Monty Tayloe

The FCC list of entities qualified to bid in the forward portion of the incentive auction contains all the companies expected to provide major bidding muscle but omits two expected new entrants, Sinclair and Social Capital Rama Spectrum Holdings, according to a Friday public notice (see 1607110052). With AT&T, Comcast, Dish Network, T-Mobile and Verizon in the list of 62 qualified bidders, the companies that didn't qualify aren't expected to have much of an effect on the auction, a broadcast attorney told us. Social Capital, a boutique investment firm owned by Chamath Palihapitiya, signaled an interest in buying spectrum, as did Sinclair, but because of the amount of money involved, their lack of participation isn't expected to be a major factor in the auction's success, an attorney who follows the auction told us. Bidders who aren't on the qualified list can't participate in the forward auction or any of its subsequent stages, an FCC spokesman told us. Becoming a qualified bidder required a timely submitted upfront payment, and those on the unqualified list likely chose not to make that payment, attorneys told us. The forward auction bidding system will be available to bidders starting Tuesday, and a clock phase practice auction will be July 25-July 29. A mock forward auction will be Aug.11-Aug. 12, the PN said. The real forward auction will begin Aug. 16 with a single round. “We will set the pace of the auction based upon monitoring of the bidding and assessment of the auction’s progress,” the PN said.

Broadcasters may be opposed to a proposed rule change that would extend to broadcasters rules encouraging diversity in procurement by cable companies, lawyers for both industries told us Friday. The proposal is backed by the Multicultural Media Internet and Telecom Council, and was the focus of dueling news releases from the FCC and MMTC last week (see 1607130068). MMTC General Counsel David Honig said a proposal to extend the rule to broadcasters is part of the draft media ownership order.

Minority-owned TV stations and minority programming will be devastated by the incentive auction, said speakers at Brownout, a panel at the Multicultural Media, Telecom and Internet Council's Access to Capital and Telecom Policy Conference Thursday. Women and minorities will own less than 1 percent of full-power TV stations after the incentive auction, and the low-power stations that carry most minority-focused programming will be nearly wiped out, predicted Ravi Kapur, CEO of network Diya TV, which targets Indian viewers. “It’s stunning that this is happening in plain sight, in front of a very diverse FCC,” he said. “This is a failure on many fronts,” said Hogan Lovells broadcast attorney Ari Fitzgerald.

FCC draft media ownership rules have three votes from the Democrats, but negotiations on the order are ongoing and a final order isn't expected for weeks, agency and broadcast industry officials told us. The three votes in favor of the draft item were disclosed during a House Communications Subcommittee FCC oversight hearing Tuesday (see 1607120078). Once an item has three votes, a “must-vote” process is triggered that requires the remaining commissioners to vote for or against the item, but an item must be circulated for a minimum amount of time before that process takes effect, and there's still time remaining on the media ownership item, an FCC official told us.

FCC questions about the pay-TV set-top proposal (see 1607110042), a spate of recent ex parte meetings on the subject and blog posts Tuesday from Incompas CEO Chip Pickering and from Verizon acknowledging the compromise plan are seen as indications the agency is increasingly moving in that direction, industry officials and attorneys on both sides told us Tuesday. Pickering's post offered a kind of counter-proposal to the multichannel video programming distributor plan. He said in an interview Tuesday it's a positive sign the two sides have reached the point where they are going back and forth on details of a proposed plan.

Many FCC proposals for improving the emergency alert system would be unduly burdensome, said the American Cable Association, Dish Network, NAB and NCTA in replies in docket 15-91. Also Monday, the FCC approved 4-1 new EAS codes for storm surges and high winds, an item originally slated for the commission's June meeting (see 1606240072). Pay-TV entities and broadcasters said proposed EAS security measures would be overly onerous and should be left up to EAS participants. They disagreed about proposals to change rules that allow cable carriers to “force-tune” viewers to a central channel displaying EAS information.

The FCC gave NCTA and other supporters of the pay-TV backed set-top proposal (see 1607010066) a list of questions seeking more detail on the plan’s specifics, a cable industry official told us. The document seeks more information about the future of HTML5 and how the pay-TV plan would work, and said “we agree that a licensing model is a viable option to ensure a variety of protections.” The FCC also indicated support for the HTML5 standard, which is what that alternative set-top plan is based on: “We agree that HTML5 may be an appropriate platform for app developers to provide access to content.” Both the licensing concept and the HTML5 standard were targeted in comments from proponents of the original FCC set-top plan, such as Public Knowledge. The questions also show the agency is trying to get specific answers to questions raised by critics of the pay-TV plan, such as whether third-party boxes running pay-TV apps will be able to use DVR functionality. There are also signs of contention, such as FCC comments that “innovation and competition in user interfaces has the potential to lead to consumer friendly features.” The pay-TV proposal’s apps would each use the multichannel video programming distributor interface. The FCC had no comment. In an ex parte filing posted Monday in docket 16-42, Roku expressed concern about the pay-TV compromise plan’s use of HTML5. The MVPD proposal “would, as a practical matter, establish HTML5 as the de facto standard in the video distribution marketplace,” Roku said. “Such an approach would be ill advised given that consumers have clearly demonstrated their preference for an array of devices with diverse user experiences at various price points, which has spurred competition and innovation in the marketplace.” HTML5 is a “bulky and expensive architecture” that would require third-party device manufacturers to “include additional processing power and memory to support it, even in their lowest-priced devices,” the company said.

Two broadcaster petitions for permission to be foreign-owned over the 25-percent threshold could be test cases for future ownership situations, numerous broadcast attorneys told us Friday. Petitions for declaratory ruling from Frontier Media and Univision (here and here) are seen more likely to be approved than not. Frontier's petition is considered a “perfect” test case for the commission’s willingness to allow more foreign investment in broadcasting. Frontier is seeking permission to be 100 percent foreign owned by two specific individuals (see 1607060050). Univision's request to be allowed up to 49 percent ownership (see 1607070062) by a combination of investors and foreign company Grupo Televisa is seen as more amorphous, but also in line with recent moves by the FCC. “We have a really great fact pattern” said David Silverman of Davis Wright, who represents Frontier.

The question of how grandfathering will work under the FCC draft order on eliminating the UHF discount (see 1606270083) is the most important aspect of the proposed rule to broadcasters, broadcast and public interest attorneys told us. Since broadcasters don't know how or if the item will affect their combinations, it creates uncertainty, said Pillsbury Winthrop broadcast lawyer Scott Flick. If too many existing combinations are grandfathered, eliminating the UHF discount won't help limit broadcast consolidation, said Free Press Policy Director Matt Wood. “It will be a nice symbolic victory that doesn't accomplish anything.” The FCC didn't comment.

Content companies and supporters of the FCC set-top plan expressed increased openness to the pay-TV apps-based compromise proposal after a week of meetings on the topic at the commission, according to ex parte filings in docket 16-42 and interviews. The pay-TV plan is “a preferred baseline for developing final rules,” Scripps Networks Interactive told the FCC, said a filing on a meeting that included Content and Distribution Marketing President Henry Ahn. Public Knowledge Senior Staff Attorney John Bergmayer told us the PK-backed FCC plan “is the bee's knees,” but the Consumer Video Choice Coalition, of which PK is a member, isn't locked into any particular technology to accomplish its set-top policy goals.