SAN FRANCISCO – U.S. telecom companies are using a high profile programming dispute that broke into public view this March to influence the shaping of the rules regarding retransmission consent fees against the broadcasting industry, its lawyers argued in a filing with the Federal Communications Commission earlier this week.
“It is the petitioners themselves who are creating an artificial ‘problem’ and then asking the government to solve it,” according to the National Association of Broadcasters, and the associations for ABC, CBS, FBC and NBC affiliates.
The 139-page argument, packed with statistics, came in response to a petition signed this March by a group of non-profits, think tanks, the American Cable Association, and 10 of the 13 largest multichannel video programming distributors in the nation.
The fight between the broadcasters and the video distributors is of interest to lawmakers because cable rates are regulated by law and the sharp increases in pay TV rates over the years has been a concern to constituents.
The current petition came after a high profile incident just before the Oscar ceremonies this March when negotiations over retransmission consent fees between ABC and Cablevision broke down, leaving more than three million Cablevision customers in the New York City area without the channel for the day, and high and dry until the beginning of the ceremonies.
But the service interruption didn’t just spark off outrage among Oscar party hosts in the New York City region. It precipitated action by the cable, telecom and satellite TV companies, who charge that the broadcasters are abusing the rules laid down in a 1992 law to both extort ever-higher levels of compensation for the retransmission of their signals, and to force the inclusion of programming that the distributors’ customers don’t want — all resulting in ever-escalating monthly cable bills for those customers.
The broadcasters themselves point to a 2008 FCC report on cable industry prices that shows that the weighted average price of cable television service has increased by 163 percent between 1995 and 2008, while the Consumer Price Index increased by only 38.4 percent. The authors of the letter argue through detailed analysis how retransmission fees can’t be the source of this rise in cable bills. They also reference a 2003 Government Accountability Office Report that said it was a lack of competition, and not retransmission consent fees, that was to blame for rising cable bills.
But all these points are just a red herring, argues a telecom industry source. The prices are going up because the cost of paying for all the programming – for the copyright fees associated with the programs, as well as the fees for the signal, are increasing. Cable companies feel that they must have the programming from the broadcasters, but broadcasters will often only make their broadcast channel available on certain conditions.
“The broadcasters use the leverage of the retransmission consent negotiations to extract higher fees for all of their programming,” said the executive.
“Programming costs going up is definitely a result of retransmission consent fees … they are able to, by tying/connecting the licensing process of the other channels to the broadcast signal, charge higher fees for everything.”
For example, as part of some past retransmission consent compensation packages, broadcasters required cable companies to carry new channels.
“That’s how FX was launched, that’s how SOAPnet was launched, that’s how the FOOD Network was launched – these were all channels that were launched as compensation for retransmission consent.”
The petition asks the FCC to establish a “dispute resolution mechanism” when the two sides can’t reach an agreement over retransmission consent fees, and that the programming distributors should be allowed to continue carrying the broadcasters’ signals even if an agreement has not been reached by the time that their contracts have expired.
Retransmission consent fees are the cash fees and other forms of compensation that cable and satellite companies pay to broadcasters to carry their signals. Congress established the regulatory regime governing the marketplace through the 1992 Cable Act on the basis that cable companies were local monopolies.
But the programming distributors say that the marketplace has changed dramatically since 1992, and that they don’t have the monopoly market power that they wielded back then because of today’s increased competition between providers in the television marketplace.
That’s bunk, argue the broadcast industry’s lawyers, calling the coalition’s explanation of the 1992 Cable Act “revisionist history,” replete with “rhetorical hyperbole –not facts.”
“In the end, the petition is really about the fact that the pay TV industry preferred it when they could force television stations to give away their signals at a discounted rate or, in many cases, for free,” they argue.
But the bargain between all parties–the broadcasters, the video distributors and the public — is far more complex than what’s portrayed in the filing.
“When you look at the question of interim carriage, it’s very important to think about the public interest here,” shoots back the industry executive. “The copyright fees have already been paid to the creators and producers of the programming. The signal belongs to the public — it’s the retransmission of a broadcast signal, and the spectrum is the public’s asset, which broadcasters get for free, but for which they are charging.”
The broadcasters also argue that the ABC-Cablevision incident is a rare occurrence.
“In tens of thousands of retransmission and consent negotiations, there have been few showdowns, even fewer shutdowns, less than a handful of complaint adjudications by the Commission – just four in total – and zero findings by the Commission that a broadcast station has failed to negotiate in good faith or has otherwise abused the Commission’s rules or processes (the same, unfortunately, cannot be said with respect to MVPDs,)” write the broadcasters’ lawyers.
The lawyers recounted a radically different historical narrative than the one provided by the petitioners to bolster their argument that interim carriage is not something that can be even contemplated by the FCC.
