John Eggerton

CenturyLink and Frontier have teamed up with a handful of other telecommunications companies in a new coalition to push back on the Federal Communications Commission's proposed reforms of special access market (the business services market the FCC has rebranded BDS or business data services). Also in the coalition are Cincinnati Bell, Consolidated Communications, and FairPoint.

The coalition, dubbed "Invest in Broadband for America," called the FCC proposal sweeping and questionable--it is also being questioned by cable operators providing BDS competition. "First and foremost, it is crucial that the FCC get the data right on competition in the marketplace before flying blindly into a major policy decision,” said John Jones, CenturyLink SVP, in announcing the new effort. “Important decisions are best made with accurate data. What is at stake here is the definition of ‘competition.’ That definition will have a substantial impact on the telecom and national economy for years to come. Think investment, suppliers, employees, infrastructure and contractors.”

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.

Sens Bernie Sanders (I-VT), Ed Markey (D-MA), Richard Blumenthal (D-CT), Al Franken (D-MN), Elizabeth Warren (D-MA), Patrick Leahy (D-VT), and Tammy Baldwin (D-WI) called on the Federal Communications Commission to finalize its broadband privacy proposal. “An [Internet service provider] has a duty to protect the privacy of consumers who use the company’s wired and wireless infrastructure to connect to the world,” the Sens wrote in a letter to FCC Chairman Tom Wheeler. “We strongly support the commission’s Notice of Proposed Rulemaking, and believe that this framework will strengthen the privacy protections for consumers’ personal information.” They told the FCC it needed to:

Adopt a comprehensive definition of customer proprietary information.
Apply protections to both current and former ISP customers.
Promote transparency by requiring ISPs to disclose what information is being collected and how it is used.
Require ISPs to obtain consent before using or sharing consumers’ proprietary information.
Establish data security protections and breach notification requirements.
Mandate that the FCC and ISPs create clear complaint processes if consumers believe their privacy has been violated.

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.

Republican and Democratic Reps took their fight over various Federal Communications Commission proposals and actions to the House floor as they debated the omnibus Financial Services Bill that includes the FCC's appropriation. Democratic Reps tried to block FCC-targeted efforts, but were rebuffed. Republican Reps even added the FCC's broadband privacy proposal to the list of actions blocked by the bill. The House's Republican majority are looking to undo through riders on that must-pass bill what the FCC's Republican minority could not defeat with their dissenting votes, including new network neutrality rules, the set-top box proposal, and the broadband privacy framework. The bill also prevents the FCC from tightening joint sales agreement rules, as it has proposed in its quadrennial media ownership review circulated the week of June 27. Those proposals are unlikely to make it into legislation that gets past President Barack Obama's desk, given his support for Title II reclassification and "unlocking" set-top boxes in particular.

Democratic Reps tried to head off the Republican efforts with amendments offered on the floor to strike some of the offending FCC portions, but were defeated. The bill as it currently stands would not allow the FCC to spend funds to enforce its Open Internet order. House Communications Subcommittee Ranking Member Rep Anna Eshoo (D-CA) introduced the amendment to strike the moratorium on funding for the Open Internet order, but it was defeated.

The Protect Internet Freedom coalition said those with concerns about the Federal Communications Commission's proposal on broadband privacy have submitted over a quarter of a million comments to the FCC as of June 6, which is the deadline. The group said that was the total that had been submitted from its online platform. Given that the FCC's online docket showed 271,473 comments (218,198 in the last 30 days alone), the group was concluding that "despite all of the setbacks and glitches, opposition comments are still in the overwhelming majority of total comments filed." The FCC has had some problems with comment backlogs across all its dockets, including broadband privacy, due to an aging system that has recently been replaced. PIF complained to the FCC about the backlog.

Larry Downes, project director at the Georgetown Center for Business and Public Policy, is no fan of the Federal Communications Commission's broadband privacy proposal. Downes filed a letter in the docket referencing his article in the Harvard Business Review on what he says is the three major problems with the FCC proposal:

False Premise – The FCC’s assumption that Internet service providers have 'unique' access to consumer information is flatly wrong. Thanks to a nearly-complete campaign to encrypt information flow, ISPs are largely blind to the kind of sensitive information the FCC claims as its chief motivation for the rulemaking.

Double Standard – Leaving out the dominant 'edge' providers who are in fact the 'gatekeepers' of transactional information unnecessarily subjects consumers to two sets of different rules and different enforcement mechanisms for information exchange.

Transaction Costs of 'Opt-In' – Subjecting ISPs and ISPs alone to 'opt-in' requirements for nearly any use of consumer information, as all economists agree, significantly raises the transaction costs of precisely the kind of information exchanges that have so far fueled the 'cycle of innovation' that elsewhere the FCC praises as the source of the Internet’s phenomenal success. To do so only for those providers who have the least access to transaction data is both arbitrary and capricious.

The National Association of Broadcasters says it is fine with the Federal Communications Commission extending its online political file mandate to all video services, including cable and satellite and even broadcast radio, though there are some issues with the last that might require a phased-in approach.

The Federal Communications Commission said it supports the National Association of Broadcasters' request for expedited hearing of NAB's challenge to a portion of the incentive auction rules.

While saying it was not agreeing with NAB's criticism of the FCC's auction order, or that broadcasters would suffer irreparable injury absent the quick turn-around, it agreed that it was "generally in the public interest" to resolve the issue as promptly as possible.