Industry Relieved at Congressional Passage of STELA Reauthorization Before Thanksgiving

Senate passage of STELAR occurred shortly after 7 p.m. Thursday, a committee aide said. At the time, Majority Leader Harry Reid, D-Nev., was on the floor calling up the day’s wrap-up memo. Within a half-hour, Senate Commerce Committee Chairman Jay Rockefeller, D-W.Va., and ranking member John Thune, R-S.D., issued a joint statement: “Today’s unanimous passage of the bipartisan, bicameral STELA Reauthorization Act guarantees that 1.5 million satellite pay TV subscribers maintain access to distant broadcast network television signals,” they said, praising the legislation’s “important, common-sense and pro-consumer reforms to the nation’s video laws, many of which originated in our Senate bill that the Commerce Committee passed in September.” The bill reauthorizes STELA, which expires Dec. 31, for another five years.

The House compromise bill cruised through the Senate after Sens. Ed Markey, D-Mass., and Richard Blumenthal, D-Conn., said Wednesday they wouldn't block the bill over its repeal of the set-top box integration ban (see 1411190058). The bill would repeal it after one year and tells the FCC to create a working group to find a CableCARD successor standard. Sen. Dianne Feinstein, D-Calif., is believed to have considered raising objections over that same issue in the day leading up to the unanimous consent vote. A Feinstein spokesman confirmed Thursday that she wasn't placing a hold on the hotline but was unable to confirm Friday whether she had integration ban repeal concerns.

“The cable industry has teed up through this legislation what we have been looking for all along -- for the FCC to update section 629 to ensure that consumers have the choice to purchase a set-top box rather than continue to lease one from their MVPD [multichannel video programming distributor] as the technology moves to IP,” TiVo General Counsel Matt Zinn said in a statement after the hotline’s approval. “We are hopeful that the FCC will now take the necessary steps to open this market to robust competition.”

TiVo has long and vocally opposed repeal of the integration ban. Zinn told an audience on Capitol Hill Nov. 17 that the cable industry had “hijacked” the STELA reauthorization process and cast doubts about the FCC's ability to convene an industry working group successfully if such integration ban repeal legislation passed (see 1411170037).

A deluge of other statements followed the hotline. “This bill makes sure satellite customers can keep accessing broadcast content, and it also starts the important process of modernizing our laws as consumers continue to change how and what they watch,” said Commerce Committee Chairman Fred Upton, R-Mich. “Sending this bill to the President shows the American people that Congress can come together in a bipartisan and bicameral fashion to pass legislation,” said Senate Judiciary Committee Chairman Patrick Leahy, D-Vt., approving of the passage. The repeal of the integration ban “will foster greater investment and innovation in the set-top box market,” said House Communications Subcommittee Vice Chairman Bob Latta, R-Ohio, author of the original repeal bill. “With New Jersey being one of only two states without its own media market, I’m pleased my amendment was included in this reauthorization to evaluate what more can be done to promote local news programming,” said Sen. Cory Booker, D-N.J., citing a provision introduced with Sen. Deb Fischer, R-Neb. Their provision would tell the FCC to review media markets and assess the best ways to improve local TV programming access.

The Senate “moved with appropriate speed to prevent consumer disruption and to enact meaningful video reforms,” NCTA said, especially pointing to its repeal of the “ill-conceived” integration ban “at long last.” NCTA has lobbied aggressively to repeal the ban. Dish and DirecTV lauded the passage and want to continue “the important discussion regarding retransmission consent reform, and in particular protecting consumers from local channel blackouts,” they said.

American Cable Association President Matt Polka urged President Barack Obama to “sign this bill into law immediately” and praised what he called many pro-consumer provisions. The reauthorization “will help tap the brakes on out-of-control retransmission consent fees by banning any same-market TV stations that are not commonly owned from jointly negotiating retransmission consent,” Polka said. “In more than 20% of local TV markets, ACA found that TV stations had been relying on this collusive tactic to gain even more bargaining leverage over small cable companies in an effort to force their customers to pay higher fees for broadcast TV.”

NAB reiterated its neutrality on this STELA reauthorization bill Friday. NAB had lobbied for clean STELA reauthorization, not overhauling any retrans rules. It was especially opposed to an earlier STELA reauthorization proposal in the Senate known as Local Choice, which would have imposed a broadcast a la carte model. Rockefeller and Thune dropped Local Choice, but Thune has said he may take it up next year.

Polka also blasted the “burdensome” integration ban and said it “drove up the price” of set-top boxes and retail cable bills “while failing to engineer a robust retail market for such boxes that regulators identified as their goal.” The bill will let ACA members “roll out so-called integrated” set-top boxes “that will have the same rich navigation features and functions yet in a more cost-effective manner,” Polka said. “This change, however, will in no way relieve cable operators from their obligations to support CableCARD boxes, like those manufactured by TiVo, that consumers acquire elsewhere, which represents a consumer-friendly compromise between cable operators and consumer electronics manufacturers.”

“I think there are a couple of takeaways from STELAR,” Guggenheim Partners analyst Paul Gallant told us. “One is the battle over the minor issue of set-top boxes, which is a good reminder of how hard it could be to pass something truly impactful in 2015-16. The other is the Local Choice push by incoming chairman Thune, which suggests video will be a big part of whatever the Senate does on telecom.”