Rockefeller: STELA Reauthorization Won't Be ‘Clean Process' This Year

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By Bryce Baschuk  

April 1 -- Congress likely will include new provisions and modifications to the coming reauthorization of the Satellite Television Extension and Localism Act (STELA), said Senate Commerce Committee Chairman John D. Rockefeller IV (D-W.Va.).

“It's fair to say this will not be a clean process this year,” Rockefeller said at an April 1 hearing held by the Senate Committee on Commerce, Science, and Transportation's Subcommittee on Communications, Technology, and the Internet. The full Senate Commerce Committee has not yet introduced legislation to reauthorize STELA.

The Senate Commerce Committee is one of four panels that will seek to reauthorize the law that permits satellite providers to retransmit broadcast television signals before portions of the law expire on Dec. 31. The House and Senate Commerce committees share jurisdiction over STELA with the House and Senate Judiciary committees.

Broadcasters urged lawmakers to sunset Section 325 of the Communications Act and Section 119 of the Copyright Act because they said the rules unfairly benefit pay TV providers in retransmission consent negotiations. Satellite providers said Section 325 of the Communications Act and Section 119 of the Copyright Act are essential to ensure that pay TV providers can deliver distant signals to subscribers who cannot get a viewable signal from their local broadcast affiliates. Nearly 1.5 million Americans currently receive distant signals authorized by STELA, according to estimates conducted by the Satellite Industry Association.

May Upset Incumbents

“Several aspects of the present video market could be reformed,” Rockefeller said. “I think it is long since time that we explore what we can do to foster a more consumer-centric future for video, particularly through online video distribution,” he said. “Dealing with these issues will require the committee to take a close look at today's video market, ask tough questions, and ultimately we may have to make hard choices that may upset incumbent interests -- so be it.”

Rockefeller may seek to include elements of his Consumer Choice in Online Video Act (S. 1680) into the committee's bill, industry sources told Bloomberg BNA. His bill aims to limit the ability of Internet service providers to degrade consumers' access to online video services, and provide video distributors with reasonable access to broadcast and cable video content, among other provisions.

Subcommittee Chairman Mark Pryor (D-Ark.) said Congress should reauthorize STELA and that he would approach any reauthorization with an open mind. “What ultimately matters in this debate is what is best for the consumer,” Pryor said. Federal policymakers “cannot lose sight of the 1.5 million people who may be harmed by STELA's expiration.”

'Retransmission Consent Wars.’

Michael Palkovic, executive vice president of operations at DirecTV, urged STELA's reauthorization and sought blackout relief from the “retransmission consent wars” between pay TV providers and broadcasters. Lawmakers should amend STELA to require broadcasters not to blackout their signals while negotiations are pending and retroactively apply the new rates, Palkovic said. He noted that there were 127 blackouts in 2012, up from 12 in 2010.

Section 325(b) of the Communications Act requires broadcast television stations and multichannel video programming distributors (MVPDs) to negotiate retransmission consent agreements “in good faith.” When negotiations break down MVPDs are prevented from carrying broadcast signals which results in program blackouts for certain customers.

Gordon Smith, the president of the National Association of Broadcasters, urged lawmakers to sunset STELA's provisions and preserve the current broadcast carriage regime. Smith slammed the Federal Communications Commission's March 31 decision to bar joint retransmission consent negotiations among the top four competing broadcast TV stations in a local market. “Policymakers and regulators need not intercede on behalf of the largely unregulated pay TV industry to 'balance the playing field’ particularly when the top four cable and satellite companies control 67% of the video market already,” he said.

Michael Powell, the president of the National Cable and Telecommunications Association, commended the FCC's order, saying the commission did the “right thing.” Powell was a former FCC Chairman during the presidency of George W. Bush. Powell asked lawmakers to eliminate language that requires cable providers to carry retransmission consent broadcast station content on their basic channel tiers.

Rising Cable Prices

Sen. Bill Nelson (D-Fla.) asked witnesses at the hearing what can be done to curb the rising costs that pay TV providers charge consumers. A recent Consumer Reports cover story revealed that cable price increases have more than doubled the rate of inflation in the 15 years through 2012.

Powell said part of the rise is due to the “enormous explosion of channels and services” in recent years. Free Press Policy Director Matt Wood countered that consumers lack choice and are forced to buy certain bundled packages from pay TV providers. It's like saying “look at all the value we make you buy,” Wood said.

FCC Integration Ban

Powell repeated his call to eliminate the FCC's set top box integration ban. Earlier this month the House Energy and Commerce Subcommittee on Communications and Technology approved a five-year draft STELA reauthorization bill that includes language to eliminate the commission's integration ban.

Section 629 of the 1996 Telecommunications Act requires the FCC to ensure that consumers have adequate access to navigation devices in order to view multichannel video programming. In 2003, the FCC adopted industry-developed standards for a CableCARD security device that would permit video navigation devices to allow televisions to display encrypted multichannel video programming content. The commission subsequently ordered an integration ban that prohibited multichannel video programming distributors (MVPDs) from using built-in security features in their set-top boxes in lieu of permitting CableCARD accessibility.

“We have had our headaches with the CableCARD but the function needs to stay,” said Thomas Rogers, president at TiVo, Inc. “The industry needs to come up with a replacement standard; it provides choice to consumers,” he said. “Why take off a current standard that will end up Balkanizing the industry?”

FCC Media Bureau Chief Bill Lake said the CableCARD security device “does have to be replaced for an [Internet protocol] delivery world.” When a replacement is worked out, Lake recommended that industry stakeholders adopt a common reliance principle.

To contact the reporter on this story: Bryce Baschuk in Washington at bbaschuk@bna.com

To contact the editor responsible for this story: Heather Rothman at hrothman@bna.com