Broadcasting&Cable

The House Commerce Committee has defeated two amendments from Democratic Reps to a reform bill that would have given the Federal Trade Commission authority to regulate broadband Internet service provider consumer privacy and more authority to regulate edge provider privacy. That came in a full committee mark-up July 14 on the FTC Process and Transparency Reform Act of 2016 (HR 5510), that would clarify what conduct the Federal Trade Commission can cite for unfairness under its authority to go after unfair and deceptive practices and how it determines that to be the case. The Judiciary Committee is also considering the FTC reform bill.

One amendment would have given the FTC authority to create rules that protect consumer privacy on websites. The Democratic Reps on the committee said that if the Republican Reps want a level playing field in broadband privacy, rather than prevent the Federal Communications Commission from adopting new rules on broadband privacy, a better answer is give the FTC more FCC-like rulemaking authority. Republican Reps countered that was a slippery slope, that the FTC was an enforcement agency, not a rulemaking agency. That amendment was defeated by a vote of 27 to 17. A second amendment would have eliminated the common carrier exemption that required the FCC to take over broadband privacy oversight when it reclassified ISPs as common carriers. Democratic Reps argued that would be an elegant solution to boosting the FTC's ability to regulate privacy. Republican Reps said that the FCC would not give up its abusive, mission creep authority just because the FTC also got oversight. That amendment was defeated by a voice vote.

Digital rights and privacy groups are launching a campaign to pressure trade deal negotiators to look at privacy and data protection differently. The vanguard of that effort is a new report released July 13 and commissioned by the Center for Digital Democracy (CDD), BEUC, the European Consumer Organisation, European Digital Rights, and the Transatlantic Consumer Dialogue (TACD). The EU and US just launched a new cross-border data flow privacy shield regime, which the groups have issues with. The report says the EU undermines personal data and privacy rights in trade agreements, citing the EU/US TTIP trade deal, for one. The study says the EU should:

• Keep rules on privacy and data protection out of trade agreements, by means of a legally-binding exclusion clause. This is also recommended by the European Parliament.
• Include an exception that allows any signatories to regulate cross-border data transfers. This should apply to any sector that deals with the processing and transfer of personal data, such as financial services, within a trade agreement.
• Insert a clause into trade agreements that prevents an EU measure from becoming automatically invalid or inapplicable.
• Prevent clauses in trade agreements which would oblige the EU to submit forthcoming rules on privacy and data protection to trade ‘tests’ in order to see if they are more burdensome than necessary.
• Treat all trade partners the same way when granting ‘adequacy status’ for data transfer purposes to prevent the EU from being vulnerable to potential challenge under trade rules.
• Require the European Data Protection Supervisor (EDPS) to issue an opinion on the texts of free trade agreements.

Video streaming device maker Roku has issues with the Federal Communications Commission's set-top box unlocking plan, but it also has issues with the cable industry's box-ditching, apps-based plan. In meetings with top aides to FCC Chairman Tom Wheeler about the National Cable & Telecommunications Association's app-based proposal, Roku said that "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," they said. FCC staffers vetting the pay-TV 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 it, 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."

A pair of powerful Democratic Sens have called on the Federal Trade Commission to protect consumers from digital advertising fraud, which they suggest is rampant, including potential regulation of reform of ad exchanges. In a letter to Federal Trade Commission Chairwoman Edith Ramirez, Sens Mark Warner (D-VA) and Chuck Schumer (D-NY) -- members of the Senate Banking Committee as well as active on communications and tech issues -- pointed to recent studies that have found "rampant fraud" in the $60 billion digital ad market, including one finding that as much as 98% of all ad clicks on major ad platforms, including Google, Facebook, Yahoo! and LinkedIn, were not by human fingers but by computer-automated bots.

"The ad fraud market has scaled to such an extent that it has attracted participation by organized crime," to put an even tougher point on the issue. “Bots plague the digital advertising space by creating fake consumer traffic, artificially driving up the cost of advertising in the same way human fraudsters can manipulate the price of a stock by creating artificial trading volume," they told Chairwoman Ramirez, suggesting regulation or legislation may be needed to stem the tide.

[Commentary] Mark Twain deliciously mocked James Fenimore Cooper for creating characters that appeared not to be able to jump onto a boat one foot from the river bank, and moving at a snail’s pace. The Federal Communications Commission has similarly, and indefensibly, missed the boat with its proposal to retain and even toughen outdated media ownership rules. These are the same broadcasters being moved to smaller spectrum quarters, which for some means giving up spectrum that could be used for digital multicasting and other services that would provide more programming in the marketplace.

The FCC appears to see—through a “glass eye darkly,” we would add—a marketplace filled with thriving newspapers and a powerful broadcasting industry that lacks video competition. Fifty years ago, maybe, but today? That’s like calling myopia “focus.” Instead of finally getting rid of the newspaper/broadcast cross-ownership rules, or abandoning the plan to tighten joint sales agreements remanded by the courts, FCC Chairman Tom Wheeler has doubled down on regulation. “Our analysis indicates that the ownership restrictions remain necessary in the public interest,” the Chairman said in an overdue ownership review that came in both late and way off the mark. That is even more reason for the FCC to give broadcasters some purchase on the future via ATSC 3.0.

