WASHINGTON — A new Government Accountability Office report concludes that the FCC conducted limited analysis of the need for set-top box regulations before proposing some, and that most experts and stakeholders it consulted for the report “said that further regulations for this purpose were not needed, given recent changes in the video content market.”

That pretty much squares with the view of the current Federal Communications Commission chair, Republican Ajit Pai, who is unlikely to exhume a previous effort to unbundle cable channels for easier online access.

Related: Pai Pulls Set-Top Proposal

Nineteen of 35 experts the GAO turned to found further regulation of set-top devices was not needed. Eight said they were needed, and the rest provided “uncertain” responses or did not comment, per the GAO.

Widespread changes in the video market in recent years have expanded consumers’ choices of video services as well as devices to access those services, the report noted, something the FCC would be well served studying in a “comprehensive analysis,” the GAO said.

Pai pushed back on efforts by his predecessor, Tom Wheeler, to impose new regulations on set-tops. That effort, which drew widespread protest from programming providers and others worried about the impact of government interference with carriage contracts, eventually failed when Wheeler could not secure three Democratic votes. Commissioner Jessica Rosenworcel had issues with the regulations’ impact on content protections.

Read More: Complete coverage of the Tom Wheeler FCC's proposed set-top rules

The GAO study was based on research data, interviews with the 35 stakeholders who filed comments with the FCC (12 MVPDs, five video content producers, three device manufacturers and 12 industry associations among them), as well as with 11 industry analysts and experts identifed in news coverage.

Former chairman Tom Wheeler's proposal to revamp set-tops is no longer on the Federal Communications Commission's list of items on circulation to be voted by the other commissioners.

Top House Republicans had asked him to close the book on the proposal, which he and they had opposed. Neither Pai nor fellow Republican Michael O'Rielly were likely to vote on it anyway, but the move makes it official that it is no longer in front of any of the commissioners for a decision.

The Motion Picture Association of America, which had opposed the plan over concerns with the impact on copyrights of inserting a standards body into an MVPD-supplied app approach to creating competition in video navigation, was pleased.

READ MORE:About the FCC's set-top box policy making.

"The MPAA applauds FCC chairman Pai’s decision to pull the set-top box proposal from circulation,” MPAA chairman Sen.Chris Dodd said in a statement. “As the creative community has made clear from the start, we support competition within the set-top box market, but not at the expense of copyright policy or the livelihoods of millions of American creators. We are grateful for the support from more than 200 Republicans and Democrats in the House and Senate, senior leaders of various government agencies, civil rights and free market organizations, and virtually the entire creative community, including majors and independents, music groups, advocacy organizations, and unions and guilds that collectively represent hundreds of thousands of creative professionals. We are proud to be joined by so many in standing up for copyright and the rights of creators.”

Wheeler proposed requiring MVPDs to make data and program info available to third parties -- devices, then apps -- allow a better co-mingling of traditional and online video. But there was pushback from Republicans and Democrats over issues of copyright protection and the FCC's role in approving an app-based approach to accessing the MVPD content, so Wheeler could not get three votes for the item before time ran out on his tenure, though it still remained on circulation for a vote.

House Energy and Commerce Committee Republicans have formally asked Federal Communications Commission chairman Ajit Pai to close the docket on the set-top box proceeding because it is no longer under active consideration, and because it “remains an unnecessary regulatory threat to the content creation and distribution industries” and casts a “shadow over investment and innovation.”

This is a wise, pro-competitive, pro-property rights and good government request from Congress to the new Pai FCC.

The FCC should efficiently utilize this decision opportunity to employ the statutory sunset provision in the law to permanently sunset and remove this unnecessary and serious regulatory threat to competition, copyrighted contractual content and its creation, investment, and innovation. It surely is among the top 75% of regulations that the Trump Administration has targeted for removal.

The FCC can justify its sunset of the Section 629 set-top box provision based upon the rich and overwhelming official FCC evidentiary record of:

• The video-related competition documented in the FCC’s Jan. 17 video competition report;

• The still-fresh 2016 FCC set-top proceeding record that provided copious evidence that video-related markets are fully competitive;

• The FCC’s June 2015 ruling “that cable operators are subject to Competing Provider Effective Competition” exempting cable from regulations; and

• The accurate and prescient competitive analysis and approach in the FCC’s 2008 approval of the XM Radio-Sirius Satellite Radio merger that correctly recognized that Internet-delivered content revolutionized how people access and consume content overall and flooded the market with new competition.

The Section 629 provision was written in 1996. when cable still was still largely a monopoly. The evidentiary record today, 21 years later, proves the markets fully competitive and the provision obsolete.

This provision of law included a total sunset provision precisely because Congress anticipated that the 1996 Telecom Act’s overall purpose of deregulation to promote competition would in fact succeed, and enable the technological innovation and competition that eventually would make Section 629 obsolete and sunset-able.

That eventuality is now. Consider this summary of the evidence that these are fully competitive markets.

In 2016 and 2017, the FCC has documented that most Americans have three-plus wireline video distributors and seven-plus choices when wireless is included. That’s far more than any country in the world. 

It spotlights a plethora of new online video distributors and competitive alternatives like Netflix, Amazon Prime, Google-YouTube, Dish Network’s Sling TV, Verizon Wireless’s Go90, AT&T’s DirecTV Now, CBS All Access, Hulu, HBO Now, Showtime and Starz, among others — comprising about 70% of downstream Internet traffic in 2015, per Sandvine.

As for competition for navigation devices, more than 200 million Americans watch their video content on smartphones and tablets, and even more do if one includes laptops and desktop computers.

In short, the markets for video distribution and navigation devices are fully competitive; deregulating will promote competition, as it has before; and that is in the public interest.

Continue reading this blog at at PrecursorBlog.com, where it was originally published.

Scott Cleland served as deputy U.S. coordinator for international communications and information policy in the George H. W. Bush administration. He is president of consultancy Precursor LLC and chairman of NetCompetition, a pro-competition e-forum supported by broadband interests.

New FCC chairman Ajit Pai is a long and strong opponent of FCC chairman Tom Wheeler's proposal to revamp the set-top box marketplace to boost online video competition, and would be unlikely to exhume that push, but the Republican leadership of the House Energy & Commerce Committee want him to put a nail in the coffin.

In a letter to Pai Wednesday (Jan. 25), Energy and Commerce Committee chairman Greg Walden (R-Ore.), Communications Subcommittee chairman Marsha Blackburn (R-Tenn.), Energy and Commerce Committee vice chairman Joe Barton (R-Tex.), and every Republican member of the Communications Subcommittee asked him to officially close the docket on the proceeding.

"The regulatory overhang of the set-top box regulation has cast a shadow over investment and innovation in traditional video programming delivery," they said. "[w]e urge you to close the proceeding and permit the industry to innovate and serve consumers free from the restrictions of a government-chosen platform."

They said it would generally be a good idea to close all inactive dockets. and that in this particular case it should be closed as an "unnecessary regulatory threat to content creation and distribution industries" and to signal to video program distributors "that they can bring technological advances to set-top boxes and video delivery without fear that the Commission overturn them by regulation."

FCC chairman Tom Wheeler proposed requiring MVPDs to make data and program info available to third parties, first devices, then apps, to allow a better co-mingling of traditional and online video. But there was pushback from Republicans and Democrats over issues of copyright protection and the FCC's role in approving an app-based approach to accessing the MVPD content, so Wheeler could not get three votes for the item before time ran out on his tenure.

Chairman Pai’s office said it was reviewing the letter.

FCC chairman Tom Wheeler told Congress, or at least one congressman, in late October that he still believed he could find agreement on a set-top box revamp.

That came in an Oct. 21 letter to Rep. Keith Ellison (D-Minn.).

Wheeler had to pull the set-top item off the September public meeting agenda after failing to secure a Democratic majority for the item, and continues to try and get that majority for the item, which is currently on circulation for a potential vote outside a public meeting.

"I have long felt that consensus is within sight and will continue in this quest," Wheeler told Ellison.

Read more about the FCC's set-top rules proposal.

Wheeler has since signaled that he is hopeful he will get a vote by the end of the year. the chairman has not said when he would leave the commission after the election.

That could depend on whether Democratic Commissioner Jessica Rosenworcel stays on. She has to leave at the end of the year unless she gets confirmed, which would leave the commission with a Republican majority if Wheeler also left.

Rosenworcel has been re-nominated and unanimously endorsed by the Senate Commerce Committee, but her Senate confirmation vote has been held hostage to a  fight between the Senate majority and minority leaders over process, promises and politics, a fight that has spilled over into holding up bipartisan telecom regulation.

Hardly had the FCC voted to approach one contentious item -- the broadband privacy order -- when FCC chairman Tom Wheeler had scheduled a vote on another -- the business data services (BDS) proposal.

The BDS item had been circulated for a vote by the commissioners, which meant it could have been voted out of the public eye.

But according to the tentative agenda for the agency's Nov. 17 public meeting (which can change if recent past is prologue), a vote has now been scheduled.

It is billed as light-touch regulation for competitive business broadband providers -- like cable ISPs -- and updated price cap regs for the incumbent telcos.

Not on the agenda was a public vote on the set-top rules revamp. That, too, was circulated for a vote among the commissioners, but given all the attention from stakeholders and the Hill and calls for transparency, it would likely be scheduled for a meeting vote,

Wheeler told reporters Thursday (Oct. 27) that he was still hoping to vote out the set-top item by the end of the year.

Also on the November agenda is a Report and Order on requirements for video-described programming.

The AFL-CIO wants the FCC to publish the text of its latest set-top box revamp proposal.

The chairman has resisted such calls to this point.

In a letter to Wheeler Wednesday (Oct. 26), William Samuel, director of the union's government affairs department, said that if the FCC was to be "fully transparent" it would release the full text of the revised proposal before a vote.

After pulling the item off the September meeting agenda to let commissioners vet some last-minute changes, he did lift prohibitions he had instituted on further meetings with FCC staffers about the item, but stakeholders have argued that given that changes, they didn't know exactly what they were commenting on.

Given the outcry from the political right and left for transparency, the chairman may want to vote the item in a public meeting once/if he gets three votes, but is unlikely to publish the text of what is considered work-in-progress work product until it is voted.

One of the union's concerns, shared by cable operators and studios and some in Congress, is the impact of the proposal on copyright and contract protections.

"The middle class Americans who depend on copyright protections to earn family-supporting pay and the consumers entrusting their personal information with corporations that deliver their entertainment content deserve a voice in the process."

Last month, Samuel wrote the FCC, saying the proposal "seriously undermines important copyright protections that help ensure that the people who work in the film and TV industry receive fair compensation for the work that they create."

WASHINGTON — Ovation TV and Vme TV, both independent programmers, want Federal Communications Commission chairman Tom Wheeler to put out the agency’s set-top box proposal for comment in a further notice of proposed rulemaking so they can see just what the FCC is proposing and allow for a few weeks of comment.

Wheeler has lifted the sunshine prohibitions on contacting FCC officials about the proposal, but not the changes to the item now being hashed out by commissioners. The chairman pulled the set-top plan from the agenda of last month’s public meeting, giving commissioners more time for vetting. However, he has declined to publish the text (it is considered work product until finalized) or to put the latest proposal for out public comment.

Without seeing the details of the new proposal, Victor Cerda, senior vice president of Hispanic-targeted Vme TV, told reporters on a Monday conference call that dealing with Wheeler’s set-top plan has been like “negotiating with a mime.”

Cerda and executives from Ovation, an arts-focused channel, took part in the conference call organized by the Future of TV Coalition (both programmers are members) to talk about their ongoing problems with Wheeler’s plan to “unlock” the cable set-top box. Chief among them is that they aren’t sure what’s in it.

They are sure, however, that if the plan gives the FCC any role in reviewing their contracts with distributors it will be a big problem.

Wheeler moved from an original set-top based approach to making MVPD content available to third-party navigation devices as a way to promote set-top competition. After major blowback from virtually all quarters — including top congressional Democrats — he pivoted to a more app-based approach.

When that approach also drew flak — and it became clear that Wheeler didn’t even have the votes of all the FCC Democrats — the item was pulled from the FCC’s Sept. 29 public meeting agenda. It was put in circulation for a vote, but in an unusual move, the FCC preserved the sunshine-rule prohbitions on contacting FCC decision-makers about the item.

After complaints from Vme and many others, the sunshine-rule prohibition was lifted. But FCC staffers were still limited as to what they could say, prompting Cerda’s comment about talking to a mime.

"We actually sit there and present it and hope from their body language and their questions we can glean some idea of what is being worked into the rule," he said.

Cerda said he had worked on homeland-decurity issues and in government and had not seen this level of secrecy in other contexts where he thought it was more defensible. "Here, dealing with a cable box and television, and this kind of approach … it's just bizarre."

NCTA – The Internet & Television Association had pushed an app-based proposal — Vme TV helped with that effort, Cerda said — but the chairman's variation and its subsequent tweaking was not what Internet-service providers, Vme or Ovation, had in mind due to the FCC's role in contracts.

But their baseline pitch was mostly about transparency. Whatever the FCC is proposing, the networks want to see it and figure out how it affects them. It’s hard to manage through uncertainty, and even harder for independents than large programmers, Ovation general counsel Robert Rader said.

Both Vme’s Cerda and Ovation executive vice president of distribution John Malkin said that the FCC chairman's "trust me" approach to the item did not cut it.

Part of Wheeler's goal with the set-top proposal, he has said, is to making it easier for viewers to find independent programmers in a unified search of online and traditional content. 

Malkins said Ovation knows well the challenge of getting noticed as an independent, a fight the network fights every day. He also said that Ovation is fine with an app-based approach, but the FCC proposal appears to be a threat to the network’s business model.

Malkin said he was "surprised and alarmed at the decision not to share the information about a proposal that has changed markedly, and one that could impact the industry as a whole.

Among the "huge" issues Malkin said they remained in the dark about included: 1) whether the FCC was looking to create a compulsory license — Wheeler says no, but MVPDs and studios have said it sure looks like it; 2) how would contractual protections from networks being dropped or repositioned be conveyed to the new regime, if they would carry over at all; 3) what happens to their advertising; and 4) what does the search model look like and will sites with pirated content be searchable alongside Ovation's acquired or original, licensed content.

