Wheeler Circulates Apps-Based Set-Top Order for Sept. 29

Consumers would "no longer have to rent a set-top box, month after month," Wheeler wrote. "Instead, pay-TV providers will be required to provide apps -- free of charge -- that consumers can download to the device of their choosing to access all the programming and features they already paid for.” The draft includes a universal search function that integrates pay-TV and over-the-top content, and would require the MVPD app offerings to provide the same services available on pay-TV set-tops, senior FCC officials said in a news media call. Since the draft would allow the pay-TV content to remain in proprietary apps, it should address the privacy and copyright concerns raised by the original NPRM, they said. “To ensure that all copyright and licensing agreements will remain intact, the delivery of pay-TV programming will continue to be overseen by pay-TV providers from end-to-end,” Wheeler said.

The licensing aspect has been a focus of concern for content companies. The draft item “appears to exist within a fantasy world of unlimited Commission authority,” Commissioner Mike O'Rielly said in a statement. “The Commission is and must remain in the business of licensing spectrum and infrastructure, not content.” The order would create a licensing body made up of MVPDs and programmers which will create a license, which will then be subject to review by the FCC, said the fact sheet. The FCC will have the power to alter only licensing terms that are anti-competitive, officials said. The agency wants to retain some oversight of the licensing body because MVPDs manipulated licensing under CableCARD to suppress competition, FCC officials said.

The draft would require MVPDs to create apps -- or allow a third party to create an app -- offering their content for all widely deployed platforms, FCC officials said. By platforms, the commission means operating systems such as Android or Windows, and the draft item defines widely deployed as having shipped at least 5 million units in the previous year, the FCC officials said. The item's platform neutrality will “speed development” and encourage innovation, the FCC said. The app proposal suggested by MVPDs would have required third-party manufactures to use HTML5. Pay-TV interests said a platform-neutral approach would be onerous and technically difficult. NCTA expressed concerns Thursday.

Though the approach in the draft is markedly different from the original NPRM, the commission sought comment on apps-based approaches in that document and has provided sufficient notice of the proposed order, senior FCC officials told us. The draft item abandons the previous plan of requiring MVPDs to provide three information flows to third-party manufacturers. Pay-TV groups have raised concerns that the new item could violate Administrative Procedure Act rules. The draft item doesn't require pay-TV interests to stop offering set-tops, and officials said consumers who don't want to change the way they receive content won't have to.

The universal integrated search provision of the draft will require pay-TV companies to provide the correct data to allow the search to function and bars any discrimination in favor of content offered by MVPDs. The draft item doesn't bar other arrangements to prioritize contentin the search function, FCC officials said. “Smaller and independent programmers will be better able to reach broad audiences under the new rules, even if they are not carried by cable or satellite, because their content will be easily searchable on the same device as pay-TV content.” the FCC said in the fact sheet. Programmer copyright terms will be preserved in the proprietary apps, the FCC said. The draft would protect privacy by requiring the rules governing MVPD use of consumer data to apply on all devices, the FCC said.

Sens. Edward Markey, D-Mass., and Richard Blumenthal, D-Conn., in a joint news release commended the draft as improving competition. “The FCC is using authority clearly provided by Congress to better allow consumers to choose which device to watch programming for which they have already paid,” said Markey. “Competition in the set-top box market is an issue of basic fairness,” said Blumenthal. Public Knowledge Senior Staff Attorney John Bergmayer was largely complimentary of the proposal, though he said the FCC mustn't allow MVPDs to use the licensing system to unfairly prevent competition.

MVPDs continue to have concerns. “The Chairman isn’t just proposing a standard license but a centralized licensing organization that would exist in perpetuity,” said NCTA. The licensing body would be “subject to intrusive FCC oversight, creating a bureaucratic morass and improperly involving the FCC in private licensing arrangements,” NCTA said. The proposal would “far exceed” FCC authority and “must be eliminated or drastically altered if the Commission hopes to have a sound app-based plan that truly benefits consumers while protecting the critical rights of content creators,” NCTA said. In a blog post Thursday, AT&T said the plan still raises privacy concerns, and overseeing content licensing is outside the FCC's authority. “By usurping the free marketplace and the rights of the content creators in this regard, the FCC has in effect (as the programmers, NAB and NCTA have also stated) created a 'compulsory copyright license,' clearly outside of the FCC’s jurisdiction,” said AT&T's Bob Quinn, poised to head the telco-TV provider's Washington office.

MPAA also has concerns about the licensing body, CEO Chris Dodd said. “If Chairman Wheeler's revised proposal is as it has been described to MPAA members and others in meetings, it still amounts to a compulsory copyright license that the FCC does not have authority to grant,” Dodd said in an emailed statement. “Whether through a licensing body subject to FCC review or otherwise, the FCC must not encroach upon copyright holders' discretion in how they exercise or license the exclusive rights Congress granted them.”