[Commentary] The Federal Communications Commission and broadcasters have teamed up to set a high bar for clearing out all that broadcast TV spectrum being repurposed. The first-ever two-sided FCC spectrum auction resulted in an $88 billion price tag that could be tough to cover in the forward auction. The FCC is not releasing any information about bidders or markets until after the auction closes, but that figure is likely a combination of stations frozen at their opening bids—some estimates have been as high as $40 billion in initial freezes—and broadcasters refusing to bid themselves down to a bargain-basement price.

There remain more question marks than exclamation points in the auction. How much will wireless companies bid for the spectrum? Will the auction close after one round—which now seems unlikely—or extend to at least one further reverse round, followed by a second forward auction? How long will all that take? If there is one thing markets don’t like, it’s uncertainty. Having gotten this spectrum auction boulder rolling, the FCC cannot do much to change its path or timetable. But one thing the FCC can and should do to help broadcasters plan for their future is to give them the green light to start rolling out the new ATSC 3.0 transmission standard so they can make the most out of whatever spectrum is left post-auction. Broadcasters want an answer by Oct. 1. They should get it by then, and it should be ‘yes.’

The Federal Communications Commission has a bunch of questions for cable operators and other backers of an app-based “ditch the box” compromise proposal on promoting competitive navigation devices. That is according to a list of questions FCC staffers have for those stakeholders, including the National Cable & Telecommunications Association, based on a copy supplied by a source and confirmed by FCC officials on background. FCC staffers have been meeting with stakeholders after FCC Chairman Tom Wheeler said he was open to productive discussions about finding common ground on the issue. From the questions posed by FCC staffers, there are plenty of points that need clarifying but also some hope that the proposal could have legs.

There was plenty of “please clarifying” in the FCC staff questions but also a lot of “we agreeing.” That agreement was mostly on the broad strokes: HTML5 may be an appropriate platform for third parties to provide access to content; open standards provide more choice; that multichannel video programming distributors (MVPD) programming contract rights should convey to third party apps or devices (a key issue with programmers); and that the app should be free. It is likely how “ditch the box” backers fill in the details that determines whether ditching the box can be the basis of a compromise.

The House passed the (FY) 2017 Financial Services and General Government Appropriations bill (HR 5485) that cuts the Federal Communications Commission budget and would prevent it from enforcing its network neutrality rules, implementing a new set-top box proposal, regulating broadband rates, or adopting new broadband privacy rules. The prohibition on the privacy rules was a last-minute addition to that laundry list thanks to an amendment from Rep Marsha Blackburn (R-TN)—approved by a vote of 232 to 187. The amendment prohibits "the use of funds to implement, administer or enforce any of the rules proposed in the Notice of Proposed Rulemaking adopted by the FCC on March 31, 2016 (FCC 16-39), intended to regulate consumer privacy obligations as necessitated by the FCC's net neutrality regime."

The vote on the underlying bill was 239 to 185. The White House has signaled it will almost certainly veto the bill if those provisions remained since President Barack Obama publicly called for the new Open Internet order reclassifying Internet service providers under Title II and backed "unlocking" set-top boxes.

Univision said it filed a breach of contract lawsuit against Charter Communications claiming that rather than negotiate a new carriage agreement, Charter is attempting to impose rates and other terms of Univision’s agreement with Time Warner Cable, which was acquired by Charter. In papers filed at the Supreme Court in New York, Univision also claims that in government filings and public statements that Charter would be the continuing business after the merger and that Charter is acting in bad faith by enforcing Time Warner agreements in Charter cable systems.

Univision’s carriage agreement with Charter expired June 30. At the time of the merger in May, Time Warner Cable was larger than Charter and received more favorable terms from programmers such as Univision. Univision says Charter “has outright refused to negotiate a renewal agreement with Univision.”

In an ex parte submission, armed with colorful charts showing the decline of print readership and advertising, the National Association of Broadcasters was trying to convince the Federal Communications Commission to finally scrap the newspaper/broadcast crossownership ban. FCC Chairman Tom Wheeler has circulated a quadrennial media ownership review item that concludes the newspaper/crossownership ban is still necessary in the public interest, though he is proposing a failing paper waiver similar to the failing station waiver.

NAB said the rule is outdated and fails to serve the public interest. It calls the decision to retain it arbitrary and capricious, which would make it a violation of the Administrative Procedures Act. NAB also said the FCC needed to start counting competition from online news sources. "The FCC can no longer ignore the Internet’s transformative effects on the media marketplace and on consumers’ access to news and information," it said. Even as NAB was citing statistics on declining newspaper audience, Pew Research released a report that found only two in 10 people "often" get their news from a print source. It also showed that while TV news remains the top choice for news consumers, younger demos more often get their news online. NAB also pitched ditching the radio/TV crossownership rule, which Chairman Wheeler also proposed retaining.