Rader said that if contractual protections were not secure, those hard-won elements would go for naught, and that he was concerned by the FCC's "rush and secrecy." Getting in a plug for Ovation’s new series, Versailles, about palace intrigue in the court of Louis XIV, Malkin said he saw parallels with how the FCC was handling the set-top item.

Wheeler has said there has been plenty of time to comment on the various issues in play.

Looking to light a fire under the FCC, a group of 76 organizations have written Chairman Tom Wheeler and the other commissioners to urge them to take action on three items/issues currently before the commission.

Those are the set-top box proposal, broadband privacy and the zero rating plan investigation.

The commissioners are currently vetting an updated set-top proposal, zero rating is an ongoing inquiry, Wheeler has said recently; and broadband privacy is up for a vote at the Oct. 27 public meeting, so it appears to be the closest to action, though Wheeler could add set-tops to the October meeting if he can get three votes for it and though the privacy proposal has been tweaked, it continues to get pushback from industry and some in Congress.

In the letter, they called the three items "big opportunities" to protect consumers. Wheeler has said he wanted to act on set-tops and broadband privacy by year's end, but has not provided a timetable for the zero rating investigation/inquiry.

The FCC is looking into zero-rating plans both on its own dime and in response to a complaint under the Open Internet general conduct standard, which the FCC can use to decide, on a case-by-case basis, that a practice not specifically prohibited under the rules impedes an Open Internet.

Related: O'Rielly Says Zero Rating Plan Has Chilled Offerings

The groups asked the commission to "liberate" those consumers from the set-top "monopoly; "promulgate rules that foster

trust in the integrity of broadband privacy"; and "prohibit abusive data caps and zero rating plans that violate net neutrality."

The set-top proposal would require MVPDs to make their content available to third parties via a device or app as a way to promote competition in navigation devices, and give online video competitors a stronger platform for competing with that MVPD content, both of which are FCC goals under Wheeler.

While the broadband privacy item is scheduled for a public vote, it is unclear when the set-top box order will be voted. It was pulled off last month's meeting agenda and placed on circulation, which means it could be voted any time, though if the chairman does line up three votes, he could add it to the Oct. 27 agenda, which would make sense politically given that both Democrats and Republicans in Congress have called for transparency in how that item is dealt with.

Among the many signatories to the letter, which was dated Oct. 17, are Public Knowledge, Free Press, Demand Progress and the Center for Digital Democracy.

FOR MORE:News on the FCC's set-top box plan

At press time midday Thursday (Oct. 18), no one but FCC chairman Tom Wheeler had voted to approve either the set-top box order or business data services (BDS) combination order and Second Further Notice of Proposed Rulemaking, according to an FCC source speaking on background.

Both items were circulated for commissioner votes, and more work in the case of set-tops after not making it onto public meeting final agendas. Set-tops was circulated back on Sept. 29, BDS on Oct. 6. The chairman's "aye" is implicit in his circulating the items for others' approval, so each needs two more votes, likely only from the two Democrats on the panel.

Both the BDS and set-top items got makeovers after pushback from numerous quarters, and both were billed as more in line with alternative proposals offered up by NCTA - The Internet & Television Association and others. But in neither case were critics assuaged, arguing the items' apparent pivots -- toward app-based and more protective of content and contracts in the case of set-tops, less of an opt-in mandate for privacy in the case of broadband -- were deceiving.

The chairman could still add either item to the Oct. 27 meeting for a public vote, or push set-tops to the November meeting if it still needs work. The October meeting already has a planned vote on the chairman's proposal on a broadband privacy regulatory framework, another item that has drawn a lot of heat from industry and the Hill.

With many Hill Democrats calling for more transparency on the set-top item, holding a public vote on set-tops would be the more politic course if and when the chairman lines up two more votes for that item

The Sept. 29 Federal Communications Commission Open Meeting presented an interesting turn of events for the commission’s set-top box proceeding. After whiffing completely on the NPRM’s convoluted “three flows” approach, commission leadership recanted its opposition to an app-based approach — one that I had been advocating for months — and centered its attention on it.

An apps-based approach also was at the core of what the related industry filed as a compromise plan to achieve resolution of this proceeding. Unfortunately, the leadership did not accept yes for an answer and tried to add a multitude of unworkable provisions to a reasonable plan. In doing so, they found a way to make all interested parties essentially hate the proposal. In reality, it was not just a lack of time that led to the chairman pulling the item off the meeting agenda at the last minute. This proceeding is still plagued by major unresolved issues:

• FCC Control of the Model License and API: Some have proposed replacing provisions in earlier versions that provided explicit FCC review and approval roles with active FCC monitoring and threats of future action if progress is deemed unsatisfactory. For practical purposes, they are the same thing. Preserving any role for the commission is highly objectionable, especially to the content and MVPD communities, because it could potentially alter private commercial agreements without full knowledge or understanding of the entire negotiation and tradeoffs made.

• The Myth of Universal Search: One of the benefits of the item touted by proponents is that it will enable a competitive market in so-called “universal” or “integrated” search apps. This mandate would allow an MVPD’s over-the-top competitor access to all the proprietary information needed to undercut the MVPD’s content pricing to consumers, a truly disastrous outcome. Moreover, since the commission mandates the metadata flow only from MVPDs, not from over-the-top providers, the promise of universal search will be unfulfilled.

• Questionable Feasibility: A key component of this item is a requirement that every MVPD with more than 400,000 subscribers develop and support a native app for every widely deployed operating system. No one even knows how many apps this would be right now. Is it 10? Twenty? The only way to transform this mandate into anything resembling a manageable, realistic task would be to provide a safe harbor for particular widely adopted and available consumer apps so that MVPDs could better manage their scarce software development and support resources.

• Opening the Door to the App Tax: Today, many of the widely deployed platforms usually receive an upfront fee or cut of revenues from software developers to have their apps made available on these very popular platforms. Clearly, MVPDs should not be required to develop either full-featured or consumption-only apps for platforms demanding revenue sharing of any kind. This needs be addressed upfront, not punted to a later date.

• Competition From Pirated Content: Programmers and MVPDs have registered valid concerns that the third-party integrated search engines contemplated by the item would result in pirated content being displayed in search results alongside legitimate MVPD content.

Substantively, the only way to fix the item is to address the key problems and flaws identified above. Only by doing so would a true app-centric approach be workable for most of the affected companies.

Michael O’Rielly is a Republican Federal Communications Commission member.

Last Thursday (Sept. 29), the chairman of the Federal Communications Commission agreed to temporarily delay the clumsily introduced initiative that would insert the FCC into the management of copyrights as well as the distribution and packaging of cable programs. A lot of digital ink has been spilled on the problems with this approach and the cost, pain and confusion it would cause the storytellers that not only create great content, but have developed and supported the cable and satellite industries.

Do not celebrate just yet.  You can take a momentary deep breath after the commission temporarily delayed a vote, but the commission has once again gone behind locked doors to design a new version of the same plan, and indications are that it is once again refusing input from the entertainment community.

This issue involves federal regulation of pay TV set-top boxes. The FCC seems hell-bent on creating a new federal set-top licensing system that would control program distribution. The beneficiaries are clear: a few large tech companies, which will profit by injecting their own advertising and editorial discretion into our programming. 

But their victory will come at a huge cost to the entertainment industry because it upends the licensing and compensation system on which most of our companies depend.

As Martha De Laurentiis, producer of the popular NBC series Hannibal, recently told The New York Times, “Virtually the entire creative community — including actors, filmmakers, screenwriters and production crews all over the country — rejects the Federal Communications Commission’s plan.”

This plan must be stopped.

It is a direct threat to the entertainment community and the people who work in it.  Its impact on quality entertainment, especially entertainment for African-Americans, Latinos and communities of color, will be large.

The FCC needs to hear loudly and clearly that this process must be slowed to allow the entertainment community’s concerns, which include issues that directly affect our viewers, to be addressed.  More than 200 Members of Congress (both Democrats and Republicans) have already called out the FCC over this plan.  So have entertainment unions and civil rights groups concerned about the harm to programming for their communities. 

But more voices need to speak up, which will only happen if we make our voices heard! The commission created its proposals in unprecedented secrecy. That has to change.

The public and the programmers both deserve time to weigh in on crucial areas that the FCC has ignored. There should be no urgency on an issue this complicated.  Far better that the commission take its time and gain additional perspective than to rush into a complex, legally questionable plan.

In addition to licensing and compensation problems, the FCC’s plan has a third major problem: It is so poorly written that it could undercut efforts to curb content piracy. Rampant theft of our work is causing serious harm. Indeed, as De Laurentiis notes, online piracy was a key reason her popular show was cancelled.

What unfortunately seems to be lost on the FCC in its closed-door discussions is that the entertainment industry is already rapidly moving toward giving consumers greater programming access. Consumers have more viewing freedom now than at any time in history and the trend is clearly continuing in this direction.  This is an important message and deserves the cCommission’s attention.

But there’s a crucial distinction between the FCC’s plan and this growing openness. This current trend is fueled by the growth of “TV apps,” which are doing for TVs what mobile apps have already done for our smartphones. With these apps, viewers can watch what they want when they want it, through proper licensed channels.

This helps keep viewers from going to pirate websites and, in turn, helps us earn a fair return for our efforts.

The FCC’s attempt to regulate licensing and set-top boxes involves vague and complex rules guaranteed to spark years of confusion, bureaucratic lobbying and lawsuits. The U.S. Copyright Office, which is another branch of the federal government, has warned openly against the FCC’s effort because of how it would spur piracy.

This entire situation regarding the set-top box vote is creating an aura of confusion around the entire industry, weakening our core business model while we are in the midst of the greatest amount of change in history. Technology and innovation are wonderful for our industry. Ignoring the pillars of copyright and compensation for storytellers is not, not for cable companies, not for the producers who created those stories, and certainly not for the public.

To lead our industry and the nation, the FCC should open the discussions to get to the right answers in the innovative air of transparency, not in the clouded, smoke-filled room of closed-door meetings and back-door politics.

The entertainment community and the viewers it serves have a lot riding on this. The FCC should give everyone time to address these issues before voting on a new plan. Our ability to license and receive proper payment for our work is on the line.  It’s time to make your voice heard at the FCC and in Congress.

Keith Clinkscales is a media entrepreneur and former CEO of Revolt Media & TV.

WASHINGTON — When programmer push came to FCC shove last week, the latter moved.

After announcing a Sept. 29 vote on what appeared to be at least the third iteration of his “unlock the box” set-top plan, Federal Communications Commission chairman Tom Wheeler was unable to get a version of that plan that would secure three votes in time for the monthly public meeting. He pulled it from the agenda at the last minute — some commissioners didn’t learn of it until a half hour before the meeting’s scheduled start.

Wheeler said it was a case of running out of time on edits and content tweaks, but it was clearly also a case of counting votes.

Read more about the FCC's set-top proposal.

While the item was not voted, the chairman put it on circulation. That means if he gets a third vote, it can be approved without a public vote, though that might not sit well with various parties, including cable operators, members of Congress and Republican members of the commission. They were still calling last week for the FCC to publish the text before a vote, preferably in a further notice of proposed rulemaking that would require further public comment.

That doesn’t sound like it is going to happen. Wheeler-said last week the issue had been around for a couple of years, adding, “I don’t think this is an issue where the public has not had an opportunity to express themselves.”

Sources said the chairman had offered up a new version of his plan last week that put some distance between the FCC and oversight of an app standards-setting body, but not enough for programmers or cable operators, and apparently not enough for the third vote he needed, generally believed to be that of FCC commissioner Jessica Roseworcel.

While the chairman’s proposal would have backed off language that had the FCC backstopping license agreements on the front end, it still had a complaint process that would allow the commission to weigh in on “reasonableness” and “competitiveness.”

Programmers made it clear to Rosenworcel that any FCC role in licenses or contracts was still a nonstarter.

So did cable operators. “Heavy-handed government regulation, based on questionable legal authority in a fast-moving marketplace will stop the apps revolution dead in its tracks,” said Comcast senior executive vice president David Cohen following the item’s removal from the meeting docket.

Add a couple more drums to the drumbeat for FCC Chairman Tom Wheeler to publish the text of his app-based set-top proposal as a further notice of proposed rulemaking (FNPRM) so that there could be public comment on plan, which has changed at least a couple of times from his initial "unlock the box" proposal.

On Friday (Sept. 30), Sen. John Thune (R-S.D.), chairman of the Senate Commerce Committee, wrote Wheeler to make that pitch. Wheeler has said that the public has had a couple years to comment, suggesting that FNPRM isn't happening.

“Your new proposal is intended to benefit consumers, yet those same consumers are not currently able to read this far-reaching new plan," said Thune. "For a rulemaking that is expected to take years before it is fully implemented, there is no need or urgency for the Commission to rush behind closed doors to adopt a final order."

That is a reference to the fact that while the item did not get a public vote, it is on circulation, where once it gets three votes it is on the clock and would after a couple of weeks be de facto approved whether the other commissioners had voted it.

"Sunlight in government proceedings is critical for ensuring outcomes that provide the most benefit possible for the American people," said Thune, who also referenced a call by Democrat Tony Cardenas (D-Calif.) for publication.

After the chairman nixed a vote on the proposal at the Sept. 29 public meeting--he clearly did not have the necessary three votes for an item he said was getting some last minute editing and content-tweaking--the calls for him to publish the text grew.

Also on Friday, the Multicultural Media, Telecom and Internet Council (MMTC) echoed that call for public comment. "

Yesterday’s action should prompt the FCC to ask the public for feedback on the current proposal to assist the commissioners in arriving at the best possible result for current and future television viewers, as well as content creators,” said MMTC President Kim Keenan. "The deletion of the set-top box item from the open meeting agenda validates our concerns and provides the agency an opportunity to be more transparent about the details," she said.

FCC chairman Tom Wheeler's pulling of his own set-top rules revamping proposal from a public meeting vote today (Sept. 29) continues to draw strong reactions, including one of praise and relief from providers in the the multichannel video industry.

Wheeler said the item just ran out of time, with a new iteration circulated late Wednesday with changes that still needed discussion. It remains on circulation and could be voted at any time. But its delay was a victory for critics, since remaining on the agenda for the Thursday's meeting would have meant it almost certainly would have the three votes needed for passage. 

