The Future of TV Coalition This is Not the “Apps Approach” You’re Looking For

This is Not the “Apps Approach” You’re Looking For

Future of TV Coalition   •   Press Release   •   September 15, 2016

Senate Hearing Reveals Bipartisan Consensus that Newly Proposed Licensing Rules Exceed FCC’s Authority

Appearing today before the Senate Commerce Committee, FCC Chairman Tom Wheeler attempted to defend his controversial “revised” set-top box proposal to clearly skeptical lawmakers.  The proposed mandate has faced withering criticism from stakeholders and advocates across the spectrum; Sen. Claire McCaskill observed that she’s “never seen such a unanimous opposition from providers, programmers, and the creative community.”

By the end of the hearing, the verdict was clear:  a bipartisan majority of both Commissioners and Senators recognized that that proposal’s sweeping new licensing provisions would exceed the Commission’s authority.

Chairman Wheeler countered that his proposal actually reflected what industry leaders have been asking for.  “When the cable industry proposed a much simpler apps-based approach, we adopted it,” he claimed in his opening remarks.

To be clear:  this is false. 

The Chairman’s latest plan may be cloaked in the window dressing of “apps”, but looking behind the curtain reveals a radical plan that would unlawfully expand the FCC’s authority into the direct oversight of content licensing agreements and create a de facto compulsory license.  This is fundamentally incompatible with the apps framework proposed by industry leaders – a plan that would respect the U.S. Copyright Office’s admonition to prevent the FCC from interfering with private licensing agreements.

Direct FCC Involvement in Content Licensing

Chairman Wheeler testified that “it is not our goal to become a judge of the contracts between MVPDs and programmers.” But as Commissioner O’Rielly noted in his opening remarks, that’s EXACTLY the role the FCC would play under the proposed rules.  The proposal would give the FCC the right to nullify any contract terms it considers “unreasonable” – even terms that programmers might rightfully insist on to protect their legitimate content security interests.  This represents a violation of content creators’ rights under the Copyright Act and marks the first time the federal government would directly involve itself in setting the terms of commercial licensing agreements  – a step that that exceeds the FCC’s statutory authority, as Commissioner Rosenworcel pointed out.

Direct FCC Involvement in App Licensing

Chairman Wheeler’s latest “fact sheet” promises that the rule will leave “control of the app and related software in the hands of the pay-TV providers.”  But as Commissioner Pai testified, this isn’t the case.  The rule requires the development of a “standard license” governing these apps, and gives FCC the right to reject or alter this license– at the staff level, no less, without even requiring a vote of the Commission.  The proposal even suggests the FCC could launch a new proceeding to rewrite the license themselves – once again exceeding the Commission’s authority, as noted by Commissioner Rosenworcel.

A False Promise of Consumer Privacy

The FCC’s proposal would require TV providers to hand over customers’ private subscription and transaction data to any tech platform running TV providers’ apps.  Chairman Wheeler suggested at today’s hearing that as long as consumers “opt-in” to sharing their data with device-makers, they’ll be protected.  But even if a customer opts in, sharing their private data with unregulated device manufacturers will mean the loss of key statutory protections under federal privacy laws.  Cable and satellite companies are covered by these tough privacy laws, but tech companies aren’t – so if a tech company violates their stated terms or suffers a breach, customers have no right to go to court to obtain relief.

By contrast, the TV industry’s “Ditch the Box” apps alternative would allow for integrated search without requiring TV providers to expose customers’ private entitlement data.  As Commissioner Pai noted, this would have avoided the risks to consumers by ensuring that customers would retain their privacy rights under the Communications Act. 

A Federal Roadblock to Innovation

Under the industry’s proposed “Ditch the Box” alternative, each TV provider would be free to test and deploy new features consistent with their licensing terms, and to keep those license terms current as technology trends, threats, and opportunities evolve in the marketplace.   But under the FCC’s approach, TV providers would have to conform their diverse network architectures to standardized government technology mandates and navigate months of federal red tape to make even small changes in the “standard license” to enable new features.  And they would be banned from testing any new features without adding those features to every app serving every platform in lockstep – massively increasing the cost of innovation.

Make no mistake:   The “revised” proposal described at the recent Senate hearing appears to be substantially different from the apps-based alternative put forward by TV industry leaders, as Commissioner Pai made clear in his remarks.

Of course, there’s an easy way Chairman Wheeler could clear up the confusion about what’s actually in the new proposal:  by “Unlocking the Item” and releasing the text for public review.

See the original article at: Press Release