“To the same extent a television station is not permitted to retransmit and resell the signal of another station without its consent, a cable system should not be permitted to retransmit or resell the signal of a television station without its consent,” they argue.
But this isn’t just another marketplace, argues the industry insider.
Because of the history of the development of the two markets, and the perception that cable was a monopoly, the rules governing the business negotiations between the two sides favors the broadcast industry while the cable industry is hamstrung by a thicket of rules that prevent them from searching out alternatives.
“It’s a marketplace where you’re going to the supermarket, and being told what you have to buy,” said the industry executive.
The petitioners include the American Cable Association, Cablevision, Charter Communications, DIRECTV, Dish Network, Public Knowledge, The New America Foundation, Time Warner Cable, and Verizon. Notably, it doesn’t include Comcast, which is in the process of buying NBC.
BroadbandBreakfast.com is hosting a panel discussion about retransmission fees and video program licensing issues June 8 at Clyde’s of Gallery Place in Washington, DC. The event is free and open to the public. Join us!
Federal Communications Commissioner Brendan Carr Optimistic About Finding Common Ground at Agency
March 24, 2021 — Federal Communications Commissioner Brendan Carr said the regulator has since 2017 seen what he wanted: Broadband speed increases and lower prices.
“The approach we adopted in 2017 is working,” he said at the Free State Foundation’s 13th annual telecom policy conference on Tuesday. “Speeds have increased, prices are down, and we see more competition than ever before; we need to keep it that way,” he said, stressing the importance of reinforcing the good work the previous administration did and continues to do.
Carr, who has been a part of the FCC since 2012 in various capacities and through different compositions, said the transition into the new administration is going well.
In contrast to before, when it seemed as though the “sky was falling” and there were many problems with net neutrality, today’s reality is quite different, thanks to Acting Chairwoman Jessica Rosenworcel, he said.
The chairwoman contacted him almost immediately after she asked him to participate an event together on telehealth. There have been a lot of conversations and compromises since that moment, he said.
He said elections do bring some consequences, and undoubtedly have shaken some of the agency’s previous standards with a different party in leadership. However, he said the FCC has been finding common ground, something that “has been all too rare in the past couple of years.”
He added that, in 2016, experts and analysts weren’t painting a very rosy picture for the US future leadership when it comes to 5G. One of the primary reasons cited was the cost and length of time to build out the Internet infrastructure in this country, he said.
“We went from 708 new cell sites in 2017 to over 46,000. The progress is astounding, and not only with towers but with fiber, as we built 450k miles of fiber in just one year alone.”
Spectrum auctions driving the agenda, Carr says
Optimistic on spectrum, he pointed out that at present, there is a lot of it available. “In 2017, the FCC had previously voted in a lot of higher band spectrum options.”
The work of initial prioritization was completed by us before 2017 when we moved in and noticed the lack of midband spectrum in the pipeline. We had to move fast, and we had the first auction for the midband in 2020, with frequencies ranging from 3.5 to 5.5 gigahertz.
Over the last couple of years, he said the FCC has opened that band to intensive use, pushing the midband spectrum a great deal. The future holds the need to create a spectrum calendar with a rough outline of spectrum auctions, including which bands are available for auction and when, he said. “I have already filled in that calendar.”
He said the regulator’s challenge is not with a lack of communication but with coordination. “We need the FCC to take a step back and consider the public interest, how the agency can best achieve the federal missions and how it can best do this. Even if there are going to be disagreements, it is paramount to ensure that the American economy stays competitive.”
Looking ahead, Carr said the 5.9 gigahertz project, which last year was on trial to expand rural broadband access, would be a great beginning to prove that good leadership and compromise are possible between both parties.
The $3.2 Billion Emergency Broadband Benefit Program: What’s In It, How to Get It?
March 5, 2021 – Just shy of the 60-day deadline set by Congress, the Federal Communications Commission adopted an order on February 25, detailing how the new Emergency Broadband Benefit Program would work.
The $3.2 billion program was part of the Consolidated Appropriations Act of 2021 that passed Congress in December 2020 and is allocated to the FCC to help low-income households with broadband access during the COVID-19 pandemic.
Broadband Breakfast Live Online will focus on the program on Wednesday, March 10, 2021: “The Emergency Broadband Benefit: How Will the $3.2 Billion Program Work?“
The funding will provide up to $50 per month for eligible low-income households, increased to $75 per month for those living on native tribal lands. Rather than disbursing directly to consumers, the funds will be distributed to participating broadband providers, who in turn will grant the discounted internet access to qualifying households who apply.
The Emergency Broadband Benefit program is not to be confused with the Emergency Connectivity Fund currently being considered by Congress.