Critics of the item were understandably pleased. 

Comcast senior executive vice president David Cohen said pulling the item was the right decision, adding: "It is now critical that the Commission heed the bipartisan calls of dozens of Members of Congress and respected third parties and release its new proposal and associated rules to allow the public to provide comment." (Commissioner Ajit Pai, meeting the press after the meeting, seconded that call for more review and comment.)

Cohen said: "This is an extremely complicated and technical item that should not be adopted without the opportunity for expert and public input. Based on the limited information available from the Chairman’s Fact Sheet and op-ed, a broad range of content creators, civil rights organizations, labor unions, and others have concluded that the Chairman’s new approach does not solve the copyright, privacy, innovation and other significant concerns that were implicated in his discredited original proposal – and suffers from the same legal infirmities."

Programmers this week made it clear that if the FCC remains involved in decisions of an app licensing body, either on the front end via determining standards, or reviewing them -- or on the back end through a complaint mechanism -- they are not going to support it.

"We share the goal of providing consumers more options to access their video services without the need for a set-top box as we are proving through our Xfinity TV Partner Program," Cohen said, "[b]ut heavy-handed government regulation, based on questionable legal authority in a fast-moving marketplace will stop the apps revolution dead in its tracks, and delay consumer choice.”

“The MPAA is pleased that the FCC is taking more time, and we hope they use it to ensure any set-top box proposal remains consistent with copyright policy and avoids harming creators,” said Motion Picture Association of America chairman Chris Dodd. “As the MPAA and its member companies have repeatedly stated over the last year, we support the FCC’s goal of promoting set-top box competition, but we continue to urge the Commission to forge a path that does not undermine the creative economy. Copyright employs more than 5.5 million U.S. workers and generates over $1 trillion in economic value – incentivizing innovation and investment in creative works enjoyed by millions around the world.”

Bob Quinn, AT&T Senior VP of federal regulatory, was also pleased with the delay. “In light of the limited information that has been publicly disclosed, AT&T supports the call for additional review and public comment on the FCC’s modified set-top box proposal," he said in a statement. "We have always said that this complicated technology mandate is unnecessary given the rapidly expanding applications-based marketplace. No FCC proceeding in recent years has drawn more unified opposition and bipartisan expressions of concern." That point has been made from Capitol Hill as well.

"Important questions remain about the scope of the FCC’s authority as well as the complex framework proposed in this item, and about the significant impact it could have on existing statutory privacy, copyright and licensing protections. These concerns all suggest that this proposal needs to be brought from the back rooms of the FCC into the sunlight to ensure that consumers continue to receive the innovative video products the marketplace has already been delivering," Quinn said. 

Applause also came from USTelecom President Walter McCormick. “We’re pleased the commission is taking more time to fully consider the complex technical and legal issues in this proceeding," he said. "The course of action the commission was considering received widespread concern from both sides of Capitol Hill and the creative, content and television industries. We hope the commission will provide a meaningful opportunity for all involved to provide input on any new proposals.”

"I welcome the decision by the Democrat majority of the FCC to pull the item from today's agenda that would have imposed a new regulatory mandate for video navigation devices and apps," said Free State Foundation President Randolph May. "To the extent that commissioner Jessica Rosenworcel's continued concerns about the wisdom of Chairman Tom Wheeler's proposed approach were responsible for deferring the vote, I commend her for this."

The Association of National Advertisers, whose members represent billions of ad dollars, praised the delay.

"The Association of National Advertisers is pleased to see that the FCC is not rushing to judgment on the set-top box issue. As has been advocated by ANA and other industry stakeholders, including members of Congress, we hope that this means that the Commission will publish its proposal with the details before it moves forward, so that interested parties can carefully review the specific elements. We agree with the Commission that this issue merits further consideration and hope this development will allow for more public awareness of their approach and a more useful public comment process. This is a far-reaching proposal with very serious implications."

"Like the FCC, ANA is enthusiastic about the next generation of multichannel television where content will be device-agnostic. However, as we clear the way forward for the next generation of broadcast and cable, the FCC must carefully consider the contract, privacy and copyright challenges that lie ahead. Any proposal impacting the transfer of advertising content must ensure the protection of copyright agreements, especially because of the essential nature of advertising as a funding source for the exponential growth of programming in recent years. We look forward to working with the FCC on these issues on behalf of consumers and advertisers, and together to usher in the next generation of multichannel television innovation.”

Rosenworcel's vote was key, and she has had issues with the FCC's involvement with the app licensing process, contracts and copyrights. 

Opponents of the delay were looking to win another day. 

"We are disappointed by today's delay," said Joshua Stager of the Open Technology Institute. "Congress directed the FCC to end the set-top box monopoly in 1996, and consumers have been waiting ever since. We recognize the desire to get these reforms right, but consumers can't afford to wait another two decades. The FCC must move swiftly and Congress should not stand in its way.”

The National Hispanic Media Coalition, which backs the Wheeler proposal, was not happy.

“While the Commission has promptly followed all Congressionally-designed protocols articulated in the Administrative Procedure Act and may issue its vote at any time, we are dismayed by yet another delay that many in our community cannot afford. A vote to unlock the box is one that will provide relief to millions of families who have paid these unnecessary fees for far too long already.”

With the FCC's vote on "unlocking the apps" set-top proposal a day away, Hill fans of the plan are doing some last-minute pushing.

Following Tuesday's press conference with plan backers Sens. Ed Markey (D-Mass.), Richard Blumenthal (D-Conn.) and Rep. Anna Eshoo (D-calif.), Sens. Al Franken (D-Minn.) and Ron Wyden (R-Ore.) issued statements in support.

"It is long past time to break the stranglehold Big Cable has over their customers through forced set-top box rental fees," said Wyden. "Cable providers should not double dip on customers who are already paying monthly subscription fees for their content. The FCC should act, as directed by Congress, on its authority to create a competitive marketplace that will save consumers money and promote innovation in the industry. Oregonians and Americans should not be held captive by Big Cable’s price gouging. At this Thursday’s FCC Commission meeting I urge the Commissioners to pass Chairman Wheeler’s proposal and unlock the box.”

Franken took to Facebook to try to convince his followers to support FCC Chairman Tom Wheeler's proposal.

"The Federal Communications Commission—or FCC—has said that it’s time to 'unlock the box' and give consumers a meaningful choice in how they access the content they pay for," Franken said. "Instead of renting one of those dust gatherers, consumers would be able to access the full content of their cable subscription via an app—just like Netflix, Hulu, or HBO GO—at no additional charge. That means you’d use the app with your smartphone, tablet, smart TV, or on a device like the Roku, Apple TV, Chromecast, or Amazon Fire Stick. Can you imagine how much easier that would be than the outdated way we’re doing things now? The FCC is voting on the proposal tomorrow, and I really hope they’ll side with consumers and vote to unlock the box."

Wheeler is proposing an app-based approach to unlocking that box, with MVPDs supplying an app to make their content available and searchable alongside over-the-top content.

While ISPs suggested an app-based approach, the FCC's creation of an app standards body and its assertion of authority to modify agreements that are not reasonable or competitive has prompted concerns not only from ISPs and the programmers with which they have contracts, but legislators on both sides of the aisle, as well as app developers and unions and diversity groups.

Federal Trade Commission Chairwoman Edith Ramirez says she has assurances that as part of FCC Chairman Tom Wheeler's set-top rule plan, device makers will be held to the same privacy requirements the FCC can impose on ISPs.

That came in an FTC oversight hearing in the Senate Commerce Committee.

Sen. Jerry Moran (R-Kan.) pointed out that the FCC did not have jurisdiction over device manufacturers and had said the FTC would be able to enforce device privacy on the third parties beyond the FCC's reach. The FCC does not have authority over edge providers or device makers.

Moran pointed out that Wheeler had told the committee that he had worked with the FTC in writing the set-top rules and that they would require manufacturers to comply with privacy rules that the FTC could enforce. He wanted confirmation of that.

Ramirez pointed out that in comments to the FCC on the set-top proposal, it had recommended that those third parties be required to make a "consumer-facing statement" pledge that they would comply with the same privacy rules the FCC can impose on cable companies, which would allow the FTC to take action where necessary.

That is because the FTC can go after violations of that pledge under its authority over unfair and deceptive practices.

Ramirez said Wheeler had indeed indicated his intent to make such a pledge a part of the rules.

The FCC is also proposing broadband privacy rules, necessitated by its reclassification of ISPs as common carriers.

Sen. Ed Markey (D-Mass.) said that given that the authority was clear, the FCC needed to move ASAP to adopt its proposed new regs.

Ramirez agreed that the FCC had primary authority, and agreed it was appropriate for them to put new rules in place.

Asked whether privacy protections should be based on who is doing the regulating or on the sensitivity of the information, Ramirez said that, in general, a harmonized approach to privacy is optimal.

But she also said that "different agencies with different authority will be examining these issues."

Sen. Ed Markey (D-Mass.) and House Communications Subcommittee ranking member Rep. Anna Eshoo (D-Calif.) teamed up to make a last-minute push for FCC chairman Tom Wheeler's latest, apps-based, set-top box proposal.

The FCC is still set to vote on that proposal Sept. 29 despite pushback from some of Markey and Eshoo's Democratic colleagues.

At a press conference on Tuesday (Sept. 27), Markey said the FCC had shown its willingness to address concerns about the initial proposal, had done so in the new proposal by adopting the apps-based approach suggested by ISPs, and that "every month" without new rules is another month of consumers paying exorbitant rental fees for "relics of the past."

Eshoo seemed to signal that programmers were now supportive of the FCC proposal, though she later said she was citing an ex parte from Sept. 22 in which those programmers signaled progress, but still said having an apps licensing body was a nonstarter. Eshoo said that the letter "expresses movement."

The same principal cast on the press call held a similar press conference back in June backing the chairman's initial "unlock the box" proposal.

Joining them in the call were Sen. Richard Blumenthal, who along with Markey has been pushing hard for a set-top rules revamp, along with various public interest group representatives; BET founder Robert Johnson, now heading RLJ Entertainment, and Allison Abner from the Writers Guild of America West (WGAW).

A representative of Best Buy, which would benefit from a robust third-party device market to sell against leased boxes, offered his support for the FCC proposal as well.

Johnson, who is now an online video entrepreneur, has been pushing for the proposal as a way to give online video providers more exposure alongside traditional video fare, while purveyors of that traditional fare are concerned that could threaten the business model and contracts of established diverse programmers.

Wheeler's revised plan would make set-top box data and programming available to third-party apps and navigation devices, as a way to finally create competition to set-tops--99% of those are still rented from an MVPD--as well as giving online video a boost as a competitor to traditional cable and satellite.

Johnson said that just as BET would not have existed had cable not "broken the broadcast monopoly," new over-the-top offerings, like his own, will not be able to flourish unless the FCC eliminates cable's "stranglehold" on set-top boxes.

He said that would allow new diverse voices to flourish. He said he had told Wheeler that the set-top decision is the most important decision the FCC has ever made in terms of enhancing diversity and access.

Asked why the NAACP, Urban League and other diversity groups are not supportive of the plan, Johnson said that he said he didn't think they "quite understand the upside benefits of the apps-based approach," and that some of the incumbents, including BET, are afraid that the a la carte regime the set-top proposal represents will lead to their being dropped due to their cost.

Johnson suggested that while that might be the case, the government should not be choosing winners and loser.

Asked why over 60 of her fellow Democrats have asked the FCC to put out the plan for comment rather than vote on it this week, she said she had talked to some of them and they had a "lack of understanding about the revised proposal and what it would do for their constituents." She said they also did not understand that the new proposal kept MVPD content within the new app, which she said was very, very significant. She suggested the lead on that colleague letter should have said: "Regarding throwing sand in the gears."

Execs with streaming media player Roku met with aides to FCC chairman Tom Wheeler last week to show their support for his apps-based variation on new set/top/navigation device rules and argue that MVPDs having to create apps for multiple platforms should be doable.

They got together with counselor Gigi Sohn and legal advisor Jessica Almond just before the beginning of the seven-day quiet period in advance of this week's planned Sept. 29 vote.

The Roku representatives, including the head of content and general counsel, said they thought Wheeler's plan would "allow for more innovation and encourage greater competition."

MVPDs have argued that the FCC "needs to put limits around [an app] mandate in order to ensure that MVPDs [who are not happy with the latest proposal]  are not unduly burdened with producing apps for untold numbers of native platforms." But Roku told the FCC it doesn't think that platform requirement should be too hard a lift.

"Roku understands that to ensure that MVPD apps actually provide consumers with the same levels of functionality and performance as MVPDs’ set-top boxes, it is contemplated that the standard license will include technical appendices addressing any features unique to a particular widely deployed platform," the company said. "As Roku representatives

explained, establishing platform-specific technical appendices should not be an overly complex matter."

Roku said that "platform" should also be defined narrowly enough so that MVPD's would only have to develop apps for each platform, not every device.

"In other words, a single platform should only be considered to operate on multiple device types when each device using the platform can generally operate the same set of available apps without requiring the apps to be modified or developed differently."

At press time the FCC was still scheduled to vote on the set-top proposal Sept. 29  despite major pushback from many quarters.

Long a favorite of street hustlers, carnival hawkers and con men, three-card monte is one of the oldest games around. According to Wikipedia, three-card monte is a confidence game in which the victim, or mark, is tricked into betting a sum of money on the assumption that they can find the “money card” among three facedown playing cards. It is the same as the shell game except that cards are used instead of shells. The chances of a mark winning are almost nil against a skilled con artist.

In an eerily similar rendition, Federal Communications Commission chairman Tom Wheeler has served up a “compromise” rule on set-top boxes. After the original proposal was met with overwhelming opposition, Wheeler retreated and reconfigured a new version of the same old rule. Much like the dealer in three-card monte, Wheeler has changed the game to appear responsive to the players when, in fact, he still holds the “money card.”

What makes both of these games so interesting is the high level of legerdemain required to pull them off successfully. At the FCC, chairman Wheeler has become adept at the art of appearing to be sensitive to the public. Remember the about-face on net neutrality after listening to the four million comments from the public? The same sensitivity has been attributed to the chairman’s stance on media ownership, mergers and privacy. And then there is the illusion of inclusion the chairman paints when it comes to all things diversity. But these are matters best left to another discussion.

