Before the Federal Communications Commission Washington, Dc 20554
Total Page：16
File Type：pdf, Size：1020Kb
BEFORE THE FEDERAL COMMUNICATIONS COMMISSION WASHINGTON, DC 20554 In the Matter of ) ) Expanding Consumers’ Video Navigation ) MB Docket No. 16-42 Choices ) ) ) Commercial Availability of Navigation Devices ) CS Docket No. 97-80 COMMENTS Matthew M. Polka Barbara S. Esbin President and Chief Executive Officer Cinnamon Mueller American Cable Association 1875 Eye Street, NW Seven Parkway Center. Suite 755 Suite 700 Pittsburgh, PA 15220 Washington, DC 20006 (412) 922-8300 (202) 872-6811 Ross J. Lieberman Thomas Cohen Senior Vice President of Government Affairs Edward A. Yorkgitis, Jr. American Cable Association Kelley Drye & Warren LLP 2415 39th Place, NW 3050 K Street, NW Washington, DC 20007 Washington, DC 20007 (202) 494-5661 (202) 342-8518 Mary C. Lovejoy Jeffrey Lamken Vice President of Regulatory Affairs James Barta American Cable Association MoloLamken LLP 2415 39th Place, NW 600 New Hampshire Avenue, NW Washington, DC 20007 Washington, DC 20037 (202) 603-1735 (202) 556-2000 April 22, 2016 EXECUTIVE SUMMARY The American Cable Association (“ACA”) represents approximately 750 smaller cable operators, incumbent telephone companies, municipal utilities, and other local providers of multichannel video programming services (“MVPD services” or “pay-TV”) that serve smaller communities and rural areas or compete with much larger multichannel video programming distributors (“MVPDs”) in urban and suburban markets. In aggregate, these providers pass nearly 19 million homes and serve nearly 7 million homes – or less than 7 percent of the MVPD market. The vast majority of ACA members have fewer than 5,000 subscribers, and half have fewer than 1,000 subscribers. While their smaller size limits their ability to develop their own navigation devices for their subscribers, in recent years ACA members have been working with TiVo, Roku, and other device vendors to integrate these vendors’ devices into their systems. These devices give their customers the ability to seamlessly access pay-TV and over-the-top programming. ACA members also provide millions of set-top boxes, on which most of these providers make little, if any, margin. Finally, ACA members operate systems which today would be non-compliant with the Federal Communications Commission’s (“Commission’s”) proposed regulations in the Navigation Device Notice of Proposed Rulemaking (MB Docket No. 16-42, CS Docket No. 97- 80 (“Navigation Device NPRM”)). It is clear they would incur substantial costs to come into compliance even if the exact costs may be unknown and not calculable at this time (which they are not). ACA members thus have a large stake in the Navigation Device NPRM and the Commission’s proposal. The Navigation Device NPRM states an intention to “assure the commercial availability” of “equipment used by consumers to access multichannel video programming” pursuant to Section 629 of the Communications Act.1 But the Navigation Device NPRM goes “off the rails” from the outset, leading it to propose regulations that are poor policy, contrary to the public interest, and outright unlawful. The Commission should decline to adopt its proposal for a great many reasons, including: x Relying on scant and misleading evidence, the Navigation Device NPRM contains unwarranted assumptions that consumers lack choices and pay excessive fees for navigation devices which turn out to be erroneous. x Based on unspecified and untested technologies, the Commission proposes to require MVPDs to disaggregate their networks and adopt a security protection system which would impose excessive costs on smaller MVPDs, including the costs of (a) complying with the requirements to provide the three information flows and a compliant security system, (b) reviewing, amending, and ensuring compliance with content agreements, (c) ensuring third party devices meet public interest obligations, and (d) maintaining network security. These counterproductive requirements would severely reduce, if not eliminate, cash flow for smaller MVPDs, leading to cut-backs in developing new video programming services and upgrading broadband plant that ultimately harm consumers. Some smaller MVPDs may be forced to exit the video business altogether as a result. Any hoped for benefits for consumers from the Commission’s proposal will be illusory, and it is more likely consumers will be confused and frustrated by purchased devices that do not perform as the Commission theorizes. x Misreading its statutory and constitutional authority, the Commission proposes rules that are unlawful. o Section 629 requires the Commission to address the availability of retail devices that can receive multichannel video and other services “offered” and “provided” by MVPDs. It does not authorize the Commission to mandate