STELA Concerns Stir Ahead of Wednesday Hearing

"Reject any proposals to weaken Section 629” in the STELA reauthorization process, said the letter, directed at Communications Subcommittee Chairman Greg Walden, R-Ore., and ranking member Anna Eshoo, D-Calif. “Rather, Congress and the FCC should maintain and strengthen, not eviscerate, the law’s requirement for equal treatment of consumers who purchase competitive commercial devices.” These stakeholders asked the subcommittee “not to forestall competition through an amendment to STELA such as the language of” HR-3196. “This provision would allow cable operators to rely on IP technologies that are incompatible with competitive devices and user interfaces,” said the letter.

House Republicans defended the provision in a majority memo, released Monday. The STELA provision “does not repeal the Commission’s section 629 mandate to foster the retail set-top box market,” the memo said (http://1.usa.gov/1i5LQXA). “Rather, it eliminates the section of the Commission’s rules that require CableCARDs in leased set-top boxes, leaving the Commission free to use other tools at its disposal to regulate the set-top box marketplace.” The memo cited judicial actions that rendered parts of the FCC “CableCARD regulatory regime” not in effect any longer. “Nonetheless, the integration ban and separable security requirements continue to be good law, and cable operators continue to use CableCARDs to comply.” The cable industry has backed the provision.

The memo framed the issues for House Republicans before a Wednesday House Communications Subcommittee hearing set for 10:30 a.m. in 2123 Rayburn. The subcommittee Monday added Free Press Policy Director Matt Wood to the list of witnesses, which already included DirecTV, NCTA, Schurz Communications and TiVo executives.

The draft legislation would reauthorize STELA for five years and also kill the sweeps-week prohibition on signal changes and limit joint retransmission consent negotiation, among other changes. The memo called the add-ons “several narrowly tailored changes to the video distribution law, intended to ameliorate perceived flaws in the current system.” It noted that the House Commerce Committee “is concurrently working on major changes to the Communications Act, which is the better venue for a comprehensive review of necessary changes to the communications sector and its governing laws.” STELA expires at the end of 2014, and the Commerce and Judiciary committees in both chambers have jurisdiction over its reauthorization.

Surprise Free Press Invite

"We weren’t expecting to be involved,” Wood told us of STELA. But the recent revelation that the STELA draft will include the integration ban provisions, as well as language limiting FCC action on sharing agreements before the agency completes its quadrennial review compelled Free Press’s involvement, he said. He was still putting the finishing touches on his testimony Monday. It will include “just a word” on the integration ban, he said, pointing out that TiVo General Counsel Matt Zinn will testify in opposition to the integration ban language and Free Press tends to be “in alignment” with Zinn’s views on that. The “main focus of our testimony” will be the STELA language that proposes limiting FCC shared services action, which is wrong, he said. Wood praised FCC Chairman Tom Wheeler for announcing intentions to address such sharing agreements last week (CD March 7 p7). “We supported the FCC’s action as a good first step.”

The GOP memo also defended the bill’s language limiting FCC action on broadcaster sharing agreements, the subject of a draft item to be voted on at the March 31 agency meeting. (See separate report below in this issue.) The STELA draft “requires the Commission to complete its statutory duty to review all of its media ownership rules every four years (the ‘quadrennial review') prior to taking action on the specific issue of [joint sales agreements],” the memo said. “While sharing arrangements may warrant a hard look, just as the UHF discount may warrant re-examination, the Commission’s review should take place in its quadrennial review, not as a piecemeal substitute for complying with its governing statute.” Broadcasters have lobbied for this provision, an industry executive has said.

Industry officials and lobbyists have wondered how this STELA draft will play among subcommittee Democrats, who have not weighed in publicly on the provisions. Eshoo has outlined concerns with the integration ban language in its bill form, before it became a part of the House Republicans’ STELA draft. Her office did not comment Monday. One broadcast lobbyist said last week that the CableCARD language may prove controversial among subcommittee Democrats. Eshoo seems to be the prime Democrat who opposes the measure, and has clout on the subcommittee as its ranking member, the lobbyist added.

That integration ban language “received very little support from the Democratic side of the aisle,” said Public Knowledge Vice President-Government Affairs Chris Lewis. The integration ban and the shared services agreement FCC language will likely come up, Lewis said, adding he expects questions at the hearing on the latter. Lewis called the FCC announcement on shared services agreements last week a “positive step.” Lewis is curious how other video revamp proposals may come up at the Wednesday hearing, given Public Knowledge’s attention to online video and the video bill that Senate Commerce Committee Chairman Jay Rockefeller, D-W.Va., introduced last fall. He expects the legislation’s language to evolve over the course of the next half-year.

"The FCC has conducted an Inquiry about a successor to CableCARD that would be based on a standards-based IP gateway concept of supporting competitive devices,” the opponents of the integration ban language told the subcommittee in their Monday letter. “We ask this Subcommittee not to block a decision-making process that could allow manufacturers, retailers, and consumers to realize the benefits of a healthy set-top device market, free from cable industry control and akin to the market that has developed for competitively provisioned viewing devices like smartphones and tablets.” (jhendel@warren-news.com)