FCC Set-Top Box Proposal Opponents Warn of Disruptive Impact

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By Lydia Beyoud

Feb. 16 — The Federal Communications Commission's forthcoming set-top box proposal, dubbed the #unlockthebox campaign on Twitter, is about far more than simply giving consumers to ability ditch devices rented from their cable or satellite provider.

Cable, satellite, device supplier companies and content creator representatives are waging a full frontal assault on the plan—which reaches into the realms of advertising, privacy and copyright—against an equally vociferous defense of the rules from public interest groups and competitive telecommunications trade groups, before it's even out of the gate.

The proposal aims to unchain the programming stream from the pay TV provider's device and make it available to third-party competitors like Google Inc. or Roku Inc. Such a move would fundamentally undermine the economics of content distribution by taking away a portion of a content provider's advertising revenue stream, TV One chairman Alfred C. Liggins III said Feb. 16 during a press call by opponents of the plan.

“Everyone knows these days metadata and consumer behavior is a big part of where the gold is in the digital commercial industries,” Liggins said. Under the FCC's proposal, companies like Google could gain a treasure trove of new, valuable user data to monetize, particularly when combined with users' online data, he said. That access could also change how certain content, particularly content intended for minority or niche audiences, is valued by advertisers, he said.

Further, treating a programming stream and encryption protocols as severable from the rest of the components consumers pay for as part of their pay TV package violates the statute, Liggins said.

He supported the alternative backed by the cable and pay TV industry to allow consumers to use apps to access their content. Sewn into the app are all the current copyright, licensing, regulatory obligations, privacy terms and conditions, he said.

Copyright Protections

The FCC's notice of proposed rulemaking (NPRM) does contain provisions to protect content creators' copyrights, agency spokeswoman Kim Hart told Bloomberg BNA via e-mail.

“The Commission will not interfere with the business relationships or content agreements between MVPDs and their content providers or between MVPDs and their customers,” she said.

Third-party developers would be able to self-certify to abide by existing copyright agreements, similar to the existing CableCARD regime, another FCC spokesman said via e-mail.

The Copyright Office's procedures will remain intact in enforcing those agreements, the spokesman said.

Privacy Measures

The proposal has also raised concerns about how the FCC's privacy rules will be implemented. Cable providers are subject to specific privacy obligations under Title VI of the Communications Act of 1934.

“The proposal seeks to ensure that similar privacy protections that exist today will also apply when alternative navigation devices are developed and then used,” Hart said. Currently, device manufacturers and software developers must comply with applicable state and federal laws on consumer privacy and information security, she said.

The proposal doesn't explicitly propose extending Title VI rules to device manufacturers and app developers, but third parties would be required to certify with pay TV providers that they would abide by the same privacy rules, she said.

The FCC will seek comment on the appropriate enforcement mechanisms related to the NPRM's privacy regime, the FCC spokesman said.

Congressional Input

Members of Congress, particularly those from California, are keeping a close eye on the proceeding, as indicated by a pair of letters lawmakers sent to the FCC Feb. 16.

Five House members sent a bipartisan letter, led by Reps. Judy Chu (D-Calif.) and Doug Collins (R-Ga.), asking for specifics on the NPRM's provisions related to privacy, copyright, cybersecurity and compensation issues. The lawmakers said they were concerned about the proposal's implications “for the nearly two million Americans who work to produce America's film and television content.”

In another letter in support of the proposal, 13 House Democrats, led by Rep. Anna Eshoo (D-Calif.), ranking member of the House Energy and Commerce Communications and Technology Subcommittee, said the FCC could fulfill its obligations under the 2014 STELA Reauthorization Act to provide consumers with an alternative to renting their set-top box without reverting to a failed 2010 proposal known as AllVid.

The group of representatives said the chairman's proposal would likely offer consumers better features and functionality over those contained in downloadable applications, which the Pay TV industry has promoted as a preferable alternative to set-top boxes.

Proponents of the commission's proposal plan to hold a counter-conference call Feb. 17. The press briefing, hosted by Public Knowledge, will feature Sen. Edward Markey (D-Mass.), TV content creators and a representative from the Writers Guild of America, West.

To contact the reporter on this story: Lydia Beyoud in Washington at lbeyoud@bna.com

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

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