-universe limited (hopefully) series. But so do many scenarios in the current COVID-19 pandemic.

Bipartisanship over emergency measures does not extend to the longstanding divides over issues like rural broadband, infrastructure spending, funding for closing the “homework gap” and net neutrality, though.

As FCC Democrat Geoffrey Starks put it, in what at a different time would seem hyperbole, “Our longstanding digital divide has morphed into a monstrous new COVID-19 divide.”

Some see leveraging the crisis to try and secure long-held positions and actions as a sort of public-interest opportunism. But it is undeniable that access to broadband, particularly in rural areas already isolated by geographical distance, has taken on a new urgency. It was also not lost on net neutrality activists that the handful of issues a court had with the FCC’s deregulation of ISPs was that the agency had not sufficiently gauged the impact on public safety and the Lifeline program that subsidizes broadband to low income households. (The FCC says it did.)

Obviously, public-safety communications and making sure low-income people still have broadband connections are big issues these days, particularly when there are millions of people suddenly out of work.

The Benton Foundation, which advocates for expanding the Lifeline program, is calling on the FCC to automatically enroll those 10 million jobless in Lifeline’s broadband subsidy, and to boost subsidies from $9.95 per month to $50.

Companies are also taking advantage of delays. Advertisers and agencies have cited the pandemic in calling for California to delay enforcement of the state’s new privacy law, something in the works long before the virus exploded. The same goes for cable operators and the deadline for new truth-in-billing regulations. They told the FCC the rules should be pushed back to let them focus on the new COVID-19 normal, and the regulator agreed, extending the deadline to January 2021.

Definitely Not Business As Usual

Media Bureau chief Michelle Carey’s explanation of the extension summed up the FCC’s approach to the new business as usual:

“As the nation tackles the COVID-19 pandemic, multichannel video programming distributors (MVPDs) and providers of fixed broadband Internet access service are among the entities that are integral to the Commission’s ongoing, nationwide effort to keep Americans informed and connected during this national emergency,” Carey said in granting the extra time. “So that these service providers may focus their resources on this critical effort, we provide appropriate flexibility for MVPDs and providers of fixed broadband Internet access service to fulfill their obligations under the Television Viewer Protection Act of 2019 (TVPA).”

Senior FCC officials told Multichannel News that while the agency isn’t going to issue blanket extensions, there will be case-by-case flexibility. The FCC also is clearly looking at requests through the lens of an unprecedented national health crisis and of letting broadband operators focus on the business at hand.

Then there are the tech companies, which have pushed back on Trump tariffs for years. They say now is the time to lift what amount to taxes paid by U.S. consumers on modems, network technology, cable and much more. Tech association ITI, in seeking the relief, cited its members’ “crucial role in facilitating a comprehensive U.S. response to the COVID-19 crisis, from manufacturing critical healthcarerelated devices and components, to supporting social distancing policies while providing products and services for telework, remote learning and telehealth arrangements.”

But Trump has signaled the China tariffs aren’t going away anytime soon, pointing to them in one of his COVID-19 briefings when asked what the U.S. response should be to China’s alleged downplaying of the impact of the virus there.

Cable operators and local franchise authorities continue to spar over the FCC's decision that in-kind considerations in franchise agreements count toward the statutory on such fees.

At issue is the status of franchise agreements in place when the decision became effective and the impact of the FCC's deregulatory decision.

Following that August decision, the National League of Cities, United States Conference of Mayors, the National Association of Regional Councils, the National Association of Towns and Townships, and the National Association of Telecommunications Officers and Advisors asked the FCC to stay that decision that any in-kind services or equipment local cable franchising authorities (LFAs) require cable operators to provide count toward the FCC's 5% (of cable revenues) cap on franchise fees charged by the LFAs. 

After the FCC's Media Bureau denied a request by those LFA's that the order be stayed, NCTA-The Internet & Television Association sought clarification of language in that stay order that NCTA said conflicted with the original decision.

NCTA said that the FCC stay denial order’s statement that “[t]he rules in the Order
did not supersede provisions in existing franchise agreements," with language in the Third Report and Order that 'expressly preempt[ed]' obligations on cable operators
that contravene its terms as of the effective date of the Order.

In the latest twist, LFA's told the FCC this week that that NCTA had "grossly mischaracterized" an legal alert sent to local governments about the issue.

It said that while NCTA alleged that the alert informed governments that the stay denial provided justification for LFA's to "to refuse to renegotiate unlawful franchises and to improperly extend the imposition of excess franchise fees in clear contravention of the Order.”

Instead, said the LFA's, the alert simply informed them that the current franchise agreements remained in place until a cable operator affirmatively challenged them and sought to renegotiate.

WASHINGTON — Federal Communications Commission chairman Ajit Pai’s ongoing efforts to deregulate broadcasting in the face of increased competition were dealt a big blow last week, a hit that puts the brakes on that effort and could call into question the just-approved Nexstar Media Group-Tribune Broadcasting merger.

The 3rd U.S. Circuit Court of Appeals on Sept. 23 vacated the Pai-led deregulatory 2017 order that allowed combinations of TV stations, radio stations and newspapers in a singep market; for dual station ownership in smaller markets; and for the same company to own two of the top four-rated stations in a market.

The court invalidated those changes because it said the FCC had not sufficiently explored how deregulation would impact station ownership by women and minority group members, something the court had instructed the agency to do the last time it ruled the FCC had not sufficiently justified deregulation.