Front and center for today is the set-top box rulemaking, which is set for a decision at the Sept. 29 meeting of the FCC. Sparing the technicalities, here is the bottom line: The new set-top box rules, as proposed, would indelibly change the advertising, content and programming ecosystem that today allows for commerce, copyright and creative protections in the delivery of video on pay television. Stakeholders from Hollywood to Capitol Hill have decried the chairman’s defiance of long-held intellectual property and privacy principles, and his deference to the new technology robber barons on an issue of such consequence to both industry and consumers.

In a polite, but poignant, exchange, both Democrats and Republicans expressed concern in Thursday’s (Sept. 15) Senate Commerce Committee oversight hearing. Ranking member Sen. Bill Nelson (D-Fla.) highlighted lingering contradictions on both copyright and content. Sen. Claire McCaskill (D-Mo.) noted that she had never seen such unanimity of opposition from providers and consumers, who do not usually agree. Other senators raised similar concerns over FCC jurisdiction in privacy, copyright and authority to get involved in a federal licensing regime.

In question after question, the senators wanted to know how flexible Wheeler might be in forging a meaningful compromise on set-top boxes. After all, there is universal agreement that consumers demand cost relief, and the market demands competition, as contemplated by Section 629 of the Communications Act. In answer after answer, the chairman nodded to the principles of competition and consumer choice, but appeared steadfast that his approach is best. Earlier, committee chairman John Thune (RS. D.) pointed out that Wheeler has presided over more divided, party-line, votes in three years than all other commissions in the previous 20 years combined. This, alone, would contend for the erstwhile Dubious Achievement Award.

To be fair though, chairman Wheeler has ushered in several noteworthy regulatory developments during his tenure. Although stalled at a less-than-successful stage, the spectrum incentive auction could result in a new inventory of wireless capability, which, when coupled with progress on 5G, will bring wonderful things to the consumer market. Although contentious, the Lifeline Modernization Program is regulatory rulemaking that’s clearly in the public interest. And, the chairman deserves kudos for his initiative and leadership on security, global and emergency issues across all communications platforms.

It seems chairman Wheeler has the same problem as President Obama when presented a choice to sacrifice existing industries with proven track records in favor of newer, sexier and techier entrants. Broadcasters, cable and telcos have been on the losing end of many of Wheeler’s most significant rules, as opposed to tech. And this has led to criticism of an anti-business — or at least anti-incumbent — bias.

When it comes to the rules on set-top boxes, the growing chorus of content creators, distributors, programmers, advertisers, manufacturers, copyright and privacy advocates deserve a straight answer responsive to their demonstrably legitimate concerns. The chairman has all the cards in hand to toss out a compromise that will allow every player in the set-top game to walk away from the table a winner.

Adonis Hoffman is chairman of Business in the Public Interest and an adjunct professor at Georgetown University. He is the former chief of staff and senior legal advisor to FCC commissioner Mignon Clyburn and author of Doing Good — the New Rules of Corporate Responsibility, Conscience and Character.

On the heels of a letter they joined on asking FCC Chairman Tom Wheeler to release the text of his set-top plan, the bipartisan leadership of the House Judiciary Commmittee have signaled they are going to hold hearings on that plan.

"We will be conducting oversight over this matter in the weeks and months to come," said Bob Goodlatte (R-Va) and John Conyers (D-Mich.) in a joint statement out of the Judiciary committee.

"Regardless of whether one supports or opposes the FCC’s efforts to create set-top box alternatives" [most Democrats and Republicans will say creating set-top competition is a good thing], we have very serious concerns that this should not be accomplished through a compulsory copyright licensing process that may well exceed the FCC’s jurisdiction," said Goodlatte and Conyers."

FCC Press Secretary Kim Hart said the item does not create a compulsory license.

"The proposed text of the FCC’s revised set-top box proposal has not been given to Congress, but published reports indicate that the FCC is considering a licensing body to develop a one-size fits all standard apps license. There are many unresolved questions about this proposal, not the least of which is the fundamental question of whether the FCC even has the authority to create such a regime."

The legislators were echoing a criticism raised last week by Free State Foundation President Randolph May, who wrote that "Mr. Wheeler wants the FCC to intrude by imposing a one-size-fits-all "standard" license that puts at risk copyrighted programming."

Democrat Jessica Rosenworcel, whose vote Wheeler will need Sept. 29, if he sticks with that timetable, which he has pledged to do, has also said she is concerned about the FCC getting into licensing and isn't convinced it has the authority.

Goodlatte and Conyers are also asserting their authority. "We are also concerned that this proposal encroaches upon the Judiciary Committee’s copyright jurisdiction, and may not adequately protect creators’ rights and the contractual rights of parties," they said.

Wheeler indicated Friday he would not be making that plan public before the Sept. 29 vote, and that he was still committed to that date. 

Some Hollywood heavy hitters want the FCC to know that they remain strongly opposed to the app-based set-top proposal FCC Chairman Tom Wheeler introduced last week.

That is according to a letter filed with the FCC in the wake of an FCC oversight hearing in the Senate Commerce Committee Thursday (Sept. 15).

"In response to testimony at [the] FCC Oversight Hearing before the Senate Commerce Committee, the undersigned collectively write to clarify for the record that the undersigned always have been – and remain – strongly opposed to any licensing construct in which the Commission has the ability to alter the provisions contained in any license that permits the distribution of copyrighted video programming," they wrote.

The undersigned being Disney, Twenty First Century Fox, Time Warner, Viacom and Scripps.

The studios did not specify what they were responding to, but in answer to a question from Senator Claire McCaskill (D-Mo.) about copyright licensing and what the FCC's authority was, FCC Chairman Tom Wheeler defended the FCC’s approach to copyright protections. “What the commission is trying to do,” he said, “is not to write copyright policy, but to write a policy inside its authority which does not interfere with existing copyright authority and with the contractual terms that copyright holders do inside that authority," he said, adding: "We worked for months with the copyright holders to try and find the way to do that. We're probably 90% there."

Clearly the copyright holders are on a different page.

"[I]n order to ensure that there is no confusion about our position, the Content Companies once again urge the Commission not [underlining theirs] to adopt any proposal that includes any FCC involvement in the licensing process or that grants the FCC any ability to establish the terms and conditions of a license related to the distribution of content."

An FCC source speaking on background said that by making programmers part of the licensing body, they have a direct say in how the video navigation apps are licensed to third parties and so it would be tough to believe such a licensing body would create a process that does not protect copyrights. They said that licensees will get access to the content only after agreeing not to alter it or the advertising in it.

They said the FCC will have no role or authority over the agreements between the programmers and pay TV providers, but will only review the license to ensure it does not "unreasonable" or stifle competition.

But clearly the programmers see the authority to change those contracts based on the FCC's reading of what is reasonable or competitive as too intrusive.

FCC Chairman Tom Wheeler told the Senate Thursday that he is still open to changes in the FCC's new app-based set-top plan. That came in response, as well as in advance of, concerns expressed by various legislators.

In a Senate Commerce Committee oversight hearing, Wheeler said that they were probably "90%" there on the set-top box item and cited at least one provision -- on contracts between programmers and MVPDs that he said programmers had sought -- that he is willing to pull out if it helps.

Democratic Sens. Bill Nelson (Fla.), Claire McCaskill (Mo.) and Amy Klobuchar (Minn.) all expressed concerns, including Klobuchar about the impact of the proposal on independent programmers. Wheeler countered to Klobuchar that the Writers Guild of America West backed the plan and its impact on independent programmers and that others independents did as well.

Related: Sen. Nelson: Set-Top Plan Needs Work

McCaskill said that she had rarely seen such unanimous criticism of an item, suggesting that signaled that more work clearly needed to be done.

At the hearing, Wheeler quoted Rosenworcel's comment about the need to act on set-tops for consumers. But when asked for her take about the set-top plan, Rosenworcel said that that while set-tops were clunky and expensive -- she said that was her personal as well as professional position -- she had problems with the FCC getting "too involved in licensing schemes" adding that she did not think the FCC had the authority.

Rosenworcel's vote will be needed to approve the item, since the Republicans oppose it in its current form.

Sen. Brian Schatz (D-Hawaii) pressed Wheeler on his openness to modifying the proposal to address what he said were stakeholder's legitimate concerns. Wheeler said he was, so long as it stays true ot the congressional mandate -- to create navigation device competition.

Standing up for Wheeler's proposal was Sen. Ed Markey (D-Mass.). He held up a set-top wrapped in chains and compared that with an Amazon fire stick the size of a pack of gum.

He said the box had not changed and that 100 million pay TV households can't watch their pay programming on the Fire stick.

He said only the FCC can do something about the problem, and that its proposal would free consumers from exorbitant rental fees. "That lack of choice has to end now, Markey said.

Markey asked if Wheeler could find a solution in the next 14 days. Wheeler said he hoped the "significant departure" from structure but not principle that the new apps-based proposal represents, is an indication of how he is willing and seeking to resolve remaining concerns, while chopping the chains from the box.

Wheeler said Comcast is shipping 40,000 of those (chained) boxes a day.

Sen. John Thune (D-S.D.) pointed out that Amazon had registered its own problems with the proposal. He quoted their comment that the proposal would delay competition.

Markey said that was a concern about licensing, and that the licensing board issue could be worked out.

Sen. Richard Blumenthal (D-Conn.), who teamed with Markey to push for set-top reform, also said his state's consumers would stand to save millions of dollars from the FCC set-top proposal.

He said the proposal would simply enforce a law that has been unenforced since the 1990's. He called it a classic inside-the-Beltway vs. consumer issue and labelled set-tops "dollar devourers."

But one industry source pointed out that the law also prevents the FCC from doing some things that the proposal's critics say it would do, per below:

"The Commission shall not prescribe regulations under subsection (a) of this section which would jeopardize security of multichannel video programming and other services offered over multichannel video programming systems, or impede the legal rights of a provider of such services to prevent theft of service."

Sen. Bill Nelson (D-Fla.), ranking member of the Senate Commerce Committee, added his name to those with concerns about FCC chairman Tom Wheeler's apps-based set-top plan revamp.

That came in his opening statement for the committee's FCC oversight hearing, so he delivered that message directly to Wheeler and the other commissioners.

Read more about the FCC's set-top plan.

Nelson said he agreed that consumers needed to be freed from paying "annoying and excessive monthly fees" for set-tops and praising Wheeler for his work in getting the item "so close" to that shared goal.

But he also said shared stakeholder concerns about the item's impact on content protection and said that the item still needed work.

Nelson warned that if the FCC stayed on the present course, he was afraid the item could be tied up in the courts for years and said that the FCC should reach out to stakeholders before acting to "get it right."

The commission is scheduled to vote the proposal Sept. 29.

Wheeler, for his part, said Congress had mandated competition, the FCC had worked for months on the item, then adopted the MVPD proposal of an app-based approach, but that MVPDs had been playing rope-a-dope with that mandate for years and that it was time to act.

In a phone conversation with the top aides to FCC Chairman Tom Wheeler, Amazon execs have warned against inserting a government committee into what should be a marketplace-driven regime.

Following criticism of his "unlock the box" set-top proposal, Wheeler last week unveiled a new, app-based plan for providing competitive video navigation, but would do so under the auspices of a standards committee over which the FCC would have oversight.

According to an ex parte filing with the commission, Amazon execs told Wheeler aides that "a well -functioning market solution—and not a government -supervised industry committee—is the appropriate solution in the first instance.  If examples  of market failure arise, then a complaint process can be used to address related concerns."

The Amazon execs said MVPDs should be able to participate in the current, existing, open, app market, rather than under a new government regime. 

"Millions of app developers already work productively within this system," they said, according to the document. "In this context, there is no need for app licensing terms to be determined by an industry group subject to Commission oversight. The process to create such a license and oversight body will delay competition and delay customers from receiving the MVPD services they already pay for on the device of their choice."

App developers have also raised concerns about having a standards body, overseen by the FCC, overseeing the apps MVPDs would supply to third parties.

Amazon said that if the FCC is concerned about MVPDS imposing unfair terms and conditions, "it could create a complaint process through which an aggrieved party could file a complaint about unfair terms and conditions."

Wheeler has scheduled the set-top proposal for a vote at the Sept. 29 open meeting, but ISPs and programmers are pushing back--they favor and app-based approach, but not the standards body--including with Commissioner Jessica Rosenworcel, who has had issues with the proposal from the beginning. While voting for the rulemaking proposal, she said changes needed to be made and was getting the full court press from Hollywood last week with the message that changes still were needed.

FCC Chairman Tom Wheeler’s proposed set-top box rules seemingly follow an apps-based approach that's been preferred by cable operators and other traditional MVPDs, but that doesn’t mean Comcast is happy about it, either. 

The MSO held that the rules would impose an “overly complicated government licensing regime,” have the reverse effect on the thriving apps-based market, and exceed the FCC’s authority.

Here’s the full statement from Comcast:

“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.  He claims that his new proposal builds on the marketplace success of apps, but in reality, it would stop the apps revolution dead in its tracks by imposing an overly complicated government licensing regime and heavy-handed regulation in a fast-moving technological space. 

The Chairman’s new proposal also violates the Communications Act and exceeds the FCC’s authority.  It perpetuates many of the concerns that led hundreds of Members of Congress, content creators, diversity and civil rights organizations, labor unions, and over 300,000 individuals to object to his original flawed approach, including problems with privacy, copyright protection, content security, and innovation.  Heavy-handed government technology mandates have a long history of failure.  The Chairman’s approach would likely meet the same fate, while causing real damage to the thriving apps marketplace and real harm to consumers.”

FCC Chairman Tom Wheeler has issued proposed set-top box rules that aim to bring more choice to the video market and reducing the need for consumers to rent out devices from MVPDs.

The proposal, billed as “simplified consumer-first, app-driven” rules and one that seemingly favors the approach preferred by cable operators, telco TV providers and satelite TV providers, will be voted on by the commission at its next open meeting, set for Thursday, Sept. 29.

RELATED: Wheeler Proposing Set-Top Standards Enforcer

In a fact sheet outlining the details of the proposal, the rules, if adopted, will give the largest U.S. pay TV providers, serving 95% of the nation’s pay TV subs, two years to come into compliance.