The Emergency Broadband Benefit program also has a one-time reimbursement option of $100 for purchasing desktops, laptops or tablets for connecting to the internet, with a co-pay of between $10 and $50.
Households do not receive the reimbursement for buying a device separately: That is provided by the service providers through which the funding will be disbursed.
To qualify for the program, households must meet one of the following criteria:
- Qualifies for the FCC Lifeline program
- Is approved for the free or reduced-price school breakfast/lunch program
- Demonstrates substantial documented loss of income since February 29, 2020
- Received a federal Pell grant in the current award year
- Qualifies for a participating provider’s existing low-income or COVID-19 relief program, subject to FCC approval.
To receive reimbursement for services and connected devices, participating service providers must register with SAM.gov, cannot be listed on the Department of the Treasury’s “do not pay” list, and must register with the FCC to receive a registration number. Similar to the Lifeline program, the EBBP will be provided to companies who participate through the Universal Service Administrative Company.
To participate, companies are not required to be eligible telecommunications carriers through Lifeline, but must apply through an “election notice” with USAC. They must also get prior approval from the FCC before filing their notice.
The application window for service providers to apply to the program opens on Monday, March 8, 2021, and ends March 22. The program should begin approximately April 25, or 60 days after the FCC published the order.
The service provider’s broadband plan must have been in place by December 1, 2020, to receive the discounted rate.
Unlike the FCC’s Lifeline program that has been in place for several years, this new funding is temporary and set to expire, either when the $3.2 billion are exhausted or six months after the Health and Human Services secretary declares that COVID-19 is no longer a health emergency.
What You Need To Know About the More-Than-$7 Billion Emergency Connectivity Fund
March 5, 2021 – The Senate on Thursday voted to begin debate on the $7.6 billion Emergency Connectivity Fund, which is part of the House-passed $1.9-trillion coronavirus stimulus bill.
Most of the 591-page bill adheres closely to what President Biden called for in his relief proposal in January 2021, as reported by CNN. The $7.6 billion Emergency Connectivity Fund includes funds for internet service, hot spots, and other devices to use at home. The larger coronavirus bill includes new rounds of stimulus checks, unemployment assistance, and healthcare support.
This comes after a coalition of education advocates in January 2021 petitioned the FCC to add in a provision for emergency E-rate funding. On Feb. 9, 2021, House Energy and Commerce Chairman Frank Pallone, D-N.J., announced the provision as part of the committee’s legislative recommendations for the COVID budget reconciliation legislation. The Federal Communications Commission would be tasked with implementing the $7.6-billion fund.
The potential fund of more than $7 billion fund in this Emergency Connectivity Fund is not to be confused with the Emergency Broadband Benefit Program, a new pot of broadband money allocated by the consolidated appropriations bill passed in December 2021.
Broadband Breakfast Live Online will focus on that other program on Wednesday, March 10, 2021: “The Emergency Broadband Benefit: How Will the $3.2 Billion Program Work?“
The magnitude of the pandemic has sent schools scrambling to connect students to virtual learning. The Emergency Connectivity Fund would help connect some more than 15 million children and as many as 400,000 teachers, according to Common Sense and Boston Consulting Group.
But passage of the additional more-than-$7 billion in funding is not assured. Even to begin debate on the broader coronavirus relief package, Vice President Kamala Harris had to cast a tie-breaking vote because the Senate is even split with 50 senators who caucus with the Democrats and 50 Republicans.
Major tech priorities included in an earlier Senate draft of the bill appear unchanged in the official version of the bill introduced to the Senate yesterday. Funding for the Emergency Connectivity Fund is part of larger funding for the Technology Modernization Fund, as well as for the Cybersecurity and Infrastructure Security Agency and other proposals.
President Biden originally proposed $10.2 billion of funding for the modernization fund and cybersecurity, but the Senate’s version includes just $1 billion. Additional, the Senate’s version includes $7.17 billion for the Emergency Connectivity Fund, which was reduced by more than $400 million from the original $7.6 billion proposed figure.
Still, the fund represents the a very large tech investment to support broadband capabilities and remote learning in schools.
As Broadband Breakfast noted on Monday, the Emergency Connectivity Fund, previously signed into law in December 2020, secured $3.2 billion to expand broadband coverage to underserved communities and households in need. This internet service discounts of up to $50 per month for eligible consumers and up to $75 per month for those on tribal lands. Additional discounts on a computer or laptop device are also included.
As reported by MeriTalk, getting the Senate to bring its version of the $1.9 trillion stimulus bill to a vote later this week is imperative, as both chambers are pushing to get the bill signed into law before March 14, when some unemployment assistance programs will expire.
Presuming the Senate passes its version of the bill, it goes back to the House for a vote and then onto the White House for President Biden’s final signature.
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