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Telecom Companies Are Using Fight Interrupting Oscar Ceremony Broadcast To Manipulate Public and FCC, Argue Broadcasters

SAN FRANCISCO – U.S. telecom companies are using a high profile programming dispute this March to manipulate public opinion to skew 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.

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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.

The rules governing retransmission consent fees aren’t outdated, argue the National Association of Broadcasters, and a group of affiliate associations.       Photo by: gbaku

“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!

Sarah Lai Stirland was Contributing Editor for BroadbandBreakfast.com until April 2011. She has covered business, finance and legal affairs, telecommunications and tech policy for 15 years from New York, Washington and San Francisco. She has written for Red Herring, National Journal's Technology Daily, Portfolio.com and Wired.com. She's a native of London and Hong Kong, and is currently based in San Francisco.

FCC

Housing, Public Interest Groups Oppose Multitenant Exclusivity Agreements

The FCC is looking at how to promote broadband competition and access in buildings.

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Photo of Jenna Leventoff from Internet Law & Policy Foundry

WASHINGTON, October 21, 2021 – Opponents of exclusivity arrangements that give tenants of multitenant buildings less choice of internet service provider are urging the Federal Communications Commission to eliminate all manifestations of these contracts that they say harms competition and locks landlords into burdensome long-term contracts.

While the FCC has previously banned exclusive access agreements that granted a single provider sole access to a building, it did not do so for exclusive wiring, marketing and revenue sharing arrangements. That means third party service providers cannot share the building wires with the telecom with that privilege and cannot market their services to the building’s residents.

The FCC launched a comment period in September to field arguments about what to do with these holdout issues that gave priority to ISPs. In an early submission, the internet and television association NCTA said the commission should deny all broadband providers exclusive access to these buildings, but not exclusive wiring agreements.

Internet and competitive networks association INCOMPAS said in its submission that the competitive environment has continued to suffer due to these exclusive deals and, in the case of retail shopping centers, their deals have been extended over the “last several years.”

It is asking for a complete ban on the wiring, marketing and revenue sharing arrangements, which they say “make it tougher for new entrants to effectively compete in MTEs.

“Competitive providers are still asked to participate in revenue sharing arrangements or are routinely denied access to MTEs because of exclusive wiring or marketing agreements,” INCOMPAS said, adding consumers and businesses “lose out on the faster speeds, lower pricing, and better customer service that competitors offer.”

Public Knowledge similarly said there is a lack of competition emerging from these practices that is increasing prices and restricting choice for tenants.

“Although the FCC has banned explicit exclusive agreements in multi-tenant environments (MTEs) such as apartment, condos, and office buildings, landlords and internet service providers have exploited loopholes to nevertheless create de facto monopolies in buildings,” said Jenna Leventoff, senior policy counsel at Public Knowledge.

The group is asking for a ban on “all types” of these arrangements that “negatively impact consumer choice, ensuring all ISPs have access to a building’s wiring regardless of the owner, creating a ‘rocket docket’ to quickly adjudicate supposed violations, and creating a single regulatory regime for both commercial and residential MTEs.”

In a joint submission on Wednesday, Consolidated Communications Holdings and Ziply Fiber said they “often confront such anti-competitive agreements,” with revenue sharing and marketing arrangements being the most “prevalent and troublesome.

“In practice, these agreements frequently work together as a complete bar to competing providers, giving the incumbent broadband provider a de facto exclusive service agreement with respect to an MTE,” the submission said, alleging MTE owners will “explicitly cite their lucrative revenue sharing agreements with an existing provider as their reason for not allowing our companies to access their buildings” and so to not to lose out on that compensation.

Harm on building owners

For the Stewards of Affordable Housing for the Future, exclusive wiring arrangements have not only limited choice for residents, but it has allegedly locked housing providers into “long-term onerous contracts that prohibit them from pursuing connectivity solutions, such as owner-provided broadband, at their properties.”

Members of the affordable housing group are recommending the FCC impose “reasonable standards” on such agreements, which require ISPs to offer low-cost programs or owner provided broadband at a competitive cost and give landlords an option to exit or renegotiate a contract after a certain time.

The FCC’s look into the issue comes after a bill, introduced on July 30 by Rep. Yvette Clarke, D-New York, outlined plans to address exclusivity agreements between residential units and service providers, which sees providers lock out other carriers from buildings and leaving residents with only one option for internet.

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FCC

FCC Votes on Proposals Ranging From Emergency Response to SIM Swap Fraud in Open Meeting

The agency held an open meeting Thursday to hammer out votes on a range of issues.

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Acting FCC Chairwoman Jessica Rosenworcel.

WASHINGTON, September 30, 2021 — The Federal Communications Commission voted in an open meeting Thursday on several items, including expanding the E-Rate program and addressing SIM swap fraud and robocalls.

The commission voted to increase backup power to networks in case of emergencies and natural disasters and update outage reporting requirements. This follows an aggressive response from the agency during Hurricane Ida. The federal government lost $284 million of productivity during the winter storms last year.

Targeting robocalls from overseas, the FCC passed a set of rules for gateway voice service providers. Gateway providers will be asked to block calls from numbers the FCC lists, to authenticate caller ID and to submit to the FCC a certification of the practices they are using to block robocalls. This follows the June 30 deadline for large voice service providers to implement the STIR/SHAKEN regime, which requires telecoms to work to limit robocalls and ID spoofing or face fines and penalties.

