As House Passes STELA, Debate Explodes Around Integration Ban Provision

TiVo “strongly opposes” the STELA integration ban provision, CEO Thomas Rogers told Senate Commerce Committee leaders in a Tuesday letter. He cited TiVo’s recent deal with Comcast that “now clearly demonstrates that the proper incentives currently exist for the industry to work out the transition from CableCARD to a future solution without any need for federal legislation.”

The Senate Commerce Committee is the last of STELA’s four committees of jurisdiction that has yet to to produce a draft. Senate Commerce Committee Chairman Jay Rockefeller, D-W.Va., and ranking member John Thune, R-S.D., have told us they're negotiating a draft that will include some provisions revamping the video marketplace.

The House integration ban provision will influence the Senate version “not much,” Rockefeller told us at the Capitol. “We're not where the House is. And remember that this is something that John Thune and I are working on together, so it will be a bipartisan thing.” On whether TiVo should be concerned, he remarked, “I don’t know what TiVo should worry about.”

"We're still batting those things around,” Thune said at the Capitol. “The House had three or four things that they added that they viewed to be reforms in addition to just the reauthorization, and I suspect that those will get a good hearing in our discussions. I don’t think any final decisions have been made, but most of the stakeholders came out in support of the House bill, TiVo probably being the exception to that, and I think those are reforms that we're taking a hard look at.”

'Deep Concerns,’ Eshoo Says

House lawmakers from Commerce and Judiciary touted the STELA Reauthorization Act Tuesday on the floor. Commerce Committee Chairman Fred Upton, R-Mich., mentioned the integration ban provision first: “The bill represents the best of what our committee does,” Upton said. Rep. Peter Welch, D-Vt., said the integration ban rule “regrettably is not working as intended” and slammed what he judged energy inefficiencies involved. Judiciary Committee ranking member John Conyers, D-Mich., praised how bipartisan the process was. HR-4572 also includes provisions ending the sweeps weeks rule, prevents joint retransmission consent negotiation and allows broadcaster to unwind sharing agreements. Broadcasters may yet try to modify certain of those provisions in the Senate, they said (CD July 22 p2). House Communications Subcommittee Chairman Greg Walden, R-Ore., dubbed these “much needed reforms” and referred to the integration ban provision as a “bipartisan lift.”

One Democrat voiced concerns. “While I support provisions intended to modernize the video marketplace, I continue to have deep concerns about repealing the cable set-top box integration ban prior to the industry-wide adoption of a successor to the CableCARD,” Communications Subcommittee ranking member Anna Eshoo, D-Calif., said in a prepared floor statement praising the bill as a whole. “With an eye to the future, we can fulfill a goal I set out to achieve nearly 20 years ago and that is to give consumers an alternative to renting a set-top box from their local cable company each month.”

The cable industry has spent many months lobbying in favor of ending the integration ban. “Eliminating the integration ban will reduce costs for consumers, cut set-top box energy consumption, and allow cable providers to compete on a level playing field with the many other video providers in the marketplace who aren’t subject to the integration ban,” an NCTA spokesman said when asked about TiVo’s concerns. “Since 2007, when the FCC required cable operators to stop using integrated set-top boxes and use CableCARDs instead, the integration ban has added over $1 billion in needless costs to subscribers. On top of the added hardware expense, subscribers collectively foot the bill for roughly 500 million kilowatt hours consumed by CableCARDs each year.” Comcast, despite its recent agreement with TiVo, still “firmly” believes the integration ban should be repealed, a spokeswoman said.

Several groups welcomed the House STELA passage in statements, including the American Television Alliance, the Association of Public Television Stations, NCTA and USTelecom. Industry stakeholders have lobbied Congress heavily throughout STELA reauthorization debates, as Q2 lobbying forms due Monday attested. NCTA spent $4.01 million this quarter, and Comcast, one of its members, clocked $4.45 million. NAB, meanwhile, spent $4.65 million. DirecTV spent $590,000 and Dish spent $370,000. The American Cable Association spent $130,000.

Latta Wants Senate Action

The integration ban language originated as part of a bill (HR-3196) that House Communications Subcommittee Vice Chairman Bob Latta, R-Ohio, introduced last fall. Public Knowledge objected to the integration ban language as well as what it judged a partisan process leading up to the House STELA bill. “Although there was significant opposition to the Latta bill, it was ultimately included in the final version reported” by the House Commerce Committee, said Public Knowledge Vice President-Government Affairs Chris Lewis in a Tuesday letter to House leadership. “Public Knowledge is disappointed that a more bipartisan approach was not taken from the beginning of this discussion.” The House STELA bill backers include both Republicans and Democrats from House Commerce and the Communications Subcommittee, and Latta’s original bill included Democratic backing from the start. Without the integration ban, the FCC “would be limited in its ability to ensure that consumers can use their choice of equipment to view cable programming,” Lewis argued. Latta dismissed the integration ban as “unnecessary regulation” when speaking on the House floor.

The provision “is a shining example of bipartisanship,” Latta told us in a statement, citing HR-3196’s co-authorship with a Democrat and negotiation with Eshoo. “Misinformation campaigns, like the one being led by Public Knowledge on TiVo’s behalf, have spread a web of mistruths in an attempt to misrepresent this pro-consumer, pro-innovation provision. The cable industry has already stated that it will continue to support third party set-top boxes, and this provision simply allows for greater competition and greater investment in the video marketplace, decreasing the cost of video delivery to consumers.” The Senate should include the provision, Latta said.

Colorado’s two Democratic senators, Mark Udall and Michael Bennet, meanwhile, unsuccessfully urged the House in a joint news release (http://1.usa.gov/1sMwPQV) to include their video bill, the Colorado News, Emergency, Weather and Sports Act, in the STELA vote. Their legislation aims to allow residents of the Four Corners region to receive local TV from satellite and cable operators.

What will go in the Senate Commerce draft remains a mystery, one veteran Hill strategist familiar with the integration ban debate told us Tuesday. He said some Commerce members have seemed sympathetic to TiVo’s arguments but the final STELA product is unknown. If he were to hazard a guess, he'd surmise Rockefeller and Thune would circulate a draft in early September, he said. But September is short of legislative days, and debate on the issue could be pushed into December, he said. The strategist had doubts that anything too controversial could become attached to STELA, given Senate leadership signals favoring a clean bill -- the end product might include nothing beyond a five-year reauthorization, with none of the House add-ons, he said.