Cable Industry's Schism With Chairman Wheeler Seen as Ideology Fight
A growing cable industry sense of its concerns being ignored by FCC Chairman Tom Wheeler has raised the likelihood that whatever rules come out of the agency regarding set-top boxes, broadband privacy and business data services almost surely will be met by legal appeals, cable executives and experts tell us. "I think everybody takes for granted that everything is going to end up in court," MCTV President/American Cable Association Chairman Robert Gessner said in an interview Friday.
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The problem is more an activist regulatory policy than a sense of cable being specifically in Wheeler's crosshairs, multiple lawyers with cable clients told us. "It's no fun to be on the receiving end of a lot of regulatory proposals," one lawyer said, adding that the court appeals to those contentious items should be expected because every significant regulatory change in recent years -- from USF rules to net neutrality -- has ended up in a federal court of appeals.
Wheeler "has taken a very ideological position not just with cable," another cable lawyer told us, pointing to broadcasters' dismay over possible changes to the good-faith negotiations test for retransmission consent negotiations. By contrast, then-Chairman Kevin Martin at times seemed to show antipathy toward the cable industry specifically, the lawyer said. Wheeler's regulatory bent "is about as heavy-handed as possible," the lawyer said, adding that if the agency were interested in not being appealed, it "would pay more attention to the concerns of the industry involved in whatever issue they are talking about.”
The FCC's regulatory approach was a frequent target of criticism at INTX 2016, from NCTA President Michael Powell's claim the industry is under "relentless regulatory assault" by the agency (see 1605160033) to numerous cable industry analysts saying the agency is following a pro-regulatory cable agenda (see 1605160057). Lawyers and executives at the show griped, too. A cable lawyer said such language from an NCTA chairman is unheard of and beyond cable criticisms that had been directed at Martin.
Some see Wheeler as specifically targeting cable. Referring to the different privacy rules for edge providers vs. ISPs, Mediacom Group Vice President-Legal and Public Affairs Thomas Larsen said, "There's no consistency. It seems to be singling out cable more than anyone else." Add in set-top and business data services (BDS), he said, and "the cable guys seem to be taking the brunt of it in every single proceeding." Larsen said the FCC almost surely will face cable legal challenges for what it does in set-tops and BDS, though privacy could be tougher. He also said a variety of other cable-related regulatory proceedings, such as retrans rules changes, might end up back-burnered because the agency is putting so much emphasis on and resources into set-tops, BDS and broadband privacy. The retrans NPRM "is starting to languish," Larsen said.
Pointing to the possible rate regulations in the FCC's BDS proposal, telco data services consultant CCMI in a blog post Friday said, "Naturally, cable companies are hopping mad at the FCC." It also said it is "clear that cable companies would file court appeals if rate regulations are imposed on their enterprise services," and will be joined by ILECs if the FCC puts price cap regulations on their special access services. "There must be a better way to regulate an increasingly competitive BDS market other than creating more and more regulations," CCMI said.
Wheeler at INTX dismissed much of that criticism as just lobbying and said the cable industry needs to provide alternative suggestions to the proposals instead of just opposition (see 1605180058). The cable industry is concerned that the alternative proposals are pointless because the agency seems to have made up its mind about what it wants to do regarding, for example, set-tops, ACA President Matt Polka told us. "This is not just a lobbying effort, creating demons out of regulation." Polka said that despite Wheeler's comments, the cable industry hasn't been invited to put up alternatives. The FCC and NCTA didn't comment Friday.
Despite that tension, relations between Wheeler's office and the cable industry are more detente than cold war, ACA's Gessner said. Pointing to a petition for rulemaking asking the FCC to allow broadcasters to begin using the new ATSC 3.0 broadcast standard (see 1604130065), which would have considerable effect on cable, he said, "We clearly have to continue our engagement with that office and clearly we intend to do just that. It's also pretty clear Chairman Wheeler has goals in mind of things to finish before this administration" ends, which would belie any argument cable can just wait it out until the next administration. "We will still do our best to work with everybody," he said.