STELA Stakeholders Battle Over Retrans, Rockefeller’s Video Bill

STELA must pass through the Commerce and Judiciary committees in both chambers, with each committee putting together legislation dealing with its area of jurisdiction. The Senate Judiciary Committee is holding a hearing on STELA March 26 at 10 a.m. in 226 Dirksen. Witnesses haven’t been announced, but a broadcast industry lobbyist told us witnesses won’t include a cable representative, but will include someone representing public interest concerns, someone representing broadcast and someone from satellite -- likely Dish Network. A different industry official confirmed that Dish General Counsel Stanton Dodge is testifying.

The next factor to watch is how quickly Senate Judiciary moves on its own legislation, the broadcast lobbyist said. He judged that both Senate and House Judiciary seem to be leaning toward narrower reauthorization bills, which broadcasters want. The House Communications Subcommittee introduced draft legislation earlier this month, and Chairman Greg Walden, R-Ore., told reporters last week he wants to mark up that draft soon (CD March 13 p1). Walden said there’s some informal communication among these committees of jurisdiction.

Retrans Requests

Cable and satellite companies asked Senate Commerce to include retrans provisions in STELA, among other changes. NCTA suggested “broadcasters that are not commonly owned should be prohibited from coordinating their retransmission consent negotiations,” it told Senate Commerce. “This ban could be effected by modifying section 325 of the Act to prohibit such activities, or by clarifying explicitly that such coordination would violate a broadcaster’s obligation to negotiate retransmission consent in good faith.” NCTA wants the use of joint sales agreements and shared services agreements to coordinate retrans consent negotiations forbidden unless the stations are co-owned, it said. A draft FCC order would attribute some broadcaster sharing deals, and another also tentatively set to be voted on March 31 would bar some joint retrans broadcaster negotiating (see separate report below in this issue.)

"Congress should explicitly preclude broadcasters from withdrawing their signals during retransmission consent disputes by requiring interim carriage pending resolution of such disputes, such as through an alternative dispute resolution mechanism,” said the American Cable Association (ACA). “Congress should direct the FCC to adopt a rule mandating that broadcasters and MVPDs [multichannel video programming distributors] continue to offer a broadcast signal to consumers after an existing retransmission consent agreement expires and while the terms of a new agreement are pending resolution of a dispute.” That rule would allow an agreement to “automatically be extended past its expiration date, and an MVPD would continue to pay the broadcaster for retransmission consent rights per such contract,” it said. Once a dispute ends, “prices and terms of the new agreement would retroactively apply to begin immediately after the previous agreement’s expiration date and any required true-up of prices would be applied,” said ACA. Dish and DirecTV also had backed a ban on joint sales agreements (CD March 18 p8).

NAB said retrans is one of the “wholly unrelated and controversial areas” that Congress should avoid in reauthorizing STELA. Such issues and any broader telecom law rewrites should be reserved for elsewhere, NAB said, saying they could “prolong, complicate and threaten” STELA reauthorization. NAB said the pay-TV industry’s proposed changes to retrans are simply to give them leverage and that it’s a manufactured crisis missing the fact that the retrans consent regime works as intended. NAB has long lobbied for a clean reauthorization of STELA, especially in recent weeks when a House STELA draft initially spurred outrage over a controversial basic tier provision that House lawmakers have since dropped (CD Feb 28 p1). NCTA lobbied in favor of that position in its comments to Senate Commerce. Retrans “stations should not have a government-mandated right to be included in cable operators’ ‘must buy’ basic tier,” NCTA said. “Eliminating the legal requirement for cable operators to include broadcast stations electing retransmission consent on the basic tier would promote greater competitive neutrality among video distributors.” Public Knowledge agreed.