that MVPDs disaggregate their information flows to enable services provided by third parties. Nor does Section 629 authorize regulations concerning software in addition to equipment. The Commission may regulate physical devices only. o The proposal also is legally infirm as a constitutional and statutory matter, because the Commission improperly delegates its statutory and constitutional authority to Open Standards Bodies. Although the Commission must consult with standards bodies to assist in developing specifications, it may not delegate authority to establish those standards to a private body. Should an Open Standards Body develop a standard, before that standard can become a requirement, it must be subject to notice and comment rulemaking and formally 1 47 U.S.C. § 549. ii incorporated into a Commission rule. Otherwise, any attempt to enforce adherence to that standard would run afoul of non-delegation principles and the of the Administrative Procedures Act’s requirement that rules be adopted only after adequate notice and opportunity for comment. To make matters worse, because MVPDs are providing their subscribers with access to video programming from their traditional pay-TV and over-the-top services “anytime, anywhere, over any device,” the Commission has a readily available alternative to the Navigation Device NPRM’s proposal that would benefit consumers and not harm programmers or MVPDs: enable a new, straightforward, and well-tested downloadable security solution. Instead, the Commission “rolls the dice” on an experimental and far reaching disaggregation proposal of dubious legality, one that will impose substantial costs on smaller MVPDs, reduce subscriber benefits, and lead to customer confusion. ACA thus opposes the Commission’s proposal. Should the Commission nonetheless conclude that it has authority to adopt its proposed navigation device regulations and move ahead to an order, ACA submits the Commission would achieve the goals set forth in the Navigation Device NPRM by applying the regulations only to larger MVPDs because: x These larger MVPDs (a) serve over 93 percent of pay-TV subscribers – far higher than the amount needed for a technology to become self-sustaining and create further growth, and (b) have traditionally been the first providers to deploy new equipment; and x Smaller MVPDs, many of whom are already integrating third party devices into their systems, will often adopt the same technologies as larger MVPDs after larger MVPDs prove them out and the technologies become generally available at lower costs. ACA also notes that not applying the rules to smaller MVPDs would serve the public interest because these MVPDs would be unduly burdened, increasing the likelihood they will exit the video business, harming their subscribers. iii ACA specifically proposes that the Commission refrain from imposing its proposed regulations on small multichannel video programming systems, those with fewer than 600,000 subscribers and not affiliated with either (i) an MVPD either serving more than one percent of all MVPD subscribers; or (ii) an MVPD or any entity with an attributable interest in an MVPD of 50 percent or more that has a market capitalization of greater than $100 billion. ACA bases its request on a cost analysis that validates that small MVPD systems of small MVPDs would be financially burdened by the proposed regulations. Further, ACA’s approach is modeled on that used by Congress and the Commission to afford smaller cable operators relief from undue regulatory burdens. The Commission has the authority to limit rules to larger MVPDs only. The Commission acknowledged this authority to limit the applicability of its regulations under Section 629 in the “Plug & Play Orders,” when in 1998 it declined to impose the integration ban on DBS services and in 1999 when it exempted analog-only equipment from compliance with the integration ban as well, finding in each instance that applying the ban was unnecessary to achieve statutory objectives. iv TABLE OF CONTENTS I. INTRODUCTION AND OVERVIEW ................................................................................ 4 II. THE NAVIGATION DEVICE MARKET IS WORKING, ESPECIALLY IN AREAS SERVED BY SMALL MVPDS, CONTRARY TO THE COMMISSION’S ASSUMPTIONS AND TENTATIVE CONCLUSION .................................................................................. 15 A. Subscribers of smaller MVPDs today enjoy significant and innovative choice to access video services over a wide array of devices. .............................................................. 16 1. Subscribers benefit as smaller MVPDs work with third party vendors to deploy innovative devices and provide additional ways for them to access MVPD and over- the-top services. ....................................................................................................