John Eggerton

MPAA Congratulates Trump US Trade Representative Pick

Motion Picture Association of America chairman Chris Dodd congratulated US Trade Representative (USTR) nominee Robert Lighthizer on his appointment and called for working together to protect intellectual property and expand markets. The Trump Administration does not see eye-to-eye with the studios on the Trans-Pacific Partnership, however. The TPP is a historic Pacific Rim trade agreement with 11 other countries that TV and film producers had been pushing for as a way to expand trade and access to Asia-Pacific markets.

While MPAA hailed the agreement Trump has called it a bad deal that he wants out of and pledged that his negotiators will strike better ones. The USTR is the lead negotiator on such trade deals. “The MPAA congratulates Robert Lighthizer on his appointment by President-elect Donald Trump for USTR," said Dodd in a statement. "The American film and television industry is a key driver of the U.S. economy, and effective trade policies are crucial to its continued success. Our sector employs nearly two million American workers, while generating $16.3 billion in exports and registering a positive trade balance with nearly every country around the world."

FCC Allows Univision to Boost Foreign Ownership

The Federal Communications Commission is allowing foreign investors to own up to a 49% equity stake in TV and radio station owner Univision, including up to a 40% stake by Mexico's Televisa. That came in a declaratory ruling this week after a petition by Univision and Televisa went unopposed. The FCC said it granted the petition "because this increased level of foreign investment in Univision will facilitate investment from new sources of capital in Univision that would not otherwise be available and encourage reciprocity by foreign governments."

Televisa supplies over a third of Univision's programming and bought an equity stake in Univision in 2010 (10% equity, 14.4% voting interest). Univision and Televisa had sought the declaratory ruling in advance of an initial public offering that could increase the foreign investment beyond the current 25%. "We find that the public interest would not be served by refusing to grant Univision’s petition for a declaratory ruling to permit foreign ownership of Univision Holdings...above the statutory cap of 25% and up to 49%."

Ad Agencies Challenge FCC Broadband Privacy Rules

Advertising and marketing associations joined Internet service providers in calling on the Federal Communications Commission to back off its broadband privacy proposal. The Association of National Advertisers, American Association of Advertising Agencies, American Advertising Federation, Data & Marketing Association, Interactive Advertising Bureau and the Network Advertising Initiative joined to file a petition for reconsideration at the FCC on Jan 3, the deadline for challenging the Oct. 27 order. Ad agencies had argued against the rules, saying the FCC should have aligned its regulation with the Federal Trade Commission's approach to edge provider privacy, which was more flexible and did not have an opt-in mandate for web browsing info.

Four New Members Join Senate Commerce Committee

Senate Commerce Committee Chairman John Thune (R-SD) has announced the Republican membership of the committee in the 115th Congress. They are, in order of seniority: Sens Thune, Roger Wicker (R-MI), Roy Blunt (R-MO), Ted Cruz (R-TX), Deb Fischer (R-NE), Jerry Moran (R-KS), Dan Sullivan (R-AK), Dean Heller (R-NV), Jim Inhofe (R-OK), Mike Lee (R-UT), Ron Johnson (R-WI), Shelley Moore Capito (R-WV), Cory Gardner (R-CO) and Todd Young (R-IN). New to the committee are Sens Young, Inhofe, Lee and Capito. Exiting are Sens Marco Rubio (R-FL), Kelly Ayotte (R-NH) and Steve Daines (R-MT). Sen Rubio, who was instrumental in pushing for bills freeing up more unlicensed spectrum, is moving to the appropriations committee. Subcommittee members have not yet been named.

Sens McCaskill, Portman Press Cable on Fees, Promotions

Veteran cable critics Sens Rob Portman (R-OH) and Claire McCaskill (D-MO) have started out the new Congress by pressing Charter and Comcast on fees and promotions. That came in joint letters to Charter president Thomas Rutledge and Comcast president Brian Roberts dated Dec 23. Sens Portman and McCaskill head up the Senate Permanent Subcommittee on Investigations, which held a hearing on cable fees and customer service last year in conjunction with a report it issued at the same time. Both the report and the hearing were rough on pay-TV providers, who pledged to do better.

