FCC Heeding Copyright Office Concerns on Set-Top Box Plan

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By Kyle Daly

Aug. 4 — The Federal Communications Commission's prospective order on pay-TV set-top-boxes will take U.S. Copyright Office concerns into account, FCC Chairman Tom Wheeler said Aug. 4.

“I believe many of their suggestions will be adopted,” Wheeler told reporters, referring to questions raised by the Copyright Office, the cable industry and others. “The [notice of proposed rulemaking] is designed to smoke out these kinds of issues so that you can be responsive to them.”

The agency's plan to open the set-top box market to competition has sparked opposition from cable companies and concern on Capitol Hill. It's not clear whether Wheeler will be able to push through final rules this year, even if he makes changes to address criticisms.

Wheeler said FCC watchers will have to “stay tuned” on the agency's timeline for introducing and voting on a final proposal. He said when it does come, a final proposal will tackle a wide range of concerns and likely incorporate many elements of an alternative floated last month by the National Cable and Telecommunications Association and AT&T Inc. (2016 TLN 9, 8/1/16).

Wheeler said any final rules will protect copyright and contracts between programmers and pay-TV providers; protect consumer privacy and network security; and simplify the original agency proposal. On copyright specifically, he said the FCC won't create rules that would put programming in the hands of third parties against a copyright holder's will.

The U.S. Copyright Office echoed concerns previously raised by the cable industry and a raft of lawmakers in an Aug. 3 letter to four House lawmakers who had sought the office's views.

Register of Copyrights Maria Pallante wrote that the FCC's current proposal could harm copyright holders in a number of ways, including circumventing the terms of carriage agreements they have with pay-TV providers; permitting the addition of third-party ads for which content owners go uncompensated; and potentially opening the market to devices that make it easy for consumers to access pirated content.

Republicans Prove Skeptical

Republican Commissioner Michael O'Rielly told reporters following Wheeler's comments that he's skeptical the order will be sufficiently changed from the earlier agency proposal as to allay critics' concerns.

“The chairman has indicated there's some receptivity [to industry and copyright community idea], but your guess is as good as mine on what they're going to do with that,” he said. “How many items have I said, ‘This is a cooked deal'? It is a cooked deal!”

O'Rielly's fellow Republican on the commission, Ajit Pai, issued a statement calling the Copyright Office letter a “devastating critique” that “should be the final nail in the coffin” putting an end to the proposal.

Plan's Fate Still Uncertain

If Republican dissent seems likely, the plan may yet need more work to get the requisite unified Democratic support it would need to pass the five-member commission, even on a party-line vote. Democratic Commissioner Jessica Rosenworcel, who has voiced concerns over the complexity and copyright implications of the proposal since it was first introduced (2016 TLN 6, 3/1/16), may not support it unless it's changed enough to satisfy the copyright concerns, sources familiar with the agency's deliberations told Bloomberg BNA.

Amid the back-and-forth at the FCC, Congress could well put a pause on the effort. The House in July passed a spending bill ( H.R. 5485) that would block the FCC from moving forward with rules until an academic study on potential economic and other costs and benefios is conducted and published . House appropriators have a history of targeting controversial FCC proceedings through spending-measure provisions that ultimately get stripped out by the Senate, though some of these efforts — such as one last year undercutting an FCC rule limiting broadcaster sharing agreements — have survived the legislative process. The set-top box proposal in particular has seen significant bipartisan pushback in both the House and Senate

To contact the reporter on this story: Kyle Daly in Washington at kdaly@bna.com

To contact the editor responsible for this story: Keith Perine at kperine@bna.com

For More Information

The Copyright Office letter is available at: http://src.bna.com/hr1

The House spending bill including a provision targeting the set-top box proposal is available at: http://src.bna.com/hs5

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