Rockefeller Pushback

Don’t include the Consumer Choice in Online Video Act as part of STELA reauthorization, several industry commenters told Senate Commerce. Rockefeller introduced the bill last fall, much to industry chagrin (CD Nov 14 p5). That legislation aims to level the playing field for online video distributors. “While it is appropriate for Congress to monitor these developments, intervention in this robust marketplace would be premature,” said NCTA. It said a “thriving” online video space exists now. “There are many problems today with the existing marketplace for multichannel video distribution that require the Committee’s immediate attention and resolution,” the ACA said. “Online concerns are important, complex and best left to separate consideration.” NAB also disputed that STELA is the “appropriate vehicle” for such legislation. NAB “remains concerned about proposals that legitimize theft of copyrighted programming and signals,” it told Senate Commerce, saying copyright and signal theft are “a very real threat” to broadcaster revenue without elaborating. The bill includes provisions implicitly dealing with streaming TV service Aereo, which NAB calls a copyright scofflaw. Senate Commerce is not seen as especially friendly to broadcasters, industry officials said. Dish and DirecTV criticized “several provisions [that] appear to impose additional, unwarranted regulation on MVPDs,” one banning “many exclusive arrangements,” the two companies said of Rockefeller’s bill.

Public Knowledge said the bill “contains a number of valuable reforms, all of which Congress should consider.” It praised the provision “extending the protections and benefits that MVPDs currently enjoy to functionally-equivalent online services, and ensure that all online video services (even those that do not offer linear programming) can access both video content, and consumers through nondiscriminatory broadband connections."

STELA reauthorization shouldn’t include the repeal of the integration ban, as the cable industry has supported, TiVo General Counsel Matt Zinn told Senate Commerce in a Monday letter. The integration ban demands cable operators use CableCARDs instead of built-in security in set-top boxes. TiVo’s response didn’t supply answers to the listed Senate Commerce questions but rather focused on this central concern of TiVo. Zinn had testified on the integration ban earlier this month at a House Communications Subcommittee hearing and loudly opposes such a provision currently in the STELA draft introduced by Walden. “If the integration ban were repealed, the ability for third parties such as TiVo to provide consumers with a choice of devices to receive cable programming would be undermined,” Zinn told Rockefeller and Thune. ACA and NCTA support including the repeal, they told Senate lawmakers. The ban “burdens consumers, wastes energy, slows innovation, violates principles of competitive parity, and is unnecessary to meeting the stated statutory objective of promoting the competitive availability of retail set-top boxes,” NCTA said.

Not all stakeholders supplied comments. Free Press Policy Director Matt Wood told us it’s been “in conversation” with the committee but did not submit written comments. Wood had testified before the House Communications Subcommittee earlier this month, but with a focus on “other amendments and additions” to the STELA draft in that subcommittee, he said. “We're certainly in favor of preserving satellite customers’ access to broadcast signals, but we see that ‘pure’ STELA renewal as rather uncontroversial.” The Computer & Communications Industry Association also didn’t submit comments, said Vice President-Government Relations Cathy Sloan, though CCIA passed along a news release to the committee backing the House STELA draft, with the exception of its provisions killing the integration ban.

A joint submission from International Center for Law and Economics Executive Director Geoffrey Manne and Associate Director Ben Sperry, plus TechFreedom President Berin Szoka, urged broad overhaul, including the repeal of the integration ban and changes to basic-tier obligations for cable operators. They dismissed Rockefeller’s video bill as “a step in the wrong direction” and instead urged lawmakers to consider as part of STELA reauthorization a bill from Rep. Steve Scalise, R-La., the Next Generation Television Marketplace Act. The Washington Technology Project, a consulting firm, urged Senate Commerce to “hold as many roundtables and hearings on the many facets of market entry barriers in the broadcasting, telecommunications and technology industries, as it does on the general business issues raised by STELA.” It cited “access to capital, wage inequality, institutional affiliations, science, technology, engineering and mathematics (STEM) discouragement, and other proxies for discrimination on the basis of race, age, ethnicity, gender, sexual orientation, disability, religion or socioeconomic background.”

Rockefeller is expected to hold a STELA hearing before long, likely to prominently address his own video bill. The Senate Commerce comment deadline was Tuesday. Senate Commerce staff has not decided whether to publicly release all the comments it received, a Democratic aide said, declining to say how many comments the committee had received by its Tuesday deadline or from whom. Congress must reauthorize STELA by the end of the year to avoid its expiration. The broadcast lobbyist said Senate Commerce’s solicitations included 40 or 50 stakeholders in what was a rather broad outreach. (jhendel@warren-news.com)