In a joint release Jan 3, Sens McCaskill and Portman said they were pressing Charter and Comcast over what they characterized as "the misleading placement of fees on customers’ bills, and inadequate advertising disclosure for service promotions." They want more information on both from the companies. Citing the hearing in the last Congress, they said in letters to the two companies, as they signaled in the hearing, they thought that using separate line items like the "broadcast TV surcharge" for retrans fees or "Regional Sports Network Fees" charge for the cost of that programming "obscured" the real cost of programming when it was grouped with regulatory fee line items and charges.

Telecom ISPs Ask FCC to Reverse Broadband Privacy Rules

USTelecom has petitioned the Federal Communications Commission to reconsider its broadband privacy framework order. The FCC Democrats voted Oct 27 to require Internet service providers to get their subscribers' permission (notice and choice) before sharing web browsing and app use histories with third parties for marketing and other purposes.

As USTelecom and cable operators argued before the vote, they want the FCC to "harmonize" its approach with that of the FTC. At the moment, it argues, there are at least a couple of discordant notes in the FCC's approach, which it also argues is arbitrary and capricious. First, it says, was the lack of a cost/benefit analysis of the cost of "foreclosing productive uses of information." For example, it says, the cost of requiring an opt-in regime for marketing of all web browsing info, in contrast to the FTC approach to the edge providers privacy it oversees, which allows more "flexibility" for marketing of nonsensitive information—i.e. not opt-in requirement. Second, USTelecom argues, the FCC treats ISPs as "nearly omniscient," with greater visibility into consumer data than others, a premise USTelecom calls false.

Comcast Acquires Watchwith

In a move that tacks on technologies that will drive deeper search and discovery capabilities into its X1 platform, Comcast has acquired Watchwith, a company that has built a video metadata platform that can decipher what’s happening inside a movie, TV show or sporting event. Financial terms of the deal, which closed last month, were not disclosed. Watchwith’s deep metadata platform can provide information about what’s occurring within the video, such as which actors are appearing on screen, the location of a given scene, or the start of a memorable scene within a movie or TV show. It does that through the blending of two tools—an editorial tool that enables producers to manually tag specific video segments and an automated media analysis/tagging tool that relies on algorithms and machine learning techniques.

Targeted Media Boosts Share of Political Pie

It was a record year for political ad spending, according to ad trackers at Borrell Associates, up 4.6% from the 2012 presidential election to $9.8 billion, but money is shifting toward more targeted ads, with cable in on the new bounty. Broadcast TV remained the big dog at $4.4 billion, more than three times any other outlet. Borrell pointed out that represented a 44.7% share, down from 57.9% in 2012, a $1 billion decline when many were predicting a $1 billion increase. Part of that was President-elect Donald Trump's heavy reliance on earned media and digital media, but it was also because of the general shift to more targeted media. Cable, digital and direct mail gained a total $1.7 billion over 2012. Cable jumped from $891.78 million in 2012 (9.5% of the total pie) to $1,355.28 billion (13.8%), Borrell pointed out. Online and digital exploded from $159.21 million in 2012 to 1,415.38 billion in 2016.

Trump Adds Wireless Entrepreneur to FCC Landing Team

President-elect Donald Trump has added a fourth member to the Federal Communications Commission landing team, the volunteers working on transitioning the agency to Republican majority control come Jan 20. David Morken is the newest member, currently the co-founder and CEO of Republica Wireless parent company, Bandwidth.com. Morken combines a couple of life experiences that appear to hold a lot of weight with the incoming President. He is a former member of the US military (a Marine) and an entrepreneur/disruptor who built an "overnight success" through a decade of hard work growing a business. Bandwidth.com, which started as a URL generating sales leads for other telecoms, built out its network on the theory that Wi-Fi could be the primary network and cellular (Sprint) the backup, which would allow it to charge less ($19 a month at launch) for voice and broadband.

Windstream-EarthLink Merger Clears Antitrust Hurdle

The Justice Department or the Federal Trade Commission have given a clean antitrust review bill of health to the proposed $1.1 billion merger of Internet service providers Windstream and EarthLink. The deal was listed among those that had been granted early termination of their Hart-Scott-Rodino antitrust reviews. Those are conducted by either the Justice Department or Federal Trade Commission—they never say which reviewed a deal when granting early termination, but Justice usually handles telecom transactions. Early termination means they are done with the review and are not suggesting that the merger be blocked or are suing to insure that certain conditions are applied.