RELATED: Comcast Blasts Set-Top Rules Proposal, Says It Exceeds FCC’s Authority  

More specifically, large providers will have two years to comply, while medium-sized MVPDs will get an additional two years. Smaller operators (those with fewer than 400,000 subs), will not be forced to comply, but can provide apps and software “as appropriate for their business.” 

According to the proposal, the rules will require pay TV to offer consumers a free app, controlled by the MVPD, to access all the programming they pay for on a variety of devices, including tablets, smartphones, gaming systems, streaming devices or smart TVs. That, in turn, will mean consumers are no longer required to rent boxes from their provider. Notably, the proposed rules do not address data caps.

Pay TV providers are also required to provide their apps to widely deployed platforms, such as Roku, iOS, Windows and Android. FCC officials said the definition of widely deployed means operating system that has had shipments in the U.S. of at least 5 million devices during the previous year. 

RELATED: FCC’s Magical Number: 5 Million

The rules also call on MVPDs to support integrated search for linear and VOD, alongside other video services accessible on the device, such as OTT offerings. Pay TV providers would also be barred from discriminating search results or promoting the pay-TV app over other sources of programming in the search function.

MVPDs must also provide consumers with “an equivalent ability to access content via the pay-TV app as they have in the set-top box.” Because the aim is to replicate all elements of a pay TV provider’s service on qualified retail devices, the apps must also comply with existing consumer protections such as emergency alerting, privacy and accessibility functions.

One potential snag with the FCC’s proposal is that MVPDs don’t have digital rights for all programming, making it difficult to replicate the full pay TV service on an app. FCC officials said the proposal requires that MVPDs treat programmers the same on a set-top as they do on apps, believing that the rules will spur the two sides to come together to do deals that bring unify the rights for set-tops and apps. Given that the largest MVPDs have two years to comply, "they have plenty of time to do that outreach,” FCC officials said. 

To address copyright and carriage contract concerns, the proposed rules require that pay TV content will only be opened by the pay TV app using the “robust security protocols already built in to pay-TV apps.” Additionally, programming will continue to be controlled by the pay-TV provider from end-to-end, protecting content and maintaining all contracts and agreements currently in place, the proposed rules say.

The pay-TV’s software will also manage the full suite of linear and on-demand programming licensed by the pay-TV provider, and the existing distribution deals  and licensing terms between MVPDs and programmers will be unchanged.

Standard License

The FCC’s proposal also will pave the way for a “standard license” that governs this process for placing an app or device on a platform, with programmers having a “seat at the table to ensure that  content remains protected.”  The FCC will “serve as a backstop” to keep tabs on the process to that nothing in the standard license “will harm the marketplace” for competitive video devices.

The rules also aim to be “technology-neutral,” meaning they won’t mandate a specific standard for app development, though MVPDs must make apps for devices that meet the “widely deployed” threshold in the rules. 

According to FCC officials, the licensing body will create a standard license that “governs the rules of the road” for any device or platform that wants access the MVPD apps. However, the FCC does propose, down the line, to retain some oversight over the licensing bodies.

That’s because “[W]e learned our lesson in CableCARD,” officials said, holding that cable operators were able to “manipulate the licensing process” and tamp down true competition for devices. 

FCC Officials: Apps Approach Will Meet Goals 

FCC officials were also asked why Wheeler went with an apps-based approach and seemingly abandoned an alternative idea that identified three “core information streams” (service discovery, entitlements and the video programming itself) that would need to pass from MVPDs to the device maker. Cable operators, telcos and satellite TV providers favored the apps angle, while many CE-focused companies, including Google, wanted rules based on the three-stream proposal. 

FCC officials said that the original NPRM sought comment on a number of alternatives, which were vetted by the Downloadable Security Technical Advisory Committee (DSTAC) and presented to the FCC last fall, and found that the MVPD-controlled apps approach was aligned with the goals of the initiative, and made those goals easier to achieve than the alternative, and vehemently disagreed with the notion that the current proposal represents a “significant retreat” from the three-stream idea. 

What About Satellite?

FCC officials also recognized that satellite TV providers, which don’t have inherent two-way connectivity into the home, have a “unique architecture” and that, in order to comply with the rules, will likely need to deploy and maintain one box – and only one box – inside the customer’s home that can talk to retail video devices.

But the proposed rules likewise leave it up to the MVPD how they deploy an architecture that fits within the scope of the rules. The proposal doesn’t dictate one technical approach over another to support apps, and provides enough flexibly in cases where in-home equipment is required, FCC officials explained. 

FCC chairman Tom Wheeler is putting the final touches on a set-top box proposal that would create a central licensing agency to oversee standards for an apps-based approach to third-party access to video content.

Cable operators are not pleased, saying they are committed to licensing an app on reasonable terms, but that the FCC plan would create a new compulsory license.

The standards body would have to years to come up with a standard license and would enforce it, though the FCC would review its work and put it out for comment, according to an ex parte filing by the National Cable & Telecommunications Association and sources talking with FCC staffers.

The FCC would set the baseline terms of the license and be able to eliminate terms that did not promote device competition.

Read more about the FCC's efforts to create new set-top rules.

Device makers over a certain size would be eligible for the license and could negotiate additional terms with MVPDs, who would have to develop an app for the device. If an MVPD felt the terms were not doable, it could seek a waiver from providing an app for that platform.

The license would apply to both HTML5 and non-HTML apps.

Wheeler is trying to promote a competitive set-top marketplace, so MVPD apps would have to offer parity with the consumer set-top experience to the degree technically feasible. That would include things like channel lineups and recording, which MVPDs could handle via cloud DVR capability.

Cable operators with fewer than 400,000 subs would be exempt, while those with more than 400,000 and less than 1 million would get a phase-in.

MVPDs would have to let third-party devices access consumer data and would have to build in an opt-in choice in the apps for sharing personal information.

NCTA pitched an apps-based approach and wants channel lineups protected, but the centralized standards body enforcing the licenses did not sit well with the trade group.

In  a meeting with FCC staffers, NCTA execs said the proposed licensing body approach is "unnecessary and unworkable; exceeds the Commission’s authority under Section 629; essentially imposes a royalty-free compulsory copyright license on MVPDs and programmers, which would also be well beyond the Commission’s authority to adopt; and raises other legal issues."

The NCTA said MVPDs are commited to offer a standard license on reasonable terms, so a standards licensing body is unnecessary.

Wheeler is expected to bring up the proposal for a vote at the FCC's September meeting. The agency will circulate on Sept 8 its tentative agenda for the meeting.

The cable industry’s regulatory environment has heated up in the past year, with potential new set-top-box rules and the Federal Communications Commission’s decision to back off on retransmission-consent reform just the latest in a long list of cable-centric rules that could place undue burdens on operators large and small. While limited resources would make it hard for small, independent operators to fight lengthy regulatory battles, they have the American Cable Association to do it for them.

As The Independent Show in Orlando, Fla., drew near, ACA president and CEO Matt Polka spoke with Multichannel News senior finance editor Mike Farrell about how small operators can deal with the changing climate. An edited transcript follows.

MCN Independent Operators of the Year:WideOpenWest Covers Its Bases | Buckeye: Building on Broadband

MCN:What are the biggest issues for small operators going into the show?

Matt Polka: The theme of the show is, “Refocus and Reconnect.” I think that is appropriate in many ways. I would also say recommit. We’ve never had a year like this where we are under such enormous regulatory strain, where the types of important rulemakings that are moving at the commission, each on their own, could have a significant impact on our members’ ability to deploy more broadband service. We’re telling our members to refocus, reconnect and recommit, so you can be strong in the face of this storm.

As part of that recommitting, we’re saying, “Recommit with us at ACA so your voice can increasingly be heard.” We’re also telling our members to look at their customer service as a key differentiator that will help them maintain a strong positon and will also keep them from scrutiny.

A couple of weeks ago, Sen. [Claire] McCaskill (DMo.) and Sen. [Rob] Portman (R-Ohio) had a hearing regarding customer service for primarily the larger MVPDs. And while that hearing wasn’t focused on our members, it’s a good lesson to never ever take anything from a customer-service perspective for granted, [to] ensure that we as cable operators are presenting the best cable customer service we can provide and demonstrating that value that we are a vital connection to the community.

There are four primary issues from a rulemaking perspective: The set-top box rulemaking; the rulemaking on business data services, otherwise known as special access; the broadband privacy rulemaking at the FCC; and then just the implementation of Title II. Each one of these is a specific regulatory effort — although [with] Title II, the FCC hasn’t said what it might do yet — each one of those areas are crucial because of the cost impact to comply with the regulation, man hours, paperwork hours, the diversion of resources from deployment of broadband service to what we see as needless regulatory compliance.

MCN:It seemed like all of the indications pointed to the FCC finally doing something on the retransmission-consent reform front. How will inaction affect the industry going forward?

MP: Based on even as late as late last week [July 15] meetings with the bureau and other commission staff indicated there was going to be an order. For [FCC chairman Tom Wheeler] to say, “Nah, I don’t think so,” we’re shocked by that. I think what it’s going to mean — this isn’t the year when most agreements come up, it’s next year — unless something changes at the FCC or at the Hill, we’re going to see the impact of basically an unfettered broadcast industry that has carte blanche to do whatever it wants. That’s not a result that anybody wants.

Related >It’s a Small World After All: A Q&A With the NCTC's Rick Fickle

MCN:This year is an election year. Does that mean even more change is in store for the industry?

MP: We’re looking ahead to what’s going to happen in 2017. Heavens knows what is going to happen in the presidential elections. We’re going to have to deal with a new administration, most likely an interim FCC chair and then a new FCC chair. There will be a new head of the Energy & Commerce committee in the House because of term limits there; it’s unknown whether the Senate is going to flip from Republican to Democratic and whether [Democratic] Sen. [Bill] Nelson from Florida will be the chairman or [Republican] Sen. [John] Thune from South Dakota will remain the chairman.

We’re telling our members regardless of all of this uncertainty in the political environment, we at ACA are well-positioned because we’ve done the homework, we’ve done the grassroots, we’ve done the groundwork, so regardless of these possible changes we can stay focused on our policy objective moving forward.

One of the big issues that remains is whether [FCC Democrat Jessica] Rosenworcel is renominated and how that could affect the commission, and whether chairman Wheeler, as is tradition, steps down. There could be some bills on the Hill passed during the lameduck session, like an enhanced transparency exemption extension bill.

The Senate not too long ago passed a small-business broadband bill that increased the number of subscribers that subscribe to an ISP from 100,000 to 250,000 to comply with the FCC enhanced transparency requirements. That bill is likely to get passed at year-end. The rest of the Hill agenda for this year is kind of cloudy.

MCN:Small operators have been very outspoken over the years on a lot of regulatory issues. Could consolidation change that?

MP: It remains to be seen what impact consolidation will have on our segment of the industry. I do see some strategic combinations of our members that help to provide maybe better operational control within a particular area. It really remains to be seen whether some of the large interests have any interest in acquiring our members.

The truth of it is, I don’t care who you are, Mediacom, Cable One, WideOpenWest, that’s still really small. Even if you combine some of the larger smaller ops, you’re still tiny compared to Charter and AT&T and Comcast. If there is any consolidation, I tend to think we’ll still be fighting for the same issues.

MCN:One issue that small operators have been especially vocal about over the years has been forced bundling by programmers. Now that larger operators have taken up the skinny-bundle mantle, do you think we’ll see some traction there soon?

MP: I do. We’ve always comically but also seriously at the ACA called ourselves the canary in the coal mine. What has happened is whether it is retransmission consent or problems of cable programming choice or lack thereof, or other issues, is that larger MVPDs have gravitated toward us as they have seen in their own companies with much greater scale the need for relief and reform.

As those companies bring their greater influence to bear, it complements what we at ACA have been doing for years quite well because we compare and contrast on the same track to say the market has changed; the regulations that were once needed aren’t needed anymore with the dynamic, changing marketplace; and that government should release the straps of regulation and let the market decide.

FCC staffers had some follow-up questions for cable operators and other backers of the "ditch the box" app-based alternative to creating a retail market in video navigation devices.

Those include what search info will be available via the app, whether data caps will apply to  and whether the app will be available to non-MVPD subs.

That is according to a copy of an FCC document obtained by Multichannel News. The questions were under the heading of "clarifications" of the National Cable & Telecommunications Association's framework.

FCC staffers had already submitted a raft of questions. Those were sent out before the stakeholder meetings to help frame those discussions. With those meetings over, these are the questions still outstanding from FCC staffers, an FCC official confirmed on background.

FCC chairman Tom Wheeler said last week that he thought the proposal was more press release than plan, and that the FCC was trying to get more info on it to be able to vet it.

The FCC official said the follow-up questions had been sent out last Friday (July 11) and the FCC was looking for answers by Thursday (July 21).

Here is what more the FCC wants to know, under the heading of "Clarifications Regarding the NCTA Framework":

1. "Because consumers will continue to pay their subscription fee to an MVPD, will MVPD apps be free to consumers, and will they be usable without additional equipment provided by an MVPD?

2.  "Since the app will replace a consumer’s set-top box, will it also provide the same video service available in the MVPD’s set top box, i.e. all the channels a consumer subscribes to, all the video on demand a consumer has access to, and all the video service functionality provided by the set top box?

3.  "Since press reports indicate Comcast is currently installing 40,000 X1 set-top-boxes per day (Bloomberg Business Week June 23) and quote the company that “the set-top box will eventually get ditched, but that’s not going to happen soon” (Fierce Cable July 14), will the functions of an MVPD set-top box be the same as those described for apps in your proposal?

4. "The framework speaks of fully integrated search. Will the MVPD app provide the following data to the search function using a standardized API:

  a. "Which content is included in a consumer’s subscription

  b. "Program title, season, episode information, channel number, start and stop times for linear content

  c. "Price

  d. "Accessibility information

  e. "Resolution

  f. "Authenticated link to the content for non-linear content

5. "Will the app be available and fully functional (including integrated search) to consumers who choose a different internet service provider than their pay-TV provider?

6. "Since many programmers are exploring their own app, will the license terms allow a device’s universal search to include the apps of programmers on an equal and non-discriminatory basis with the apps of MVPDs? Will data caps apply to content provider apps?

