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Walden Sees Aereo as Potential Marketplace Disruptor

Rep. Greg Walden (R-Ore.) says Aereo could be a major disruptor in the marketplace -- as could Dish's Hopper -- and suggests he understands why Fox would warn that such disruption could move programming off the broadcast model.

Walden, chair of the House Communications Subcommittee, was being interviewed for C-SPAN's Communicators series.

Walden called both Aereo and Hopper disruptions in the marketplace and said he was surprised by the court decision allowing Areo's service to continue, at least while the court decides the broadcasters' underlying challenge. "Disruptions aren't bad, necessarily," he said, drawing "necessarily" out a little bit as he pondered it. "But this really has much bigger consequences, as people are beginning to read into it."

Asked how he reacted to suggestions by Fox that they could move programming to cable if the court upheld Areo, Walden seemed sympathetic to a point. "At some point, producers of programming have to have a way to get paid or you aren't going to have programming... If someone is taking your product and putting it on cable [SIC] for free, basically, then all of a sudden you have to look at how you change that model."

He said that was what News Corp. president Chase Carey was "carefully" saying at the NAB. "I don't think we know all the implications here." He added that it was only a 2-1 decision in one court.

Walden reiterated that he does not want to revisit retrans legislatively. "I don't want government coming in unless the market fails, and here most of the retransmission consent agreements have now been signed. And some are now extended out four or eight years. So, the marketplace has worked..."

"I am not sure [a la carte] is the panacea many think it is, Walden said of Sen. John McCain's bill to force unbundling of programming. He echoed National Cable & Telecommunications Association president Michael Powell's point to the Senate Communications Subcommittee last week that under the current system you get programming that wouldn't exist otherwise, and it could disrupt the pricing model.

Walden said he knows the FCC is working diligently to get the broadcast incentive auctions right -- Walden helped motorman the bill creating the auctions -- but added that means getting as much money out of the auction as possible.

He said that given the back and forth between broadcast and wireless on one side -- industries "usually at each other's throats" -- and the FCC over the band plan, he didn't underestimate the challenge they face in getting an auction and band plan that works.

Walden said he hoped the Justice Department had been enlightened by his and other Republicans' letter emphasizing that they wanted the maximum number of participants in the auction. DOJ had told the FCC it supported moves to tighten the local market spectrum screen or weigh different types of spectrum differently as part of a separate rulemaking. Those moves could limit the bidding in the broadcast incentive auction by making it harder for large carriers like AT&T and Verizon to bid for spectrum.

Walden said what he did not want to see is the FCC leaning toward giving up more of the reclaimed broadcaster spectrum for unlicensed use. "I am for unlicensed," he said, but the "beachfront" spectrum in the incentive auction is better for national licensed communication.

If the FCC gets the auction right, said Walden, which means not excluding major players like AT&T and Verizon, he thinks it could overdeliver on the CBO projection of $20 billion-plus proceeds from the auction. "I think they can hit that $20 billion an probably exceed it if they do it right," he said.

Walden said he thought the FCC should continue work on the spectrum auction under acting chair Mignon Clyburn, who could be in that post for several months. He said that doesn't mean they have to make every big decision, but he pointed out that a lot of work was going on at the staff level anyway.
"That's where the heavy lift really occurs."

He saluted Clyburn for "crashing through the glass ceiling." He called her an impressive member of the commission who he has worked with. "There is too much work not to go forward...I would hope they would not hit the pause button."

Asked by Politico reporter Tony Romm whether he thought Clyburn should hold off on big issues or exercise her full powers, Walden said she was "in charge. Clyburn is going to manage the agency properly," he said. "She is not going to suddenly seize the kingdom and pull up the drawbridge. She doesn't operate that way."

Walden praised chair nominee Tom Wheeler for his depth on the business side, which he said was an important perspective to have on the commission. He said he was concerned by some of Wheeler's writings about using merger conditions to regulate the market. "I find that offensive from a public policy standpoint," Walden said. "He thinks that is the way to leverage more power to the FCC...I think it's wrong...Some people might call that 'extortion.'"

He said there would be a hearing on reauthorizing the Satellite Television Extension and Localism Act (STELA) fairly soon. He did not have an outline, but suggested issues like Aero's court victory and the possibility that cable operators or satellite companies could take similar tacks was one of the issues on the table for discussion. He said his hunch is that the bill will wind up being pretty, clean, then joked: "Maybe that's where we should put [FCC] process reform." The House passed Walden's reform bill last session, but, as with so many other bills, in this divided Congress, it got no further.