Regulation over Innovation…Again?

Posted by: Bob Quinn on May 6, 2016 at 1:43 pm

Yesterday, 60 members of Congress joined an already significant chorus of bipartisan Congressional voices questioning the impact that Google’s set-top box proposal will have on consumers and the broader video marketplace.  This time the focus was on the negative impact the Google proposal would have on the ability of smaller/rural video providers to continue innovating and investing in the intensely competitive video marketplace. For those keeping score at home, 154 members of Congress have now written to FCC Chairman Wheeler to express their concerns about the Commission’s proposed rulemaking, which recommended adopting the Google set-top box proposal in a 3-2 party-line vote back in February.

The concerns raised in these letters are not, however, party-line concerns; they run the gamut from infrastructure investment and innovation, to the disparate impact the proposal would have on minority programmers, to privacy, to copyright and piracy.  When Chairman Wheeler first discussed recommending the Google set-top box proposal back in January, he assured lawmakers that  minority programming would be enhanced and not harmed, copyright would be protected, existing privacy regulations would continue to apply and the proposal would not impact the capability of broadband and video companies to continue to invest in infrastructure.  Given the chance to review the actual FCC proposed rulemaking, however, it is now apparent to everyone that none of those concerns were seriously addressed in the item.

One of the main issues raised by minority programmers and broadcasters was whether the contractual provisions between the programmers and video distributers (the cable or satellite company), which governed terms like channel placement and advertising, could be enforced on third-party set-top box and application providers.  That specific issue was not addressed by the FCC, which rather summarily concluded that because rules had not been necessary in a CableCard regime, none should be necessary here.  Similarly, while copyright was listed as a priority, no real solutions were proposed and there was no answer whatsoever to the content owners’ concerns that they were being forced essentially to provide content to entities that were not required to enter into contracts with the content owner – thereby denying them one of the main protections in U.S. Copyright law.

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AT&T Response to FCC’s
Action on Real-Time Text (RTT)

Posted by: AT&T Blog Team on April 28, 2016 at 1:08 pm

The following may be attributed to Bob Quinn, AT&T Senior Vice President of Federal Regulatory:

“Moving forward with a proceeding to allow real-time text (“RTT”) communications to replace outdated TTY technology is long overdue and the right thing to do.  We are concerned, however, that the FCC’s Notice of Proposed Rulemaking (NPRM) spends too much time looking backward to the rules associated with the ‘antiquated technology with technical and functional limitations’ of TTY rather than forward to spur the innovations brought about by RTT.

“RTT is a technology that is being cheered by those who are impacted the most by its introduction. The Commission should take that as an indication that its focus should be on retiring 1960s-era TTY services and not on micromanaging the details of its replacement.  Technology transitions work best when the new technology is allowed the flexibility to evolve and solve old problems in new ways.  AT&T looks forward to working with the Commission to that end in its responses to the NPRM.”

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Google Set-Top Box Filing Reveals Anti-Consumer Double Standard

Posted by: AT&T Blog Team on April 28, 2016 at 8:41 am

The following may be attributed to Jim Cicconi, AT&T Senior Executive Vice President of External and Legislative Affairs:

“Google’s argument exposes that their proposal makes absolutely no sense from a policy standpoint. What they suggest, amazingly, is that a customer’s info will have onerous restrictions and be subject to opt-in requirements if they use our set top box.  But if they use Google’s box, the same info from the same customer has far fewer restrictions, and Google is free to monetize it any way they want unless a customer opts out.

“Putting aside the stunning chutzpah behind such an argument, it should be very clear to everyone, especially consumer advocates, that this means a customer’s private info would be subject to an anti-consumer double standard depending on which set top box they choose.

“That Google can argue for something so obviously self-serving is no longer a surprise to us.  What would be surprising would be if the FCC seriously considered such a proposition.”

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Business Data Services:
New Name, Same Old Problem

Posted by: AT&T Blog Team on April 27, 2016 at 1:00 pm

By Caroline Van Wie, AT&T Assistant Vice President of Federal Regulatory

Tomorrow, the FCC will release a Further Notice of Proposed Rulemaking with the aim of resetting the conversation on “business data services” (BDS), the Commission’s new name for the decade-old proceeding on special access services. Despite the new moniker, we fear that this proceeding will just be more of the same – a proposal to increase regulation on services provided by those actually investing in fiber (incumbent providers (ILECs) and cable companies) to benefit a handful of companies that want to continue avoiding investing in fiber infrastructure themselves.  We agree with Chairman Wheeler that “competition is a facilities-based issue.”  And that’s why the Commission should instead be asking what it can do to incent more fiber build-out and facilities-based competition throughout the country.

The FCC initiated this proceeding in 2005 to determine whether the regulatory regime for special access services that it set up in 1999 (called “Price Flex”) was working.  The Price Flex regime gave ILECs flexibility to contract and set rates for special access services (oops, I mean business data services) where they could show that facilities-based competitors were present in a market.  Competitive providers (CLECs) have faulted this regime over the years, arguing it deregulated ILEC services in areas without adequate competition.  In response, the FCC began the process of collecting detailed location and pricing information on BDS to examine the actual state of competition.

Despite the CLECs’ best efforts, economists have reviewed these data, and their findings may surprise those who believed the Price Flex relief deregulated in areas without facilities-based competition.  In fact, the opposite is true! The data show that sunk competitive facilities are present in more than 95% of all MSA census blocks where businesses purchase BDS. These census blocks account for about 97% of all the locations that use BDS.  And 99% of all businesses are located in these areas.  This review shows that the Price Flex relief was actually under-inclusive. The data confirm that there are sunk competitive facilities in areas that were granted regulatory relief and, in fact, that there are lots of other areas that were not deregulated where competitive facilities are also present.

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The FCC’s Misguided Quest

Posted by: Hank Hultquist on April 25, 2016 at 11:33 am

In comments filed on Friday in the FCC’s set-top box proceeding, we observe that, like an old general fighting the last war, this Commission seems to be making its stand for a technology that is rapidly being supplanted. As Tim Cook has said, and as almost everyone knows, the future of TV is apps. But the FCC is proposing to re-engineer MVPD networks and video business models in a misguided quest to keep the world safe for set-top boxes.

To justify its hyper-regulatory proposal, the FCC alleges that consumers are “locked into” set-top boxes, and do not have choices in how to navigate MVPD services. In fact, MVPDs are rapidly moving to make their content available on as many devices as possible through the use of applications. This trend is exhibiting the “hockey stick” kind of growth that often characterizes technology adoption. Yet, for some reason, this consumer driven move away from special purpose devices to smartphones, tablets, smart TVs, gaming consoles and streaming devices is insufficient for the FCC.

Instead of jumping on the app bandwagon, the FCC proposes to require MVPDs artificially to split their service into separate information streams. Such a division would give third parties, like Google and Tivo, access to customer viewing data that MVPDs are otherwise required to protect from disclosure. It would also allow those third parties to brand the service as their own, re-design channel line-ups and service guides, and place their own advertisements on top, underneath, or around the ads that programmers might otherwise expect to accompany their content. All without the consent of the MVPD or the rights holders.

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