Monty Tayloe

The 17th Video Competition Report is seen as a further sign of the increasing partisan divide on the FCC eighth floor, industry officials and analysts told us in interviews Monday. Though some pay-TV industry officials see the document’s conclusions as an attempted defense of FCC video policies, to be cited in future litigation, others disparaged the Video Competition Report’s conclusions on the 2014 marketplace as being old news before they are even issued. “Nobody thought they were going to change the determination of whether the market place is effectively competitive,” MoffettNathanson analyst Craig Moffett said. It was released on delegated authority Friday.

An FCC rulemaking notice that would remove the last physical vestiges of the broadcaster public file as well as a requirement for cable carriers to keep on hand the location of their control centers (see 1605050060 and 1605040066) is expected to get little pushback, broadcast attorneys and cable industry officials told us. Though most aspects of the public file are online, broadcasters still have to keep physical copies of public correspondence in a physical public inspection file, and cable carriers must do the same for the addresses of their network control centers, under current FCC rules. Broadcasters and cable carriers said the requirement to make physical documents available to the public compromises their security.

The FCC “punted” to the Media Bureau its congressional obligation to issue a video competition report because the report contains “117 pages of rationalizations” for FCC video policies, Commissioners Ajit Pai and Mike O'Rielly said in a joint statement Friday. The statement led off with the phrase “Who's afraid of a Commission vote?” It's the first such report issued on delegated authority, the commissioners said. “It’s bad enough that our input on circulated and meeting items is typically ignored, but this disturbing trend of skipping the Eighth Floor entirely must be reversed, and is worthy of Congressional attention,” Pai and O'Rielly said.

The U.S Court of Appeals for the D.C. Circuit panel hearing oral argument in two low-power TV challenges of FCC incentive auction repacking policy Thursday seemed receptive to points made by the agency and petitioner Mako Communications but questioned the standing of petitioner Free Access & Broadcast Telemedia. FAB invests in LPTV but isn't a licensee. Oral arguments in the cases were heard back to back, with questions asked in one case bleeding into the other. An attorney following the matters speculated that Judges Sri Srinivasan, Thomas Griffith and David Sentelle may release decisions as a single opinion. Though several attendees speculated about what the court's reactions might indicate for a final decision, they all said it's difficult to predict a final opinion from oral argument.

Low-power TV and translator industry officials agree the FCC 126 MHz incentive auction clearing target (see 1604290018) will mean many more displaced stations than would a smaller target. In interviews Wednesday, they disagreed whether that's good or bad. Many full-power stations and Class A's exiting the business might mean increased opportunities for LPTV stations that survive displacement, but the large target means many LPTVs and translators will have to fund their own relocation to make it to that point, industry officials said. Though LPTV interests like the Advanced Television Broadcasting Alliance (ATBA) and the National Translator Association (NTA) are still pursuing congressional remedies, it's likely too late for congressional action to stop the displacement, they told us. “That part of the train has left the station,” said NTA President Jim McDonald.

Analyst projections for incentive auction revenue range from $30 billion to $60 billion because of differing evaluations of participation in the forward auction from wireless carriers and new entrants, financial analysts and auction watchers told us. Almost as soon as the FCC issued a public notice Friday (see 1604290048) saying the auction would seek to clear the maximum amount of TV station spectrum the commission had been targeting, 126 MHz, stock and other analysts started emailing investors their estimates for the total auction proceeds. The wide range of estimates is due to multiple factors that are subject to change until bidding is done, said analysts in interviews Tuesday.

Though the ATSC 3.0 transition plan has gotten a favorable reception from some broadcasters and FCC Chairman Tom Wheeler (see 1604200051), questions abound about how broadcasters transitioning to the new standard will interact with pay-TV providers and smaller broadcasters, broadcast and cable attorneys told us last week.

Comcast's recent announcement that it would include set-top box functionality in some Samsung smart TVs (see 1604200047) validates the FCC set-top proposal, agency Chairman Tom Wheeler said at a news conference after the commission's open meeting Thursday. Comcast “is proving our point,” he said, since the arrangement involves a third-party device performing the function of a set-top. That comparison is specious, since Comcast and Samsung were able to privately negotiate that deal, and work out stipulations about respecting copyright and data and similar concerns, Commissioner Ajit Pai said in a subsequent news conference. Since there would be no such arrangements under the FCC proposal, it would be “like the wild West,” Pai said. Wheeler said the FCC proposal would allow all companies to accomplish what Samsung and Comcast did, and keep the deal from being withdrawn. Comcast has made similar arrangements in the past, but it didn't lead to change in the market, he said. “What Comcast giveth, Comcast can taketh away,” he said. “We’re glad that Chairman Wheeler has noticed that the marketplace is already producing real technology solutions” for watching pay TV without a set-top, emailed the Future of TV Coalition. “But these market-driven, app-based solutions bear no resemblance to the sweeping, Google-backed mandate he has proposed.” Comcast's deal with Samsung involves an app that is very different from what the FCC is proposing, a pay-TV industry official told us. The Samsung device won't have any ability to change Comcast's user interface or advertising, the official said. The “groundswell” of opposition should persuade Wheeler that the FCC to “take some time” instead of “barreling ahead,” Pai said. Comcast didn't comment.

The FCC is expected to release a spectrum clearing target for the incentive auction before the end of this week, numerous broadcast attorneys and industry officials told us. Many broadcast officials now expect the number to be relatively high, such as 114 or 126 megahertz. Those predictions are based on an expected high level of broadcast participation and on FCC Chairman Tom Wheeler's comments at the NAB Show (see 1604200051), where he dwelled on the incentive auction going into multiple stages. Wheeler also said that the clearing target would be announced before the end of the month, and some officials told us they expected an announcement at Thursday's FCC meeting.

The director of the FTC Consumer Protection Bureau weighed in Friday in FCC docket 16-42 on FCC-proposed changes to rules for set-top boxes, alongside comments from pay-TV carriers, programmers, and advertisers. Set-top proposal opponent the Future of TV Coalition and proponent Consumer Video Choice Coalition filed thousands of citizen comments on the matter. Consumer Protection Bureau Director Jessica Rich didn't weigh in either way on the merits of the FCC plan but commented on the possibilities for enforcing privacy rules on third-party set-top makers, in a letter some industry officials said strengthened the case for the FCC proposal and others characterized as staking out a jurisdictional claim.