STELA Draft Shores Up Support Among Cable, Broadcast and Satellite Industries

Broadcasters are “happy” the STELA draft avoids provisions that would involve “the picking of marketplace winners and losers,” Schurz Communications Senior Vice President of Broadcasting Marci Burdick, a board member of NAB and speaking on its behalf, will testify Wednesday (http://1.usa.gov/1cMSPVM). She will emphasize what broadcasters consider the heavier regulations they face. “Broadcasters are saddled with innumerable regulations that are far more onerous than our cable and satellite competitors: public file requirements, children’s programming rules, political advertising rules, and a slew of required reports and administrative filings,” she will say. Broadcasters welcome the chance for a Communications Act overhaul debate about bringing parity to different kinds of providers, she will add. Although the STELA draft is currently all right, broadcasters “strongly” oppose “the extraordinarily regulatory path the FCC is taking to make television [joint sales agreements] attributable for purposes of the broadcast ownership rules,” Burdick will stress.

A spokesman for TVFreedom, which represents broadcaster interests and counts NAB as a member, declared to us in a statement that Congress should review any big video updates as part of a Communications Act overhaul rather than through STELA reauthorization. “It is difficult to imagine that cable and satellite TV providers need wholesale reforms at the expense of TV broadcasters in the marketplace, especially since they collectively generated more than style07 billion in revenue in 2013,” said the spokesman, whose coalition is not directly testifying.

DirecTV Executive Vice President Mike Palkovic plans to reiterate the need for STELA reauthorization and express his pleasure with the draft. The STELA language “addresses one particular abuse of the FCC’s broadcast ownership rules,” he will say (http://1.usa.gov/1ivvYvG). “It does so, moreover, without attempting to address the full range of policy questions surrounding retransmission consent.” That should happen through the Communications Act update, he will say. But Palkovic will attack how broadcasters have handled retransmission consent issues and back the FCC’s recent efforts to address them. “DIRECTV carries more broadcasters than just about anyone,” he will testify. “I assure you that these arrangements harm viewers. They lead to higher prices (as much as 161 percent higher, according to [the American Cable Association]). They by definition cause greater harm when blackouts occur."

NCTA backs the draft and praised “two narrow, yet very important, reforms that will prune away outdated legal requirements, directly benefitting consumers and promoting a more level playing field among competing providers of multichannel video services,” President Michael Powell will testify (http://1.usa.gov/1eoqIqS). NCTA issued its first statement of support for the draft Monday night. Powell plans to praise the STELA draft language ending the “incoherence” of the integration ban, which requires cable operators to use CableCARDs instead of built-in security in set-top boxes, as well as the “important step” of having language limiting retransmission consent joint negotiations. The integration ban has not stirred consumer desire for third-party devices and “the costs of this misguided rule clearly outweigh its benefits,” Powell will say. “Repeal of the integration ban also will not interfere with opportunities for innovation in retail set-top boxes. CableCARD technology is limited to decrypting video programming so that customers can view the channels to which they have subscribed."

But several stakeholders have fought back against this integration ban provision. A coalition comprising Public Knowledge, the National Consumers League, Free Press, Consumer Action, Writers Guild of America-West and the AllVid Tech Company Alliance, consisting of Google, TiVo, Best Buy, Mitsubishi, Nagravision, SageTV and Sony, signed a letter directed at the subcommittee attacking the provision (CD March 11 p3). Free Press and TiVo are set to testify Wednesday.

TiVo General Counsel Matt Zinn will blast the language as “completely unrelated" to the purposes of STELA reauthorization and say it will “undermine the retail market for set top boxes and deprive consumers of choice,” according to his advance testimony (http://1.usa.gov/1ha23rQ). He will criticize cable lobbying and dispute any NCTA claim that this is a “minor change.” Free Press Policy Director Matt Wood plans to attack the language as well and urge its removal, based on his advance testimony (http://1.usa.gov/N44m6w).

Wood, however, largely will focus far more on his concerns with broadcasters, sharing agreements and his problems with language in the STELA draft directing the FCC to complete its quadrennial review before addressing sharing agreements. “While the Commission ultimately must fulfill its Quadrennial Review obligations, Section 4 would prevent it from addressing ongoing and serious violations of its local television multiple ownership rule,” Wood will testify. He criticized industry consolidation and the way these sharing agreements have come together, providing many pages of research and specific examples. “The recent wave of consolidation has been fueled not only by traditional mergers and acquisitions, but by outsourcing agreements used to evade the FCC’s local broadcast ownership rules,” Wood will say. “Prior to the Commission’s announcement last week, the agency had turned a blind eye to outsourcing agreement abuses -- too often rubber-stamping deals without careful attention to whether de facto transfers of control had occurred."

Subcommittee Democrats also touch on these STELA provisions in their memo on the hearing. “Without clear definition of what the FCC is required to comply with under this provision, the draft bill could have the effect of blocking the FCC from making any changes to the attribution rules to address broadcaster sharing arrangements,” the Democratic memo said (http://1.usa.gov/1ha7UgT). STELA will expire at the end of 2014, and legislation must pass through the Commerce and Judiciary committees in both chambers. Wednesday’s hearing is 10:30 a.m. in 2123 Rayburn.