The Federal Communications Commission will also need to sign off, but that process will take a while longer. The FCC opened its review docket on the deal Dec. 2 and reply comments are not due until Dec. 23, so there will likely be no decision before early next year. The companies signaled they did not expect the deal to be able to close until first quarter 2017. The companies announced Nov. 7 they had reached a deal for an all-stock deal of $1.1 billion, including debt.

Still No FCC Decision on Nexstar-Media General

In the "no news is not good news for either Nexstar or Media General" department, the Federal Communications Commission's Media Bureau has yet to act on the waiver request by the two broadcasters that the commission make a decision on their proposed $4.6 billion merger, apparently.

The FCC's informal shot clock on the deal—it shoots for 180 days—was at day 306 at press time. As the days wind down to the holidays, it looks unlikely the waiver will be ruled on before the end of 2016. The companies extended some deadlines for the deal completion a couple of weeks ago amidst buzz that the FCC might be ready to both rule on the waiver and decide on the deal, which could come simultaneously. But that did not materialize. The FCC signaled early on that it would not make decisions on station license transfers that could implicate spectrum auction participants—this deal qualifies—while the auction was still going on.

Sallet Champions Gatekeeper Approach to ISPs in Merger Reviews

The Federal Communications Commission's former general counsel Jon Sallet made the case for FCC Chairman Tom Wheeler's targeting of Internet service providers as the primary threat to Internet openness. That came in a speech Dec 16 at the Capitol Future of Broadband Competition Conference in Washington (DC). In what sounded like a farewell address, Sallet—who moved to the Justice Department's antitrust division as deputy assistant attorney general earlier in 2016—delivered a lengthy address on competition and broadband providers summed up in the first subhead in the transcript of his speech: "Telecommunications Network Providers Have Incentives and Abilities To Artificially Shape Competition And Have Long Been Associated With the Exercise of Gatekeeper Power." The speech was about an approach to mergers that presupposes ISPs are going to use that power unless reined in.

Sallet said he wanted to be clear that he wasn't saying that ISPs "are the only players in the Internet ecosystem that can ever be capable of developing or exploiting this power." But that was essentially the only mention of the edge beyond talking about how online video could be discriminated against by ISPs.

CenturyLink Snags Senate Contract

CenturyLink has secured an $11.4 million contract (three years at $3.8 million per year) to provide VoIP service to the state offices of US Senators. The contract covers hardware, software, training and help desks for more than 450 offices. Yes, there are still only 100 senators, but many have multiple state offices. The contract is with the Senate Sergeant at Arms, who handles the telecommunication and tech support for senators' state offices as well as their DC home base. The contract could actually total $26 million if the government picks up four one-year options.

Chairman Wheeler: Rosenworcel Is Long-Term Communications Policy Leader

Federal Communications Commission Chairman Tom Wheeler said commissioner Jessica Rosenworcel's fingerprints are on "so much of what this agency has done." Chairman Wheeler praised his fellow Democrat as she prepares to exit the commission following a fractious Senate's failure to vote her re-nomination by President Barack Obama. "You have been a long-term leader in communications policy on the FCC staff [a top advisor to former commissioner Mike Copps] on the Senate Staff [as a top advisor to former Senate Commerce chairman Jay Rockefeller] and here as a commissioner," said Chairman Wheeler. "I don't think that there is an end point on that leadership and expect to see a lot more out of you in the coming years continuing that great tradition."

Chairman Wheeler pointed to her early championing of Title II reclassification of Internet service providers. "I remember you saying to me, 'no, the way to go is Title II,'" he said. The "no" reference is because Wheeler's initial attempt to address a court remand of the original Open Internet order did not include reclassification. "You have always been attuned to the public safety community," he said, "and have been the champion of making sure that we live up to the first title of the Communications Act, which is public safety."

OMB Approves Open Internet Enhanced Transparency Rules

According to the Office of Management and Budget, OMB has just approved the added paperwork collection obligations of the Federal Communications Commission's Open Internet order enhanced transparency requirements. Those are the parts of the order that require ISPs to provide more information on network performance and business plans, some of which smaller operators say are disproportionately a burden on them financial and otherwise.The rules will go into effect Jan. 17.

That OMB approval came Dec. 15, the same day the FCC's one-year extension for the small business waiver of the enhanced transparency portion of its rules expired without an agreement on a renewal. To date, the waiver has not had any effect because the enhanced transparency rules were not in effect.