7. "Does the framework anticipate that standard terms and conditions of the license between an MVPD and a device will be disclosed or remain confidential? Should the license be filed with the FCC?

8. "Will the terms and conditions of the license include non-discrimination provisions to ensure that consumers can select any device they wish?

9. "Will programmers have a fully participatory role in the licensing body to ensure the final terms and conditions and any enforcement of the license adequately protect content?

10. "Do the license terms envision sharing access to permitted usage information with content providers?

11. "Since Section 629 of the Act provides that consumers should be able to use whatever device they want to access their MVPD subscription, will the MVPD apps be available to platforms or devices that use:

  a. HTML5

  b. Android

  c. iOS

  d. Widely deployed web browsers

  e. Any other widely deployed operating system or platform"

12. "Does the framework envision that inclusion of content or a channel in an app should not result in a charge to the programmer?"

Democratic Whip Steny Hoyer (D-Md.) is looking to whip the FCC's set-top box proposal into shape by finding some common ground between unlocking and ditching the box.

In a letter to FCC Chairman Tom Wheeler, Hoyer said a worthwhile goal would be retiring the "clunky and costly set-top box."

He said Wheeler's "unlock the box proposal" was commendable for ambitious goals, but cited the concerns, including from Congress, about its "practicality and unintended consequences. Wheeler's proposal is to make MPVD's set-top content and data available to third party navigation device providers.

Stoyer called MVPD's app-centric, "ditch the box" proposal a constructive approach.

He also pointed to the "grave risks" of piracy or of eroding consumer's right to privacy. Both issues programmers and MVPDs have been raising about the FCC proposal.

Stoyer said that "some level of openness" should be required to allow for universal search, but not at the expense of consumer privacy. He also said rules should be "flexible and dynamic."

Wheeler last week said he was glad stakeholders were talking about his proposal, but suggested they had to be dragged to the table and indicated he still had issues with "ditch the box" and lots of questions that still needed

FCC chairman Tom Wheeler made it clear that what he likes most about the National Cable & Telecommunications Association's "ditch the box" set-top proposal was that MVPDs and programmers were at least talking about finding common ground.

In a press conference following the FCC's monthly meeting Thursday (July 15), Wheeler did not talk much about the proposal itself, declining to elaborate on what more he wanted MVPDs to explain about the proposal--though the FCC has signaled a bunch of issues in questions staffers submitted to those MVPDs, as Multichannel News/B&C reported last week.

Instead, the chairman highlighted the fact that they were finally talking.

"I am grateful to the industry that they accepted my invitation," he said. "I have been saying for weeks if not months: 'Let's sit down and talk...and it was being met with a stiff arm."

He said that the discussions he has since been having with MVPDs and programmers (and consumers) were all important. "So, I am very happy about the kind of ongoing dialogue that is occurring around this issue because it wasn't occurring previously."

Wheeler said set-top box leasing was a rigged system, and that whatever the answer, it needed to give consumers meaningful choice while protecting copyright, and contracts and privacy and security.

"We are in discussions to find out where we can have an accord," he said. "I think that is a responsible and meaningful thing to do."

Newport, R.I. – The set-top box competition proposal at the FCC weighed heavily on the opening of the New England Cable Telecommunications Association convention here, with one speaker calling it “an existential threat to the cable industry” and another saying “the loser in this [FCC] approach is the American consumer.”

The speaker seeing the existential threat, Charles River Associates senior consultant Stanley Besen, called the plan by Federal Communications Commission chairman Tom Wheeler “bad economics” that could “sever” the business relationships between programmers and video distributors. 

He said the FCC should embrace the cable industry’s proposal to let programmers get integrated into pay-TV systems via apps and then “declare victory and go home.” But the agency seems intent on changing the way programming is delivered, he said.

The second speaker, Comcast senior executive vice president David Cohen, agreed with Besen that Wheeler’s proposal – to enable over-the-top providers to gain access to set-top data – could “blow up the cable content ecosystem.” If so, he said, that “could easily result in lesser quality of programming, higher prices and a significantly worse consumer experience.”

The Comcast top policy executive (who said this was his 14th year in the NECTA opening panel) cited encouragement cable has received from Verizon and Google to the apps-based “ditch the box” proposal. He also said “consumers don’t view this as a burning issue,” having not weighed in heavily with comments and with more comments opposing Wheeler’s plan than supporting it.

Beyond the set-top proceeding there also are big policy concerns for non-video parts of the business, which are growing faster than video, he said: the broadband data privacy and special-access proceedings under way at the FCC that target high-speed data and business services.

Cohen said the proposals were “ideologically based attacks” by the Obama administration that pose “grave risks” to the cable industry and “something we need to pay attention to for the next six months.” 

Atlantic Broadband CEO Richard Shea agreed the pending FCC actions – which might get bogged down in an election year – was worrisome because of the threat to the important business services segment for the first time. “For either one of those to come into full force would have a very chilling effect for us,” he said.

Later, Cohen said with the election of a new president, administration and FCC in 2016, it "needs to be a huge priority for our entire industry, to press the re-start button and begin to rebuild a constructive relationship between our federal government and our industry." 

Asked by the moderator, CNBC anchor Ron Insana, about the surprise Pokemon Go phenomenon, Cohen said it was a good reminder that millennials are key to driving the business and of “the importance of innovation.” To the latter point, Comcast is working hard on immersive virtual reality applications for viewing the Olympics, he said. That won’t attract a significant audience in 2016 but will grow to becom an important application at the 2020 Games, he said. 

“We have to be innovating the next things that will make people love and want our products and services, even though we have no idea what they are today.”

The Consumer Video Choice Coalition -- comprising Google, INCOMPAS and others -- has some bones to pick with cable operators' "ditch the box" alternative to the FCC's "unlock the box" set-top proposal.

Chip Pickering, CEO of INCOMPAS, said in a blog post that the cable proposal represents progress, but it still has a ways to go.

Read the "ditch the box" compromise proposal.

"The cable industry’s recent proposal makes some forward progress," he wrote, adding he also saw some "key" shortcomings, including:

• "It blocks future innovation. People don't want to go from a closed box to a closed app.

•  "It takes a step backward on functionality: Cable's proposal is only for streaming boxes, not DVRs ... meaning consumers would still need multiple devices.

•  "It lacks enforceability. Having been fooled before by cable promises, the FCC must take action to ensure competition, comply with the law."

FCC staffers have a bunch of questions for cable operators about the "ditch the box" proposal as well.

Click here for more coverage of the FCC's set-top plan

WASHINGTON — Video-streaming device maker Roku has concerns about the FCC’s plan to unlock set-top boxes, but it also has issues with the cable industry's box-ditching, apps-based plan.

In meetings with top aides to Federal Communications Commission chairman Tom Wheeler about the National Cable & Telecommunications Association’s app-based proposal, the company said, “While Roku continues  to believe that the commission’s  current set-top box rulemaking efforts could be counterproductive,” it is concerned that the cable alternative would create HTML5 as the de facto video distribution standard.

“Such an approach would be ill-advised given that consumers have clearly demonstrated their preference of an array of devices with diverse user experiences,” the company said.

FCC staffers vetting the MVPD proposal have suggested that HTML5 “may be an appropriate platform for app developers to provide access to content.”

But Roku has little good to say about HTML5, at least as a potential standard: “HTML5 is a bulky and expensive architecture that would require third-party device manufacturers to include additional processing power and memory to support it, even in their lowest-priced device.”

The device maker says that whatever the FCC decides to do about promoting a competitive market for third-party video access devices, it should gave these features:

Multiple apps: If the FCC takes an apps-based approach, it should not make HTML5 the preferred or mandated option, but require MVPDs to support any widely deployed platform.

No third-party in-app development: The FCC should not allow MVPDs to support third-party app development within MVPD app, which it says would defeat the purpose of promoting third parties as competitors. “MVPDs should remain free to offer other apps that provide access to third-party apps, but such apps would not satisfy the Commission’s set-top box requirement,” Roku said.

Direct delivery: MVPDs should be required to support content provider apps “that deliver content directly to users who are paying for such content as part of an MVPD’s programming package,” along the lines of the TV Everywhere model but with a more seamless form of authentication, the company said.

Metadata: Make sure MVPDs provide "rich" metadata for searching and browsing.

Nondiscrimination: The FCC should adopt a general non-discrimination standard to ensure MVPDs can't adopt practices that make a user’s experience on a third-party navigation device different from that of their own.

Disputes: Create a streamlined process for enforcement and resolving disputes over whether MVPDs are actually supporting the third-party platforms the FCC is trying to promote.

WASHINGTON — Federal Communications Commission chairman Tom Wheeler will face a House Communications Subcommittee FCC oversight hearing this week (July 12), and probably some grilling on the status of his controversial “unlock the box” proposal.

Rep. Frank Pallone (DN. J.), chairman of the subcommittee and ranking member of the House Energy & Commerce Committee, is one legislator likely to be looking for progress on a “ditch the box” compromise proposal from cable operators that could potentially reunite his fractured subcommittee. FCC staffers signaled last week there are points of agreement, but also sought many clarifications.

Cable operators and other stakeholders have been meeting with Wheeler’s office after it became clear that the chairman did not have a lock on three votes for his original proposal to make set-top data and programming available to third parties.

The set-top issue continued to draw a crowd last week, particularly after Comcast and Netflix announced that Netflix would be available on Comcast’s X1 platform.

Easier access to both traditional and online fare is one of the big drivers behind Wheeler’s proposal.

Read more about the FCC's proposed set-top rules.

Pallone has a particular interest in seeing movement on a proposal that both cable ops and the FCC could sign off on, and Wheeler has said he was looking forward to engaging in a “constructive dialogue” with stakeholders.

Pallone signaled to Multichannel News in an e-mailed statement that he likes the direction set-top box compromise talks are taking, so long as the final destination is consumer-friendly and protects content.

“One thing everyone can agree on is that our set-top boxes can be clunky, bad for the environment and expensive,” Pallone wrote. “The recent proposal from industry and the reaction from the FCC has brought us closer to a positive resolution.”

The FCC-industry talks followed the introduction of an apps-focused “ditch the box” compromise proposal by the National Cable & Telecommunications Association and others, as well as the signal from Democratic commissioner Jessica Rosenworcel, whose vote is needed to pass a final order, that the FCC needs to find another route to the shared goals of competition for leased set-tops and access to over-the-top content.

Pallone is said to be focused on a couple of things: first, protecting content, and second — as ranking member — reuniting committee Democrats split over the FCC’s set-top proposal.

New York Democrat Yvette Clarke, for example, has pushed back strongly on the FCC plan, while House Communications Subcommittee ranking member Anna Eshoo (D-Calif.) has tried to marshal her colleagues’ support for the proposal.

While Comcast’s agreement to add Netflix to its video navigation platform might suggest the marketplace is already wedding traditional and online content without the thumb of government on the scale — something cable ops have been arguing — backers of Wheeler’s original set-top proposal wanted to make sure that was not the takeaway.

“We think that in a competitive market, consumers shouldn’t have to look to special deals between large companies like this just to access video programming from multiple sources all in one place,” said John Bergmayer, senior staff attorney for Public Knowledge. “A competitive market will deliver lots of video apps on many different devices.”

The Consumer Video Choice Coalition, which has been pushing for the proposal, said: “Yay, Comcast customers can now watch Netflix! Now what’s wrong with unlocking the box and letting consumers watch the rest of the Internet as well?”

Pallone is looking to the July 12 oversight hearing for some encouraging words about compromise. “I look forward to continued discussion on this topic at the FCC Oversight hearing,” he told Multichannel News.

If the FCC can work out a compromise with industry, the hearing would be a good place for Wheeler to signal it is in the works — or that at least a compromise is a possibility.

The FCC may have already signaled that there is hope. Staffers have sought answers from cable operators on a host of key points in the ditch the box proposal, and signaled there are many general points of agreement, according to a copy of staff questions obtained by Multichannel News.

“FCC staff continues to meet with a wide range of stakeholders to discuss the industry’s proposal,” said a Wheeler spokesperson. “While conversations have been constructive, there is more work to do to fully understand the scope of the proposal and clarify important details. Our goal is to find the best path forward to ensure that consumers finally have the competition and choice they deserve.”

WASHINGTON — After weeks of heated opposition, it appears that Federal Communications Commission chairman Tom Wheeler does not have the votes to pass his set-top box reform plan — at least as originally proposed.

The proposal, which would require multichannel video programming distributors (MVPDs) to make their programming and data streams available to third-party devices and app developers, has taken shots from all sides — now including both the Senate majority and minority leader.

Wheeler, a Democrat, has said from the outset that he was willing to tweak the set-top plan if there were a better route to his goal of a competitive market in third-party video access devices — ideally a path that allows for access to both traditional video and the over-the-top video he sees as a key new competitor.

But cable operators were unconvinced, saying they feared Wheeler’s words were more talk than action and the item would pass pretty much as proposed.

The proposal was approved 3-2, on a straight party line vote, and while Democratic commissioner Jessica Rosenworcel voted with the majority, from the outset she said she had issues the plan.

DEMOCRAT CALLS FOR CHANGES

Rosenworcel last week said she remains optimistic that the FCC and the pay TV industry can find a way forward on set-tops to promote a competitive marketplace for navigation devices, but signaled that the problems with Wheeler’s proposal have become clear, as has the need for changes.

Rosenworcel was responding to a flurry of activity that surrounded the proposal, including efforts to block it in Congress via an appropriations bill; “ditch the box,” a National Cable & Telecommunications Association-backed alternative to the chairman’s “unlock the box” proposal; and the Motion Picture Association of America’s support for working with the FCC to resolve copyright issues.

“Set-top boxes are clunky and costly,” Rosenworcel said in a statement provided to Multichannel News. “Consumers don’t like them and they don’t like paying for them.

“Kudos to the chairman for kicking off this conversation [Rosenworcel voted along with Wheeler and Democrat Mignon Clyburn to kick off that conversation], but it has become clear the original proposal has real flaws and, as I have suggested before, is too complicated,” she added. “We need to find another way forward.”

Rosenworcel wasn’t explicitly advocating for the cable industry’s “ditch the box” effort. Rather, she was supporting efforts to find some variant of a compromise proposal that addresses the Wheeler plan’s flaws.

