Video streamers and other edge providers are fighting a multi-front war in Washington lately, as Congress applies pressure on the FCC to apply good-faith negotiation rules to over-the-top content providers, as it does traditional video providers, and as hundreds of rural broadband providers and associations call on the agency to make edge providers contribute to broadband buildout subsidies.

A decade ago, the Federal Communications Commission wrestled with the issue of how and whether to regulate the over-the-top delivery of TV programming networks. Though Obama-era FCC chair Tom Wheeler opened a formal inquiry, and then reportedly got as far as working on an item that would define linear programming streams as multichannel video programming distributors (MVPDs), nothing materialized. In that case, the issue was online video provider access to content —  MVPDs are subject to program access and carriage rules — and providng FCC-enforced access to vertically integrated programming to promote competition to traditional video.

With the backing of broadcasters, who have been trying to get more money for their online content, including by pushing for an antitrust exemption from Congress to negotiate for aggregated news content, Senate Commerce Committee chair Maria Cantwell (D-Wash.) last week wrote FCC chair Jessica Rosenworcel asking her to revive the inquiry, this time focused on good-faith negotiation rules related to edge provider aggregation of news content from print and broadcast sources.

Rosenworcel has recently suggested that Congress may have to step in to give the FCC the regulatory authority that the Cable Acts of 1984 and 1992 gave it over traditional video. since those laws did not apply to, or anticipate, OTT.

But she has apparently not ruled it out. "We are carefully reviewing the issue and exploring our options," said an FCC spokesperson.

Also Read: Could the FCC Make Video Streamers Pay Into the Universal Service Fund?

Even before Cantwell sent her letter to Rosenworcel, she and other top senators were sent a letter from hundreds of groups calling on Congress to require streamers and other edge content providers to pay into the Universal Service Fund that subsidizes advanced telecommunications buildouts in rural and other hard-to-reach areas. Currently, the fund depends on traditional landline phone service and its dwindling customer base. ISPs do not pay into the fund other than for their internet phone service offerings.

“The edge provider companies derive enormous value from American families and businesses while contributing extraordinarily little or no financial support for the middle and last mile networks in rural areas,” according to a copy of the letter.

“We pay to connect to the internet and we pay to deliver traffic to our home office,” the letter said. “Then, we invest in our own networks and the last mile. Meanwhile, edge providers continue to send increasing amounts of traffic into our networks, which pushes against the limits of our capacity forcing expensive upgrades. Recovering those costs from our rural customers is very difficult or impossible, while the edge providers pay very little or nothing at all for the delivery of their traffic.”

INCOMPAS, whose members include Amazon, Facebook, Google amd Netflix, have argued that rather than going to the edge providers, the FCC should instead look at including ISPs in the Universal Service Fund (USF) subsidy pool, given that the subsidy money is being transitioned from landline phone service to broadband buildouts.

One argument against that move has been that the USF fees are passed along to consumers, so the inclusion of ISPs would raise consumers’ bills. That could discourage uptake of service regardless of how universal its availability is.

The Biden administration is pumping more than $60 billion in subsidies through various infrastructure-related programs to make sure that, by 2030, broadband is both universally accessible and affordable.

Broadcaster Cox Media Group (CMG) said it has “responded promptly” to outreach from Cincinnati Bell and rejects claims it has not been negotiating for retransmission consent in good faith or that it is demanding fees for the telco‘s broadband-only subscribers.

Cincinnati Bell had filed a formal retransmission consent complaint with the Federal Communications Commission against CMG-owned WHIO — the CBS affiliate in Dayton, Ohio, and the top station in the market — for allegedly failing to negotiate in good faith, as FCC rules require, by trying to charge a fee per over-the-top video streamer as well as per traditional cable subs.

CMG said it will respond to the complaint in an FCC filing, but wanted to make clear in the meantime that it rejected the complaint as “unequivocally false,” “calculated” and “suspect.”

Also: Telco Tells FCC CMG’s Retrans Fee is Bad Faith

For one thing, the broadcaster said, the complaint came less than three weeks after Cincinnati Bell responded to a December 2021 CMG document. In any event, “it is patently false that CMG is demanding that Cincinnati Bell pay for broadband-only subscribers,” CMG executive VP, television Paul Curran said. ”Indeed, CMG’s proposal specifically exempts broadband-only customers.“

“Curiously, Cincinnati Bell’s other complaint is that CMG’s proposal requests that Cincinnati Bell honestly portray its programming costs to subscribers rather than pretending that retransmission consent fees are a unique cost requiring a ‘surcharge,’ ” Curran said. “What they pretend is somehow ’bad faith’ is a good-faith belief in pro-consumer transparency and truth in cable billing. Cincinnati Bell can get a fair deal anytime it wants to actually engage in negotiations.”

Calling the move “blatant theatrics,” Curran said Cincinnati Bell “has concocted a frivolous set of claims into an FCC filing.” ■

The FCC has denied Gray Television's retransmission consent complaint against Frontier Communications, saying Frontier did not violate the agency’s good-faith standards, its totality of circumstances test or its notice requirements.

Gray had alleged that Frontier had failed to negotiate a new contract in good faith, as FCC rules require, and had also violated customer notice requirements about a potential blackout.

