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By Lydia Beyoud
June 17 — The pay-TV industry has pitched an alternative to the Federal Communications Commission's set-top box proposal in a bid to strike a deal to head off a commission plan vehemently opposed by cable and satellite providers.
AT&T Inc.-DirecTV, Comcast Corp., Charter Communications Corp. and National Cable & Telecommunications Association representatives met with every commissioner's office and FCC bureau staff in recent days to pitch their proposal.
It's too early to tell whether the agency will back away from its proposal, supported by companies such as TiVo Inc., to open the set-top box market to competition. But the commission is facing strong headwinds in trying to move ahead with its own plan, both from the pay-TV industry and Capitol Hill.
Under the proposal, the agency would create enforceable requirements for pay-TV companies to develop free apps that consumers purchasing third-party devices from companies such as Apple Inc. or TiVo could download to access pay-TV programming. The FCC has proposed that third party device providers would be able to receive programs and other data from pay-TV providers while only being subject to a self-certification compliance regime with the FCC's pay-TV rules.
The industry's approach would support the FCC's effort to promote a robust retail pay-TV navigation device market, but would also protect the copyrights, contracts, advertising, channel lineup and other provisions pay-TV providers have negotiated with programmers, it said in a joint filing issued June 17.
The industry proposal never mentions Google Inc. by name, but the tech giant might have more trouble inserting itself into the pay-TV industry in the same way it has in the Internet, music and online advertising industries under the plan, Michael Paxton, a senior analyst for media and communications at SNL Kagan, told Bloomberg BNA.
NCTA and other groups opposing the FCC's proposed set-top box rules have raised concerns that Google, in particular, is interested in the agency's proposed rules as a vehicle to penetrate the wealth of consumer viewing data currently controlled by the pay-TV industry.
Pay-TV providers have complained that the FCC's proposal could make it easier for third-parties such as Google to monetize user data in ways that they are prohibited from doing.
The industry proposal could lead to compromise with the FCC over the current set-top box proposal, but would still allow pay-TV providers and content developers “to continue to ‘drive the train' when it comes to developing and deploying next-gen pay-TV products and services,” Paxton said via e-mail.
An FCC spokeswoman told Bloomberg BNA that FCC Chairman Tom Wheeler has welcomed the pay-TV industry's proposal.
“Chairman Wheeler is heartened that the industry has adopted the primary goal of our proposal, to promote greater competition and choice for consumers, and agrees it is achievable,” Wheeler's spokeswoman Kim Hart said in a statement, adding that the FCC would have to study the details of the proposal. “We all agree that third-party access to pay-TV content, integrated search and the protection of copyright, content security, consumer privacy and minority programmers are critical.”
The industry proposed requiring multichannel video programming distributors (MVPDs) with more than 1 million subscribers to develop applications based on an open technological standard within two years.
Such apps would enable universal search functions for users across pay-TV content and that of streaming services such as Netflix Inc. or Hulu Inc.
Google is particularly interested in gaining the ability to help users search for content across platforms, describing support for “innovation in solutions for search and discovery of content for consumption on the TV screen” in an April 22 filing.
The 1-million-subscriber threshold would cover about 90 percent of the country's pay-TV customers while leaving smaller providers time to voluntarily develop apps based on consumer demand and at a pace suited to companies with fewer resources, NCTA spokesman Brian Dietz told Bloomberg BNA.
The two-year timeframe for major providers such as AT&T, Comcast and Charter is intended to be “a sign of sincerity and priority” for the commission, Dietz said.
INCOMPAS, a trade group representing Internet and technology providers, including Google, said it was encouraged to see the cable industry agree to a paradigm to allow consumers to purchase their own set-top box devices and integrated search capabilities.
The group's CEO, Chip Pickering, also said the industry proposal indicated that “cable-induced fears over privacy, copyright and licensing in an open, competitive device market are false.”
“We look forward to continuing the dialogue with the cable industry,” Pickering said in a June 16 statement. “Their current proposal presents both some positive movement and some familiar limitations that could fall short of delivering an open, competitive marketplace.”
If the FCC decides to incorporate some or all of the pay-TV industry proposal in its final rules, it could represent a turning point for an issue that has embroiled pay-TV companies, consumer groups and Congress.
The FCC's proposal has faced skepticism from more than 160 lawmakers seeking delays or expressing concerns with the proposal following a concerted lobbying effort by pay-TV providers, content companies and policy groups.
Most recently, Senate lawmakers included a provision in a fiscal year 2017 spending bill that would force the FCC to delay its rulemaking process until after an impact study is concluded. The House is scheduled to vote on a spending bill (H.R. 5485) with similar language the week of June 20 .
Industry representatives are expected to be briefing lawmakers and their staffs about the proposal in coming weeks. If the FCC appears to be moving in the direction of the industry proposal, some of the set-top box provisions currently in the spending bills could end up being stripped out later in the appropriations process.
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