“I am glad that efforts are underway to hash out alternatives that provide consumers with more choice and more competition at lower cost,” she said.

Rosenworcel voted to approve the notice of proposed rulemaking (NPRM) proposing the set-top unbundling, but from the outset she suggested it was a work in progress that needed more work.

The set-top plan suffered another blow when Sen. Harry Reid (D-Nevada), the Senate’s minority leader, wrote Wheeler last week to say he thought the proposal did not sufficiently protect programmer contracts or consumer privacy, points that MVPDs have been making pointedly.

OPEN TO ‘DITCH’ PITCH

Even the chairman seemed eager to seek more common ground.

In his first public statements on cable operators’ proposal to “ditch” the set-top box, Wheeler said he was glad the industry offered up the compromise, but suggested it indicated that many of the problems those same parties had with the initial proposal weren’t problems after all. In a Q&A following a speech at the National Press Club on 5G wireless broadband, Wheeler was asked about the cable-backed effort.

“I think it is absolutely terrific that the cable industry came forward with this proposal,” he said. “I have been asking them to do this, and I think that by coming forward they indicated that a lot of the arguments that had been put up against our set-top box proposal really fell by the wayside.”

But he also said that the cable proposal indicated that copyrights and privacy can be protected, that small networks can continue to thrive and that providers’ networks don’t have to be redesigned to do all that.

Wheeler said he wanted to now engage in “constructive” dialogue on how to write the specific regulations to achieve those ends.

Asked if the set-top proposal was in trouble, FCC press secretary Kim Hart responded: “Chairman Wheeler has repeatedly said he is interested in a constructive dialogue with his FCC colleagues and all stakeholders to reach the best result for consumers. He welcomes the feedback to his proposal to give consumers new options for accessing the content they pay for, and he looks forward to engaging in continued conversations to inform the final rules.”

Internet giant Google, which pushed for the set-top proposal, echoed Wheeler in calling the cable-operator alternative “a constructive effort towards the goal of more competition and consumer choice,” adding, “We hope that it sparks a dialogue between the FCC and interested parties to reach a good outcome for American viewers.”

One MVPD executive said all that activity points to more than just more dialogue.

“I’ll let you determine whether chairman Wheeler’s proposal is dead,” said the executive, who asked to speak not for attribution. “But Google is now giving up the fight, Senator Reid’s letter was pretty strong and Commissioner Rosenworcel from the get-go called it too complicated and recently said it has real flaws.”

Senate Minority Leader Harry Reid (D-Nev.) has asked FCC Chairman Tom Wheeler to make sure that consumer privacy and program content are protected in the set-top box proposal.

Wheeler has said they will be, but has not convinced cable operators, many Republicans and some in his own party, that his proposal to "unlock" the set-top will do so.

Add Reid to that list.

"I am concerned that your proposal does not contain mechanisms to ensure that third-party set-top box providers will be required to adequately protect programming content or consumer privacy," he wrote Wheeler, according to a copy of the letter obtained by Multichannel News/B&C.

Related: Rosenworcel: FCC Needs ‘Another Way Forward’ on Set-Tops

Senate Majority Leader Mitch McConnel (R-Ky.) has already told Wheeler he thinks the chairman should rethink the proposal.

Reid is concerned that the proposal, as drafted, does not specifically extend contractual protections of programming to those third parties, saying that programmers "do not rely on copyright laws alone to protect their content."

Related: Wheeler: Set-Top Proposal Doesn't Undercut Copyright

He said it is not clear what, "if any" duty third parties would have to protect content or honor contracts. "As a result," he wrote, "programmers may be forced to rely primarily on costly and lengthy litigation to protect their content." That is one of the arguments cable operators have made in opposing the proposal. Another is that third parties are more interested more in the data than the device. Reid agrees.

"[I]t has become increasingly clear that, for third-party box providers, the real value is not in producing or selling the box but in the data that the box will collect," he said. "Consumers will be handing over a significant amount of information about their viewing habits and, as the television interface is used more expansively, about themselves."

The FCC has authority over MVPD consumer data collection, it does not over edge providers. Wheeler has proposed making adherence to those MVPD-like privacy protections the quid pro quo for getting access to the programming and data streams. But that voluntary approach does not sit well with MPVDs, nor with Reid, who says it could leave the FCC "in the position of mandating privacy protections that it has not jurisdiction to enforce and leaving consumers without any meaningful remedy."

Reid said Wheeler needed to resolve those issues before moving forward with a vote on a final order.

Related: NCTA Pitches 'Ditch the Box' Set-Top Proposal

FCC commissioner Jessica Rosenworcel is optimistic that the FCC and industry can find a way forward on set-tops to promote a competitive marketplace in navigation devices, but signals that the problems have become clear, as has the need for more work on the proposal.

That proposal is to require MVPDs to make their program and data streams available to third-party devices and app developers to promote competitive alternatives, including wedding traditional and over-the-top content.

Rosenworcel was responding to a flurry of activity last week that surrounded the proposal, including efforts to block it in Congress via an appropriations bill, a National Cable & Telecommunications Association-backed "ditch the box" branded alternative to the chairman's "unlock the box" proposal, and the Motion Picture Association of America's support of working with the FCC to resolve copyright issues.

"Set-top boxes are clunky and costly," Rosenworcel said in a statement provided to Multichannel News/B&C. "Consumers don't like them and they don't like paying for them," she added. "Kudos to the chairman for kicking off this converation [Rosenworcel voted along with Wheeler and Democrat Mignon Clyburn to kick off that conversastion], but it has become clear the original proposal has real flaws and, as I have suggested before, is too complicated. We need to find another way forward."

She was not endorsing the cable effort, but instead appeared to be supporting the effort to find a compromise proposal that addresses the flaws.

"I am glad that efforts are underway to hash out alternatives that provde consumers with more choice and more competition at lower cost."

FCC Chairman Tom Wheeler applauded the NCTA-backed compromise effort Monday following a speech at the National Press Club, though he, too, suggested it was part of a continuing conversation rather than a solution.

Rosenworcel voted to approve the notice of proposal rulemaking (NPRM) proposing the set-top unbundling, but from the outset she suggested it was a work in progress that needed work, which was clear from her statement at the public meeting where the item was voted.

"Important questions have been raised about copyright, privacy, diversity-and a whole host of other issues in a marketplace that has been tough for competitive providers to crack," she said back in February. "We will need to explore them in the record that develops.... This rulemaking is complicated. It describes three information streams for navigation services, work that needs to be done by standards bodies, a medley of security systems, and a trio of parity requirements. The most successful regulatory efforts are simple ones. More work needs to be done to streamline this proposal, because in the end for consumers to enjoy the bounty of what we have proposed execution is all."  

Related: Senate Appropriations Passes Set-Top Pause Provision.

Even as ISPs were pushing a new proposal on set-top boxes in hopes of heading off FCC Chairman Tom Wheeler's proposal, the Republican-led Senate Appropriations Committee was charting its own route to heading off the FCC's "unlock the box" brand of promoting competition.

The committee approved a fiscal year 2017 FCC appropriations bill that would require the FCC to conduct an impact study before voting on Wheeler's set-top plan, which is to require MVPDs to make their programming and data available to third-party navigation devices and apps so it could be searched alongside over-the-top content. The goal is to promote a retail market in third-party devices given that 99% of subs still rent a box from their MVPD.

The House Appropriations Committee last week passed its FCC appropriations bill with the set-top pausing rider. Now Senate Republicans have followed suit, much to the chagrin of set-top proposal backers. 

“We are disappointed by the Appropriations Committee targeting the FCC for working to protect consumers, as Congress directed," said Kate Forscey, government affairs associate counsel for Public Knowledge. "This attack is a rider which attempts to stymie the Commission’s ongoing proceeding to ‘Unlock the Box’. The rider hitched onto this bill would further forestall a truly competitive video marketplace, for which consumers and creators yearn and which the FCC now stands poised to deliver."

“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," said Computer & Communications Industry Association Ed Black. "It makes no sense to use a backdoor 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?”

CCIA members include Google, Netflix and Amazon.

As the executive director of the public-access center serving Fairfax County, Va., I have been closely following the reaction to the Federal Communications Commission’s proposed set-top box rules and have concern regarding the likely consequences of these rules.

As many have pointed out, a set-top box provides the subscriber’s first and most immediate point of contact with the cable provider. As The Wall Street Journal reported on Feb. 3 and April 27, regarding Comcast’s greatest quarterly subscriber and revenue success in almost 10 years, Comcast CEO Brian Roberts attributed this achievement to both investment in customer service and technical innovations — giving much credit to the Comcast X1 set-top box.

Comcast’s innovative X1 box provides an “enhanced customer experience” — one significant enough to reduce churn and enable the significant net gains achieved by Comcast in the first quarter. Other MVPDs also realize the significance of the opportunity provided by set-top boxes. In fact, Cox Communications, one of our highly valued local MVPDs, will lease the X1 box from Comcast, providing it to its subscribers.

In the Feb. 3 article on the net gain in Comcast video customers, the Journal reported: “Comcast was able to, at least for now, defy the industry logic that cord-cutters are increasingly abandoning pay TV. It has been investing in customer service and in its set-top box and guide, which it says encourages customers to watch more TV and makes them less likely to cancel service.” (Emphasis added.)

As such, the FCC’s current proposal to require MVPDs to develop an open architecture for their set-top boxes, thereby allowing third-party vendors to offer set-top boxes directly to the MVPD’s subscribers, appears to pose a direct threat to the cable industry’s ability to provide enhanced customer experiences through innovation in advanced set-top boxes developed by providers. Thus, it’s a direct threat to reversing the multiyear industry decline in net gains.

Public, educational and government (PEG) access executives and leaders should recognize the need to join the creative unions (SAG, AFTRA, I.A.T.S.E.), the Directors Guild of America, the Communications Workers of America, programming copyright holders (including the major movie studios), the Congressional Black Caucus, the MVPDs themselves and others in opposing the set-top rules before the FCC issues a final order on this matter.

Yes, the reduction in fees that subscribers currently pay to MVPDs for monthly set-top boxes would have an immediate negative financial impact on those PEG entities that receive a percentage of those fees; however, more importantly, if issued in a final FCC order, these rules would jeopardize the current ability of MVPDs to create the above discussed enhanced customer experiences through new, innovative set-top boxes. That would most likely result in significant damage to the cable industry as a whole, lowering the tide for all involved.

The above, coupled with legitimate concerns regarding the ability of third-party set-top boxes to secure copyrighted programming, ad overlays and the utilization of subscriber information obtained via third-party boxes, should cause concern for the very health of the cable industry.

Cable provides a unique means for PEG centers to connect with our communities — a unique means of community connection that would be terribly diminished if the industry contracted due to the proposed set-top box rules. To many in the PEG community, at first glance, the proposed “unlock the box” rules appear to be very positive, but there are negative consequences for the PEG creative community should these rules be issued in a final order by the FCC.

Chuck Peña is executive director of Fairfax Public Access in Fairfax County, Va.

WASHINGTON -- A divided House Appropriations Committee Thursday passed an FCC appropriations bill, part of a larger Financial Services Bill, that would require the FCC to pause the set-top box proceeding impact studies were completed, would block broadband rate regulation, would block FCC net neutrality rules until legal challenges were resolved and would require the FCC to publish items 21 days before they were voted on.

Chairman of the Financial Services and General Government Appropriations Subcommittee Anders Crenshaw (R-Fla.) said during the markup that the FCC-related amendments to the bill were a way "to turn the FCC's focus to "mission critical" work and away from politically charged rulemakings."

Ranking member José Serrano (D-N.Y.) called them part of a toxic combination his side had no choice but to oppose.

Serrano and another New York Dem, Rep. Nita Lowey, tried to strip the FCC riders from the bill, but were unsuccessful.

The amendments blocking the set-top proposal and net neutrality, both of which President Obama went out of his way to support, and blocking broadband rate regulation, which Democrats say is overbroad, have little chance of making it to a bill signed into law.

Read more about the FCC's set-top proposal.

The approval came the same day some legislators elsewhere on the Hill were pushing the FCC to move ASAP on the set-top proposal and not delay for more study.

But a pair of House Democrats quickly praised the inclusion of the set-top pause provision in the appropriations bill.

"We commend the Committee for including in the underlying bill, language requiring the Federal Communications Commission (FCC) to complete a study on the impact of its proposed set top box rule on consumers and the telecommunications ecosystem," said Reps. Gene Green of Texas and Yvette Clarke of New York. Clarke, a leader in the Congressional Black Caucus, has called for delaying action until a study of the impact of the proposal on minority programmers. Backers of the proposal say it will help, not hurt minorities, and have criticized Clarke. sometimes harshly, for suggesting otherwise.

"The FCC’s proposed rule has the potential to detrimentally impact consumer privacy, creative rights, diversity of voices, cybersecurity, energy efficiency and the consumer experience," said Green and Clarke. "This is why we, along with 175 Members of Congress, have raised these concerns. In April, 53 House Democrats joined our letter to the FCC, calling for the Commission to push the “pause button” on its proceeding while these serious concerns are thoroughly examined in a peer reviewed report. Regrettably, the FCC seems intent upon moving forward, and has been dismissive of the legitimate concerns raised by Congress, as well as numerous civil rights organizations, content providers, minority programmers, labor unions, and hundreds of thousands of ordinary citizens. We ask why does it appear as though the FCC is so determined to finalize this rule. Given the breadth of opposition and the likely harm that would result to consumers, Congress is right to insist that the FCC suspend its artificial timetable and conduct an independent review that will fully examine the potential unintended consequences that would likely result from the Chairman’s proposal.”

Free Press Action Fund Policy Director Matt Wood was not happy with any of the FCC-related riders.

“Yet again we see the same Republicans ignoring the widespread public support for Net Neutrality rules and pro-competition policies, even though these rules are supported by Republican and Democratic voters alike," Wood said. "These poison pill anti-Net Neutrality riders proved too controversial to make it into the final budget deal last year. But these representatives keep trying to undermine common-sense safeguards for the open internet. Today featured more of the same from a handful of elected officials who are doing the bidding of industry lobbyists dead-set on reversing the FCC’s Net Neutrality order. The representatives voting for these measures care more about protecting cable companies than their own constituents. But the public won’t stand for any scheme to sneak these attacks into spending bills and legislate away internet freedoms."