Analysis: Tom Wheeler's FCC Legacy

Ultimately, Federal Communications Commission Chairman Tom Wheeler had a clear sense of his mission, which was to make sure that broadband—the transformative technology of this century—was available to all—which he combined with a distrust of the marketplace. Chairman Wheeler is a famed student of history, which includes the struggles to get electricity to the farm wives still beating clothes on rocks well into the last century. Some can fault—and many in the industry do—how he chose to accomplish his task, but it is hard to argue against trying to get broadband to everyone.

Chairman Wheeler signaled from day one that he viewed the FCC as a consumer-focused agency and that they, not industry, were his constituency. But again, media companies argue that they serve consumers too and could serve them better freed from some of the regulations Wheeler imposed or refused to un-impose. He also made it clear that he viewed edge providers like Google and Facebook, as creative forces for good in need of protecting against Internet Service Providers and their monopoly conduit into the home.

FCC Fails to Extend Enhanced Transparency Waiver

The Federal Communications Commission did not extend the small operator waiver from the Open Internet order's enhanced transparency requirements by the Dec. 15 deadline. The FCC's Consumer and Governmental Affairs Bureau extended it in 2015 by a year. In a sense, not extending it does not have much practical effect because the enhanced transparency rules, from which operators are being exempted, have not even gone into effect yet. But industry compliance officers and lawyers like regulatory certainty, and this is not it.

FCC Chairman Tom Wheeler circulated an item extending the waiver, but commissioners could not agree on it. The sticking point remains the sub trigger at which the waiver takes effect. Republicans want it to apply to operators with 250,000 subs or fewer, while Democrats want to stick with the current, or until Dec. 15 current, 100,000 or fewer. Bills that passed the House and Senate Communications Subcommittee raised the trigger to 250,000 and some legislators this week were pushing the FCC to extend the waiver. The American Cable Association had been pushing for the waiver extension, so it was not pleased at the lack of regulatory certainty.

FCC Transition Team Meets With Chairman Wheeler

President-elect Donald Trump's Federal Communications Commission transition team has met twice with FCC Chairman Tom Wheeler, the chairman said at his post-meeting press conference. Chairman Wheeler said he had met once individually with team leader Jeff Eisenach and with all three members on a second occasion. He called them good meetings and said he made it clear that if there were any issues that came up, "I was the guy to call first to solve those." Chairman Wheeler has experience in transitions, having helped the Barack Obama Administration move in back in 2008 as an FCC transition team leader.

Emergency Alert System Revamp Pulled From FCC Agenda

Federal Communications Commission Chairman Tom Wheeler's Emergency Alert System (EAS) revamp has been pulled from the Dec 15 meeting agenda. In fact, the FCC has dispensed with almost all of the items that had been on its Dec 15 meeting agenda for vote, either having already been voted or in the case of EAS and one other, removing them from the lineup. That will provide time for some goodbyes since it is expected to be the last meeting of Democrat Jessica Rosenworcel and potentially FCC Chairman Tom Wheeler.

The current January meeting is scheduled for Jan 20, after which Chairman Wheeler would no longer be chairman and probably will no longer be at the commission. The EAS item according to the FCC, "improves alerting organization at the state and local levels, builds stronger community-based alerting exercise programs, and protects the EAS against accidental misuse and malicious intrusion." It was also planning to vote on an EAS further Notice of Proposed Rulemaking seeking comment on "proposals to leverage technological advances to improve alerting and additional measures to preserve EAS security."

FCC's O'Rielly Shares Many Trump Policy Positions

Republican Commissioner Michael O'Rielly of the Federal Communications Commission says he shares many of the policy positions of President-elect Donald Trump and advised that while the FCC still has important functions—like spectrum management—how those are handled going forward is an open question. What is not is whether a Republican FCC, if Commissioner O'Rielly has anything do about it, will take a whack at the regulatory underbrush and the Title II-related actions—on broadband privacy and zero rating, for example—of the current administration.

Commissioner O'Rielly says the commission in a Trump Administration should focus on four main things: 1) remove regulatory underbrush, which he said were regulations that have been on the books "for a long time" but make no sense in the current marketplace; 2) undertake structural reforms of the commission itself, saying that structure has "broken down"; 3) undertake a pro-growth, pro-innovation agenda, for example antenna citing for wireless nets; and 4) undo bad and partisan policies, where he said he and his fellow Republican Commissioner Ajit Pai's input was not "even given the time of day."