In an effort to reduce SIM swapping and port-out fraud, rules were proposed which would require carriers to adhere to a set of secure methods of authenticating the identity of a customer before moving a customer’s phone number to another carrier or device.

SIM swapping is the act of identity theft whereby a person convinces a wireless carrier to transfer a victim’s cell service into the thief’s possession. Port-out fraud is when the thief creates an account with a new carrier and convinces the victim’s carrier to port out the victim’s service to the new carrier.

The notice also proposes that customers be alerted immediately whenever a SIM change or port request is made under a customer’s identity and account. FCC Acting Chairwoman Jessica Rosenworcel quoted senator Ron Wyden, D-Oregon, stating that “consumers are at the mercy of wireless carriers when it comes to being protected against SIM swaps.”

The FCC also updated the definition of library to include tribal libraries for use with their E-rate program, following a 2018 law from Congress. Many tribal libraries under the law were excluded from the program, which subsidizes broadband for schools and libraries, for over 20 years. Only 15 percent of tribal libraries reported having received E-Rate support.

The FCC also adopted and made transparent a series of questions that will be asked of foreign-owned companies wishing to participate in the US telecommunications market.

Questions include whether the applicants or investors have been charged with felonies, been subject to penalties for violating regulations of the US government, have undergone bankruptcy, are on the Specially Designated Nationals and Blocked Persons list and more.

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FCC

FCC Commissioner Simington Says Universal Fiber to the Home Can Wait

Simington also raised idea of Big Tech contributing to Universal Service Fund.

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FCC Commissioner Nathan Simington.

WASHINGTON, September 29, 2021 – Federal Communications Commissioner Nathan Simington said Tuesday that adoption issues for fiber is delaying the need to make universal fiber to the home a priority right now.

“I think we can push back on fiber to the home universally, at least in noting that there are edge cases and adoption issues there and that some degree of wireless is going to have to be part of the broadband future,” Simington said in a one-on-one conversation with the Internet Innovation Alliance.

A large part of the discourse surrounding the future of broadband expansion in the country is what kinds of technologies are most prudent to ensure connectivity now and scalability in the future. The Wireless Industry Association has pressed the fact that multiple technologies, including wireless, have a play in broadband’s future, while the Fiber Broadband Association and others have said fiber buildout is the best, most scalable technology.

The last mile, where the cable physically attaches to the home or business, was said at the Digital Infrastructure Investment conference this week to be a goal for broadband expansion.

But Simington said that while fiber is a “robust technology,” there’s a chunk of Americans that may not want it.

“I’m going to go out on a limb and say that there are some users who are not particularly interested in fiber,” Simington said. “That might be people who are, for example, device-only users and they don’t want a home broadband connection — that’s about 20 percent of the national population (of broadband users), although the question of want is sort of up in the air.

“Obviously to a person who is device-only, the only use that fiber would have would be to provide hotspot. And if you’re spending your entire day out and about working, what matters to you is having adequate wireless coverage in your area,” he added.

Simington touches on Universal Service Fund

Modernizing the Universal Service Fund has been one of the hot topics for broadband this year. The fund, which extends basic telecom services to all Americans, has been called unsustainable due to its reliance on shrinking voice revenues.

Some have suggested that the fund’s reliance be wholesale replaced with general taxation from Congress, while others have said that the fund’s revenue base should be extended to include the increasing broadband revenues.

Simington prefaced his comments by saying he didn’t want to get ahead of Congress, which would set the parameters of a new regime, but raised previous recommendations – including from FCC Commissioner Brendan Carr – that part of the money can come from big technology companies, like Facebook and Google.

“We might also say that there are companies that have built their model on there being universal broadband and have been the beneficiaries of the buildout without having to do much to contribute to it…that’s something that has been raised on both sides of the aisle,” he said.

He added that another approach “would simply be to say that broadband is essentially the equivalent of a telephone service back in the day and therefore we are going to put it on everyone’s broadband bill instead of on the relatively small installed base of phone line subject to the USF. That would certainly be one approach. It would smooth things out somewhat, it would presumably broaden the base very substantially.”

In any case, Simington said the USF is “absolutely vital” and that it’s failure would be “at minimum…immensely disruptive.”

Spectrum strategies and future technologies  

In his roughly hour-long chat, Simington touched on a myriad of other issues before the FCC, including the future of satellite technologies, spectrum strategies, and funding for programs to deliver telecommunications services to all Americans.

The commissioner noted that the FCC is prioritizing clearing spectrum for technologies including the next-generation 5G networks, and that the agency is looking to “squeeze every drop” of mid-band frequencies for that end. The FCC has already held a number of auctions for mid-band spectrum, including its massive C-Band auction.

FCC Acting Chairwoman Jessica Rosenworcel said earlier this year that the mid-band spectrum is a priority for the agency over millimeter wave spectrum to close the digital divide.

Simington also said spectrum sharing will increase as technological advances are made. The FCC is fielding comments about how to handle the 12 GHz spectrum band, which is effectively pitting satellite providers who say it can’t be shared and 5G providers who say that it can.

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