According to the FCC good-faith standard, “broadcasters and MVPDs must actively participate in retransmission consent negotiations, with the intent of reaching agreement, though failure to reach agreement is not itself a violation of the rules or statute.“

Also Read: Frontier Could Emerge from Chapter 11 in Weeks

As to the notice requirements, “cable operators [must] notify subscribers of any changes in rates or services at least 30 days in advance of the change, unless the change results from circumstances outside of the cable operator’s control (including failed retransmission consent or program carriage negotiations during the last 30 days of a contract).”

The FCC's Media Bureau concluded Frontier had done both of those things. "We agree with Frontier that it complied with the obligation to negotiate retransmission consent in good faith, including its per se obligation to negotiate retransmission consent, its per se obligation to designate a representative with authority to make binding representations on retransmission consent, and compliance with the totality of the circumstances test," the bureau said in denying the complaint. "We also find that Frontier fulfilled its customer notice obligations."

Frontier had said it had a business reason for not accepting Gray offers, which was that the carriage was not as valuable as it had been. The FCC agreed that was legitimate. "We find that a party is permitted to adjust its bargaining position as negotiations proceed and doing so is not bad faith. In this case, Frontier ascertained information causing it to conclude that a station was less valuable to it than previously thought," the bureau said.

Also Read: Frontier Says Gray TV Impasse Is About Value of Signal

The FCC also concluded that it was not misleading for Frontier to assert that over-the-top access to Gray TV's programming continued to be available over the station's own web site and mobile applications.

Gray had formally complained to the FCC that Frontier was not negotiating in good faith and did not give its customers "as soon as possible" notice of a potential blackout, both of which are required under FCC rules.

The complaint asserted that Frontier appeared never to have intended to carry the stations after the contract expired Dec. 18. "Instead, it just strung Gray along for weeks making us believe progress was being made until informing Gray with less than an hour to go that Frontier’s negotiator actually had no authority to enter into an agreement on the terms she had most recently offered to us and in fact she could not agree to terms along the lines of any of the proposals she had made over the last several weeks."

If the lead negotiator had no power to negotiate, Frontier could hardly be negotiating in good faith, which would violate FCC rules.

Frontier begged to differ.

“The simple fact is that Frontier and Gray disagree over the value of Gray’s stations,” the cable company said in its reply to the FCC complaint. “After 25 days of negotiation and three offers put forth by Frontier, any of which Gray could have accepted, Gray now cries foul because Frontier did not agree with the financial terms that Gray wanted to force on Frontier and its customers.”

While Gray asserted that Frontier “removed Gray’s stations from its online channel guides several weeks before the agreement was due to expire,” and possibly even before negotiations on a new carriage deal began, Frontier said that was not the case and that it did not update its “customer-facing” channel guides until after the agreement had expired."

No big surprise here, but the broadcasters fined in the Federal Communications Commission‘s first-ever finding of failure to negotiate retransmission consent in good faith want the regulator to cancel the levies, which total more than $10 million.

The FCC last month voted to deny an appeal of its decision that eight station groups failed to negotiate retransmission consent in good faith and has further decided to propose each of the 18 stations at issue over $500,000 each. It is the first time the FCC has ever issued a forfeiture order for a failure to negotiate retransmission consent in good faith, as its rules require.

Those station groups — Deerfield Media, GoCom Media, Howard Stirk Holdings, HSH, Mercury Broadcasting, MPS Media, KMTR Television, Second Generation of Iowa and Waitt Broadcasting — have jointly filed a response to the FCC, saying the agency was off base and the fines should go away. Some of the defendants also filed individually.

Mercury Broadcasting, for example, told the FCC that if it does not cancel the fine, it should reduce Mercury's penalty given that it owns only a single station, and citing “its demonstrated inability to pay and history of past compliance.”

Related: Small TV Stations Locked in Retrans Dispute With DirecTV

“AT&T has attempted for years to persuade the Commission to prohibit joint negotiations, but those efforts have been unsuccessful,” Deerfield told the FCC. “So when defendants sought in 2019 to jointly negotiate renewals of the 2016 agreements, AT&T tried to stymie their efforts.”

AT&T filed the complaint in June 2019 against the stations and groups, and the FCC said all of them failed to meet its standard for good-faith negotiations. All the groups were represented by consultant Duane Lammers of Max Retrans. AT&T sued Lammers, though that suit was thrown out.

In December 2019, the FCC's Media Bureau found that the stations had failed to negotiate in good faith with AT&T-owned DirecTV and U-verse TV. The FCC said in granting the complaint that the stations had unreasonably delayed negotiations, including by not responding to AT&T’s proposals.

AT&T pointed out in its complaint that all the stations involved were “managed and controlled by Sinclair Broadcast Group through some type of shared services agreement.” AT&T asked the FCC to 1) find that each station had violated the good faith negotiation requirement; 2) compel the stations still not negotiating in good faith to do so; 3) and fine them.

Related: AT&T: FCC's Max Retrans Smackdown Should Stand

The FCC granted the AT&T complaint in full, which included the proposed fines of $512,228 apiece for each station, the "statutory maximum for a single act or failure to act."

Rather than fine Lammers or the station groups, the FCC said it was appropriate to fine each station, saying " the harm to viewers is multiplied with each station that goes dark, regardless of the number of corporate parents involved in a carriage dispute, underscoring the importance of our focus on individual stations."

Good-faith negotiation complaints are not unusual, but the FCC upholding one and levying a fine was unprecedented. Such complaints have generally been dismissed for failing to show the negotiations were not in good faith, or dropped after the parties involved reach an agreement and publicly bury the hatchet, at least for the time being.