Don’t Expect ‘a Clean Process’ for STELA, Rockefeller Says

"It’s fair to say this will not be a clean process this year,” said Senate Commerce Committee Chairman Jay Rockefeller, D-W.Va., to witnesses at the hearing.

Last fall, Rockefeller introduced the Consumer Choice in Online Video Act, which purports to create parity for online video distributors and spurred resistance from industry. Lobbyists have speculated Rockefeller may want to attach his legislation to STELA. “One of the things that I have learned from my tenure is that the Committee should seize the opportunities that present themselves, not take a pass for another day,” Rockefeller said in his opening statement (http://1.usa.gov/1fLCMDh), not explicitly mentioning the bill. “That future day may not come.” He disputed that Congress should wait for some “mythical rewrite of the Communications Act” to address such video market concerns. Senate Commerce hearings have shown the video market “could be reformed” to help consumers, “particularly through online video distribution,” he said. Rockefeller made a brief appearance at the hearing to deliver his statement, then left.

"Dealing with these issues will require the Committee to take a close look at today’s video market, ask tough questions, and ultimately we may have to make hard choices that may upset incumbent interests,” Rockefeller said. “The touchstone will always be whether the Committee’s STELA reauthorization legislation advances the public interest."

"I want to reiterate my view that what ultimately matters in this debate -- and more importantly any legislation that will be considered by this Committee -- is what will be best for the consumer,” Communications Subcommittee Chairman Mark Pryor, D-Ark., said in an opening statement. “Folks back home are less interested in what goes on behind the scenes than making sure they can receive broadcast TV programming relevant to their lives -- whether it be news important to communities, their favorite sports teams, or, more critically, timely weather warnings that can ultimately save lives.” Pryor approaches reauthorization with an “open mind,” he said.

STELA will expire at the end of the year unless Congress reauthorizes it, and Commerce and Judiciary committees in both chambers have jurisdiction over the legislation. The House Communications Subcommittee cleared a STELA draft bill last month (CD March 26 p2) following some initial concerns from industry as well as subcommittee Democrats. It awaits full committee action. The Senate Judiciary Committee held its first STELA hearing last week, focusing on retrans blackouts (CD March 27 p3). Subcommittee ranking member Roger Wicker, R-Miss., praised the House STELA draft on pulling together “a set of narrow, targeted, common-sense reforms.”

"Is five years the right amount of time?” Pryor asked witnesses on the length of time for which STELA should be reauthorized. Sen. Kelly Ayotte, R-N.H., worries about “the consumers caught in the middle” and wondered about the dangers to consumers who would lose service if STELA were not reauthorized by its expiration.

DirecTV: Longer is Better

DirecTV Executive Vice President Mike Palkovic said his company would back as long a time as would be allowed. DirecTV is not on “a level playing field with cable,” he added. “Longer is better for us."

"In any given week, if you look at the top 100 shows, somewhere between 94 and 96 of them are broadcast content -- that shows you where the eyeballs are,” NAB CEO Gordon Smith said of the future of video. Broadcasters should be able to control this content and be able to negotiate for its market value, Smith said. He criticized the FCC for not performing a review of media ownership (CD April 1 p4). “We become the heavy in this, as if somehow we're to blame,” Smith added. Stations are always on, he said, suggesting broadcasters need to a do a better job educating consumers about what they do and the nature of accessing the content simply via an antenna. But NCTA President Michael Powell pointed to rising retransmission consent negotiation fees, saying they didn’t reflect market realities. Powell said he’s “proud” to see FCC Chairman Tom Wheeler taking action on that issue (CD April 1 p11) and giving teeth to good-faith provisions.

Wicker posed questions to NCTA and TiVo CEO Tom Rogers on the set-top box integration ban, a source of contention in the House STELA draft. That legislation proposes repealing the integration ban, a move strongly backed by the cable industry and opposed by TiVo. “Why is that good for consumers?” Wicker asked Powell. Powell defended the repeal and said the House draft language suits him fine. “It does have to be replaced for an IP world, which is coming very quickly,” said FCC Media Bureau Chief Bill Lake.

"Did they overstep their bounds here?” asked Sen. Ron Johnson, R-Wis., of the FCC’s vote limiting the use of joint sales agreements Monday. “A great injustice has been done,” Smith said, emphasizing how the FCC changed rules in an “ex post facto” way. “I don’t think they've overstepped their bounds at all,” Powell said, pointing to the agency’s duties to maintain good faith in retrans negotiations.

Sen. Roy Blunt, R-Mo., pressed witnesses on the FCC vote Monday on joint services agreements. “If the FCC had any intention to damage broadcasting, they made a good start yesterday,” Smith said. “Just check with Wall Street.” He called the vote “fundamentally unfair.” Smith insisted that JSAs are no different than cable interconnects, looking to Powell: “Well, come on. Where is that fair?”

"The Department of Justice has reviewed these kind of interconnect relationships, and have found them to be acceptable buy-in groups,” principally since the groups are not direct competitors with one another, Powell said.

The FCC typically sticks to a technical advisory role during STELA reauthorization, Lake told lawmakers. “If we have one ask for Congress at this juncture -- from the staff who work directly on these issues -- it would be for Congress to keep in mind the interdependence of the Communications Act provisions with the Copyright Act statutory licenses,” Lake testified (http://1.usa.gov/1dL29Kd). “While I understand that the Commerce and Judiciary Committees on both sides work together very well to develop the underlying policies, ensuring that the statutory language is complementary between the two acts is essential to make sure that the intent of Congress is effectuated.”

"We see now a tremendous amount of competition for the video market from the Internet,” Lake told lawmakers when questioned. “We do think it'll change a lot of the business models.” Pay-TV subscriptions may drop, he said. “We do anticipate that there will be more consumer choice and more competition going forward.” The Internet cannot take over the video market due to physics, Smith said. “When you try to run all video through the Internet, guess what happens? It crashes.” Broadcasting must be a “survivor industry” in this due to the “laws of physics,” Smith said.

TVFreedom, a coalition of broadcast interests including NAB, attacked NCTA for reviving a proposal that would allow cable operators to remove broadcast stations from the basic tier. A coalition spokesman called the “greed-driven” move “unconscionable” and cited from Powell’s testimony. “In reality, this pay-TV ploy represents yet another consumer rip-off and searing tactical play by the pay-TV industry to further lock in its regulatory advantage over broadcasters in the marketplace,” the spokesman said. The Rural & Agricultural Council of America, a TVFreedom member, also released a statement Monday calling for a clean STELA reauthorization, a position widely shared by broadcasters.