Get complete coverage of the FCC's set-top proposal.

Public Knowledge, the Center for Digital Democracy and Consumer Watchdog have petitioned the FCC to enforce cable set-top privacy rules against Comcast, AT&T and Cablevision in particular, and the industry more generally, and argue that means mandating an opt-in regime for use of set-top data for marketing purposes.

That comes in a complaint being filed today with the commission, according to a copy provided to Multichannel News.

While the FCC is currently deciding how to apply its MVPD privacy rules to broadband -- including proposing an opt-in regime for some uses -- the groups are suggesting it also needs to apply those rules better to cable ops already under privacy regs. 

They argue that MVPDs are using consumer data for advertising purposes without properly obtaining consumer consent or letting customers know the extent of that information collection. "The Commission should enforce the relevant privacy provisions to ensure that cable operators only use subscriber information when they have the consent required by law," they said. 

They say that cable operators -- they include AT&T and its U-verse video service in that category -- collect and share customer data for targeted ads without sufficient notification to subs. They concede many providers include statements in their privacy policies indicating they use personally identifiable information combined with third-party data for ads, but say those disclosures aren't sufficient to comply with cable privacy rules on set-top info. 

To buttress their case, they cite a June 2015 notice of apparent liability against AT&T Mobility. "The Commission found that when a disclosure deprives consumers of sufficient information to make informed choices and thereby impedes competition in the marketplace, the disclosure is insufficient to cure violations of the Commission’s rules," they said. 

The groups argue that the use of opt-out regimes does not constitute the "prior written or electronic consent" required by the privacy rules, and want the FCC to confirm that.

"[T]the Commission should take the affirmative step of declaring that the use of customer information requires opt-in consent and that absent such consent, cable providers violate privacy rules by collecting customer information and using it to deliver marketing tailored to those customers

The groups want the FCC to address the general practice of cable providers giving advertisers "the ability to easily access and use a customer’s information, without that customer knowing the extent to which that information is being used."

But they targeted their complaint to AT&T, Cablevision, and Comcast, saying they were "among the most egregious" improper users of data. 

“Comcast is committed to the privacy and security of our customers’ personal information," the company said. "This Petition is off base, is misleading on both the facts and the law, and is little more than an attempt to divert attention from a set of flawed proposals that the FCC has put forward on set-top boxes and broadband privacy.  All our privacy practices are fully consistent with the law.  The FCC’s pending proposals on set-top boxes and privacy have drawn widespread criticism and would leave consumers, competition and innovation worse off.”  

Labeling the complaint bogus, AT&T SVP Jim cicconi responded: “AT&T’s use of anonymous and aggregate set-top box information is entirely consistent with the statute. Our disclosures tell our customers exactly how we use that data and provide tools for customers to opt out. Frankly, this complaint is bogus, and seems mainly designed to distract the public from the overwhelming bipartisan opposition to the FCC’s controversial set-top box plan. That plan itself will erode existing consumer privacy protections, not to mention its many other harms. Because the plan’s few remaining supporters have no answer to that charge, they’ve decided to invent a false privacy claim.  This smacks of desperation, and it also carries the whiff of hypocrisy. It’s further proof, if any is needed, that the plan’s supporters have lost the public policy debate on this issue.”

Asked if Public Knowledge wanted the FCC to apply the same opt-in standard for third-parties if they gain access to that set-top-box (STB) info via the FCC's set-top box proposal, SVP Harold Feld said yes. "We want the same standard to apply to all third party set top boxes," he said. "Since that is opt in for cable, it logically follows it would be opt in for any other third party STB -- with regard to the STB data."

"It’s clear that consumer privacy is a meaningless term when it comes to the data practices of multichannel TV phone and cable giants," said Center for Digital Democracy Executive Director Jeff Chester. "They are engaged in a massive exploitation of subscriber data that should really be private. How leading cable and phone companies engage in cross-platform data collection and targeting, with their set-top playing a pivotal role undermining consumer privacy, is reason enough for the FCC to quickly enact chairman [Tom] Wheeler’s ISP proposal."

Not everyone saw it that way.

"Pressing for an opt-in regime is counter to what consumers have come to expect and be comfortable with," says Adonis Hoffman, chairman of Business in the Public Interest and former chief of staff to FCC Commissioner Mignon Clyburn. "Culturally, we have become accustomed to 'opting out' of stuff we don't want.  It is simple; it is easy, and it is ingrained in our digital DNA.  Consumers know how to just say no to the practices and things they do not want--whether it is ads, lists, or solicitations.  And our comfort level has been evolving for years."

Also joining in the complaint and call for action were TURN -- The Utility Reform Network and Consumer Action.

The chair and ranking members of the Senate Regulatory Affairs and Federal Management Subcommittee have asked the FCC to a do a formal cost/benefit analysis on its set-top box proposal before voting on final rules.

In a letter to FCC Chairman Tom Wheeler, chair James Lankford (R-Okla.) and ranking member Heidi Heitkamp (D-N.D.) said that supporting competition was important, they said the proposal could have significant impact on MVPDs in general, and smaller MVPDs in particular.

That latter point has been made repeatedly of late, including by the advocacy arm of the Small Business Administration, a bipartisan group of senators and the American Cable Association.

They said to get a better handle on that, the FCC should conduct a formal cost/benefit analysis.

They said they had heard from a number of small MVPDs in their states, and that "stranded investments and accounting for new compliance efforts...can force them to end the distribution of video services to their customers."

That point has also pointedly been made by ACA.

Heitkamp and Lankford urged the commission to consider doing a qualitative and quantitative cost/benefit analysis during the course of the rulemaking process and include it in the final rule. They also want a clear explanation of how allowing third party access to set-top programming and data will increase consumer choice.

More than two dozen state attorneys general have written the Federal Communications Commission to make third-party, direct-to-consumer privacy pledges part of its set-top proposal.

They said that would be the best way to help states and the Federal Trade Commission to protect privacy by enforcing the laws against unfair or deceptive practices.

In a letter to the FCC last week, attorneys general from 15 states, including from the FCC's hometown (the District of Columbia) and nearby Maryland, assured the FCC that their state consumer protection laws apply to third device manufacturers.

The FCC is proposing to require MVPDs to make set-top box content and data available to those third parties so it can be wed with over-the-top offerings and as, the theory goes, better promote a market in competitive navigation devices given that 99% are still rented from the MVPD.

But the AGs said the FCC should not only require third parties to comply with MVPD privacy protections for their set-top info--like who is watching what VOD movies when--but certify that to consumers.

"[W]e urge the FCC to require manufacturers of third-party set-top boxes to publish consumer-facing statements of compliance with the privacy obligations that apply to multichannel video programming distributors," they said. The Federal Trade commission has made the same suggestion.

FCC chairman Tom Wheeler has said the FCC cannot apply the MVPD regs to edge providers but can make those providers pledge to follow them as a quid pro quo to getting access to that set-top info.

The AGs want that to be a direct pledge to consumers, not just to the FCC or MVPDs, so that violating it runs afoul of unfair and deceptive prohibition practices.

They also added that the FCC should not preempt states' continued jurisdiction over state privacy laws.

WASHINGTON — Rainbow/PUSH founder the Rev. Jesse Jackson, no fan of the FCC's set-top proposal, pulled no punches in a USA Todayonline op-ed published Monday afternoon (June 6), evoking images of snarling does and fire hoses in taking aim at a commission he likened to a recalcitrant southern governor.

He said the Federal Communications Commission’s proposal to regulate set-top boxes — which would require multichannel video programming distributors (MVPDs) to make set-top data and content available to third-party devices and apps, to be wedded with online video offerings — is a “deep threat” especially to smaller, independent and diverse networks and programmers, “who often lack the deep pocket resources to weather this type of transition.”

There are diverse programmers on both sides of the issue. More established networks such as TV One and BET are generally opposed to the new regulations as a threat to their business models, while some over-the-top programmers argue the new rules will provide a way for them to get noticed and draw eyeballs in a media marketplace dominated and controlled by larger players.

Jackson was clearly siding with the TV One camp’s argument. He even cited TV One president Alfred Liggins’s comment that the FCC proposal was “a new form of ‘redlining’ that could bury diversity programming.”

Jackson offered his own harsh assessment. “The FCC cannot be, on this issue, as woodenly unreflective as a Southern governor ignoring the community that he was supposed to serve,” he said.

Jackson echoed Congressional Black Caucus leaders in suggesting the FCC pause the process until studies of the proposal’s impact on diverse programming have been concluded, and to "listen to those who have fought this battle for equality over the decades and in other contexts."

WASHINGTON — The battle over the future of video navigation devices, and the “one ring to unite them all” approach of combining traditional and online video via a single device or app, played out in the FCC’s set-top docket last week — with a definite tilt toward pausing or punting on the proposal.

The Federal Communications Commission received hundreds — perhaps thousands — of pages worth of reply comments on the proposal. The bulk of the commenters clearly appeared at least to have concerns with the plan, and many had much more than that.

Read more about the FCC's set-top box proposal.

FCC chairman Tom Wheeler has signaled the proposal, which would make set-top content and data available to third-party navigation device and app developers, needs to be enacted. But he has also said the proposal is a work in progress and its details may change.

Multichannel video programming distributors (MVPDs), though, are skeptical any changes will be made.

PROCESS COULD BE LENGTHY

The FCC’s Democratic majority has only approved a notice of proposed rulemaking, not an order. And the agency could take its time in voting on a final version, which even then won’t take hold for another year or two.

That timeline is cold comfort to MVPDs that face the prospect of giving up data and content to third parties with essentially only promises that their contracts, and their content providers’ copyrights, will be protected from hackers or pirates, or that competitors can’t monetize their content at will and without compensation.

AT&T was representative of those wielding hammers rather than red flags. The DirecTV parent company called the proposal “indefensible as a matter of law and nonsensical as a matter of public policy,” and an unnecessary, harmful and deeply flawed “scheme.”

The National Cable & Telecommunications Association raised a hammer and a flag: Specifically, it likened the set-top plan to the “broadcast flag” receiver-technology mandate approved by the FCC a decade ago. That mandate was thrown out by a federal court, which ruled that the agency’s reach did not extend past transmissions.

Foes of the set-top proposal were using supporters’ past opposition to that broadcast-flag proposal against them.

The NCTA noted that Public Knowledge, which supports the current set-top plan, opposed the broadcast flag, quoting the public-interest group’s statement at that time: “The market for delivering content digitally over new technologies is working. Consumers can watch and listen to the content they purchase anytime and anywhere they want. All of these great developments happened without government intervention,” which shows that “government intervention in the free market [in this case is] unnecessary.”

Gigi Sohn, then-head of Public Knowledge and now a top adviser to the FCC’s Wheeler, said at the time the flag would give the agency unprecedented power to dictate product design and would cause consumer confusion and cost.

After the flag was thrown out, the NCTA said, “Public Knowledge’s prediction of market successes unshackled by technical mandates came true … The current commission should not make the same mistake again.”

Public Knowledge senior staff attorney John Bergmayer told Multichannel News last week, “The broadcast flag case doesn’t really apply because FCC authority over MVPDs themselves can get to the functionality of competitive devices.”

MVPDs have enlisted, or been joined by, an unusual cross-section of interests, including unions, Congressional Democrats and diversity groups. House Republicans last week launched an effort to block the box proposal via the appropriations process, though it is unlikely to succeed.

OUTDATED TECH MANDATE

While few argue that the set-top market is competitive — 99% of boxes are leased from MVPDs — pay TV providers have described the FCC’s solution as yesterday’s technology mandate for tomorrow’s app-driven navigation marketplace, ignoring the trend away from provider-issued set-top boxes.

Now that replies are in, the next move is the FCC’s, though it is under no obligation to vote on an order.

For example, the FCC voted unanimously in December 2014 to propose classifying some over-the-top providers as MVPDs. The idea was to help promote online video as a competitor to traditional cable and satellite providers.

But after Wheeler got some major pushback, the proposal was put on the back burner and remains there.

Pay TV providers are hoping for a similar result.

A group of senators, including members of the Small Business Committee and a couple of Democrats, have written FCC Chairman Tom Wheeler to ask that the FCC further study the impact of its set-top box proposal on smaller pay-TV providers before proceeding to vote on a final order.

Reply comments were due to the FCC on the proposal this week.

In the letter, they said that small providers won't be able to afford the cost of building new architecture to comply with the rules.

The FCC is proposing that MVPDs make their program streams and content available to third-party navigation devices and apps.

They said that even if the FCC provides an exemption that does not necessarily translate to relief as a practical matter.

"When equipment suppliers, programmers, and other vendors are compelled to meet a new standard, it often leaves small operators with no alternative choice but to comply."

They said that putting added burdens on the operators serving mostly rural areas could reduce options for those areas, which is why they say the FCC must "study the costs and impacts" before proceeding. 

“ACA applauds this bipartisan group of senators for standing up for consumers in hard-to-reach rural areas who depend on vital services from smaller pay-tv providers," said American Cable Association President Matt Polka. "The senators, consistent with ACA’s own advocacy at the FCC, rightly point out the harm the FCC’s set-top box proposal would have on these consumers and their providers. As ACA has previously noted, the FCC’s proposal would force more than 200 small providers to either go out of business or cease offering video service, leaving their customers with fewer competitive options. ACA would especially like to thank Senators Daines and Tester for bringing together this bipartisan group of their colleagues to raise the alarm about the burden of this proposal on those who can least afford to comply.”

“NTCA–The Rural Broadband Association appreciates the bipartisan leadership of Senators Daines and Tester," the group said of the letter. "They, along with eight of their Senate colleagues, highlight the increasing concerns with regard to the threats to rural consumers and small companies that would arise if the FCC were to adopt its proposed video navigation technology mandate."

Signing on the letter were Steve Daines (R-Mont.), Jon Tester (R-Mont.), Shelley Moore Capito (R-W. Va.), Dan Sullivan (R-Ark.), Robert Casey (D-Pa.), Pat Roberts (R-Kan.), Deb Fischer (R-Neb.), Joe Donnelly (D-Ind.), and Dean Heller (R-Nev.).