Cable operators weren’t joining the parade of consolidation critics crowing over the decision, but they have had issues with the power they say FCC deregulation has given broadcasters in retransmission-consent negotiations, so they weren’t complaining either.

JSAs in Jeopardy

One broadcast deregulation advocate pronounced the ruling as the death knell for the various sharing arrangements — joint sales agreements ( JSAs) and shared services agreements (SSAs) — that cable operators have argued allow TV stations to skirt ownership rules and gain untoward leverage in negotiations. They also said it would end any thoughts Pai might have for loosening the 39% national ownership cap.

It could also, conceivably, throw a monkey wrench into Nexstar’s purchase of Tribune stations. While that deal has closed, it included some elements that were only allowable under the looser rules that have now been invalidated. A 30-day window to file petitions to reconsider the deal remains open.

Common Cause, one of the parties to the legal challenge, told Multichannel News it was examining “all the implications it opens up for potential action on past mergers,” which could include Nexstar-Tribune.

A spokesperson for Free Press — one of the Nexstar-Tribune’s biggest critics, though not a party to the media ownership suit — said it had no plans to challenge the deal.

The court instructed the FCC to do some real diversity due diligence before trying to deregulate broadcasting again, but Pai instead vowed to appeal and blamed the court for refusing to let the FCC modernize the regulations to meet the marketplace.

“It’s become quite clear that there is no evidence or reasoning—newspapers going out of business, broadcast radio struggling, broadcast TV facing stiffer competition than ever—that will persuade them to change their minds,” Pai said.

FCC chair Ajit Pai said he has circulated for a vote at the November meeting a media ownership item that would achieve major broadcast deregulation.

It would eliminate the newspaper-broadcast crossownership rules, the radio-TV crossownership rule, the eight-voices test for duopolies, the attribution rules for joint sales agreements (by concluding they serve the public interest), and "finally, finally," Pai said, establish an incubator program for new, diverse entrants.

Pai outlined the item at a House Communications Subcommittee hearing Wednesday (Oct. 25). The committee was prepared for the bombshell.

"It’s curious that this hearing is scheduled for today in particular — just one day before Chairman Pai is expected to make public at least one proposal that enriches a single company above others, and that would clear out any last obstacles to Sinclair Broadcasting’s purchase of Tribune Media Company," said ranking member Rep. Frank Pallone (D-N.J.).

Pai has long signaled such deregulation was coming, likely before the end of the year, and broadcasters have long pushed for such deregulation, arguing it was designed for a marketplace without MVPD and online competition.

Commissioner Mignon Clyburn, who was also at the witness table, said the proposal was to get rid of the best of broadcast regulations.

House Democrats on the panel suggested the dereg was yet another thumb on the scale for the Sinclair-Tribune deal.

A determined, almost combative, Pai said that the text of the decision would be published Thursday, calling it "news that's fit to print."

Comments were coming in fast and furious this week on the FCC's review of all its media-related regulations.

The FCC voted May 18 to launch a review of all its rules and regs applying to media outlets, broadcast, cable and satellite. FCC chair Ajit Pai promised to bring out the regulatory weed-whacker, and drew plenty of volunteers to start it up.

The National Association of Broadcasters focused on reforming or eliminating "reporting, recordkeeping and filing requirements."

That includes (1) reducing the frequency of ownership reports, providing more flexibility in meeting children's TV requirements, simplifying attribution rules, and eliminating reporting requirements for "paper copies of numerous broadcaster contracts already identified via other FCC requirements; (2) an annual report on ancillary and supplementary digital TV services by thousands of stations that do not provide these services; and (3) the EEO Mid-Term Report, which requires the submission of information already available in stations’ online public files."

NAB wants broadcasters to have the flexibility of filing more public notices online, including their must carry/retransmission-consent elections instead of having to send them to cable ops by "snail mail."

"As an initial matter, NAB wants to make clear what broadcasters are not through this initiative," the group said. "Local radio and TV stations are not seeking any diminution in their obligations to serve their communities of license. Rather, broadcasters support an updated regulatory regime enhancing local station's ability to serve their listeners and viewers more effectively in today’s competitive media marketplace."

Content creators associated with the major broadcast nets -- Disney/ABC, CBS, Fox, Univision (also members of NAB) -- put in their pitch for clearing out the regulatory "underbrush," including children's TV programming mandates on broadcast and cable when such programming is readily available, and not regulated, on the internet. They want the FCC to reconsider the prohibition of including web links in programs targeted to children, and the prohibition on broadcast host selling -- a character in a cartoon appearing in an ad in that cartoon -- to online platforms.

To make the point of the need for pruning outdated regs, NCTA: The Internet & Television Association, used an old typewriter font for the into to its comments, saying, "Back when many of the regulations addressed in these comments were being considered, this is how our filings at the Commission looked."

The NCTA had plenty of asks, including revising children's advertising limits, eliminating annual cable system reports, reducing the "burdens" of leased access rules, clarifying program-carriage rules, restoring the "proper scope" of program access, and more.

The FCC sought input in a Notice of Inquiry. The NCTA said it should convert that to a Notice of Proposed Rulemaking and start clearing the underbrush.

The Radio-Television Digital News Association told the FCC that it should eliminate the "telephone broadcast rule," which requires that broadcasters inform any party to a recorded conversation of the intention to air it unless there should be a presumption that the conversation is being broadcast or is likely to be.

"[T]here are so many pervasive means through which a recorded telephone conversation may be disseminated for public consumption that to perpetuate a broadcast-only rule under the guise of protecting privacy is nonsensical," it said.