Legislators Pushes FCC to Extend Open Internet Order Transparency Waiver

A bipartisan, bicameral group of legislators has asked Federal Communications Commission Chairman Tom Wheeler to extend the waiver the FCC granted to smaller cable operators in 2015 from the enhanced transparency requirements in the FCC's Open Internet Order. Those smaller operators have argued that the reporting—on network performance particularly—are an undue burden.

The FCC's Consumer and Governmental Affairs Bureau granted the waiver in 2015 for systems under 100,000 subscribers and there were bills in the House and Senate to do the same, while upping the sub trigger to 250,000. But the bills did not make it into law, and the waiver expires Dec. 15 unless the FCC takes action. The legislators—including incoming House Commerce Committee Chairman Greg Walden (R-OR) and Sen Joe Manchin (D-WV)—urged the chairman to extend the waiver. "Without commission action, small businesses soon face regulatory uncertainty and will potentially be subject to burdensome requirements," they wrote. "Before the current extension expires, the Commission should extend the enhanced transparency exemption and begin the process of considering whether the definition of small business entities to which the exemption applies should be modified [i.e. expanded to match Congress' 250,000 or perhaps another figure]."

USTelecom: Broadband Capital Expenditures Down $1 Billion in 2015

Broadband capital expenditures (capex) was down almost $1 billion—to $76 billion—in 2015 over the year before, according to USTelecom’s annual broadband investment report. Of that, wireless accounted for 43%, wireline 35% and cable at 22%. By contrast, from 1996 to 2015, cable's slice of the pie was 17%, wireless 33% and wireline 51%, so the landscape is changing as wireline's share of capex has declined and wireless and cable's have grown.

Internet service providers, including USTelecom, have argued that the imposition of Title II regulations would result in decreased investment, though Federal Communications Commission Chairman Tom Wheeler has suggested that would not and has not been the case. USTelecom pointed to a Progressive Policy Institute report earlier in 2016 that showed sluggish growth and attributed it in part to regulatory uncertainty. The uncertainty now is just how long it will take either a Republican FCC or Congress to reverse the Title II decision. The report shows modest increases in capex between 2012 and 2014 before 2015's decline. Over the 20 years the report covers, broadband industry capex has totaled $1.5 trillion.

CenturyLink Files Level 3 Merger With FCC

CenturyLink and Level 3 Communications have filed their merger (license transfer) applications with the Federal Communications Commission and their pre-merger notification to the Federal Trade Commission and Justice Department.

The merger is valued at $34 billion including debt. Along with the AT&T-Time Warner merger, it will be one of the first big media mergers to be vetted primarily under the Donald Trump Administration. Trump has talked about reducing regulations but also about blocking consolidation among media outlets. The FTC or DOJ—they divide those reviews but DOJ almost always handles media mergers—will vet the deal for antitrust issues and either give it a green light, a green light with conditions agreed to by the parties, or file suit to block it. The FCC will vet the deal for public interest issues that go beyond a straight antitrust review but will look at competition issues as well and consult with DOJ—they coordinate their reviews and stay in touch. As the companies pointed out, that is the first regulatory step toward the merger. Among the pro-consumer benefits the companies are touting are better service, more competition, more broadband deployment and investment.

Music Groups to President-elect Trump: Computer Companies Can Do Better

In advance of President-elect Donald Trump's planned meeting with computer/tech company leaders Dec 14, music licensing organizations, unions and others whose livelihoods depend on getting compensated for their content, called on Trump to press upon those companies the importance of better preventing illegal access to music and paying a fair market price for legal play.

In a letter to the President-elect dated Dec. 13, the groups, which include SAG-AFTRA, ASCAP and BMI, gave Trump shout outs for his support of intellectual and private property rights and wanted to make sure he was on the same page in meetings with Google and Apple and others. "As partners, many in the technology and corporate community should be commended for doing their part to help value creators and their content," said the groups. "Some have developed systems to promote a healthy market for music and deter theft. However, much more needs to be done. Search engines, user upload content platforms, hosting companies, and domain name registrars and registries should follow others’ example to effectively stop theft and assure fair payment." They said that "Surely the world’s most sophisticated technology corporations," which would include the nine-plus participating in the Trump tech meeting, can do a better job of preventing illegal access and paying free-market prices for content.