Let Me In, Innovation Man: FCC Revisits Experimental Licensing

The FCC has announced new proposals to promote investment and create jobs in wireless broadband. On November 30, the FCC announced at its open meeting that it sought to boost innovation in the telecommunications marketplace and to help restore the country’s prominence in research and development through two new proceedings.

In the first proceeding, citing past achievements such as Wi-Fi and PCS that grew out of experimental licensing, the FCC is proposing to overhaul its experimental licensing rules to streamline the process by which new devices and technologies can move from R&D to deployment. Utilizing a new license called a “program license,” the FCC will establish “innovation zones” -- specifying areas where experiments can be conducted without command and control licensing. The FCC also will make it easier for universities and labs to conduct experiments and will enable health care institutions to obtain program licenses for telemedicine research. The FCC also signaled that it would ease some of the restrictions surrounding market trials to allow consumers to have more access to new products. Interestingly, Commissioner Baker suggested that improved experimental licensing rules could provide some answers to improve spectrum efficiency in the TV bands.

For the second item, the FCC adopted a Notice of Inquiry on “dynamic spectrum access” and “opportunistic” uses of spectrum to promote more efficient spectrum use. “Dynamic” access refers to the availability of spectrum in certain locations for brief intervals and whether radio technologies can evolve to take advantage of these dynamic spectrum opportunities and thus promote wireless broadband. The NOI also invites public comment on the benefits of mandating a database model – such as the white space geo-location database – to promote efficiency. The NOI will also look at ways the FCC’s secondary markets rules could be enhanced by allowing opportunistic or “spot” use of spectrum.

Taken together, these items demonstrate the FCC’s ongoing push to increase broadband opportunities and to boost availability and efficient use of spectrum resources. These proceedings may offer new opportunities particularly for colleges and universities to move the state of the art forward.

 

STELA! FCC Implements Satellite Television Extension and Localism Act

Following the passage by Congress earlier this year of the Satellite Television Extension and Localism Act (STELA, for short), the FCC adopted new rules to provide satellite subscribers with greater flexibility to receive certain television stations from other markets.

The FCC revised its rules to make it easier for satellite subscribers to receive a significantly viewed (SV) out-of-market station. Previously, satellite subscribers could receive an out-of-market SV station with the same network affiliation as the local in-market station only if the satellite subscribers received the local in-market network station. Now satellite subscribers need only receive the satellite carrier’s local-into-local service package.

These changes may tilt retransmission consent negotiations in favor of the satellite carriers, who could favor an out-of-market SV station to the in-market station based on the amount of retransmission consent fees that are negotiated. Many broadcasters have entered into agreements that provide for little or no compensation for out-of-market subscribers.

The FCC reasons that subscribers would prefer receiving the in-market station to the out-of-market SV station, that satellite carriers will negotiate in good faith with in-market stations, and that SV stations usually are available only in a portion of the market. Time will tell, but there is good reason to be skeptical. Satellite carriers will inevitably use SV stations as a substitute, instead of a supplement, to an in-market station if any disputes arise about compensation for retransmission consent. If this happens, broadcast localism goals of the FCC will be undermined and Congress may be called back to the table to clean up the mess.

The FCC must deliver to Congress a report on in-state broadcast programming by August 27, 2011. The FCC seeks comment and data from the public in preparing this report.

 

Governmental intervention to referee TV carriage disputes could lead to unintended consequences

There is nothing wrong with TV stations charging cable and satellite companies who repackage popular broadcast channels and sell subscriptions to the public. It’s sort of like saying because you can get tap water for free, bottled water should be free too. Yet there are advocates in Washington from the cable and satellite industries who are seeking governmental intervention to referee private negotiations between TV stations and cable and satellite companies when the vast majority of deals get done without any disruptions in service to the public.

So what is really going on here? Cable and satellite companies are engaged in a not-so-transparent effort to arbitrage the FCC process to involve the government in order to gain leverage in retransmission consent negotiations. At the same time, a real marketplace for broadcast programming is emerging as Congress intended. Senator Rockefeller (D-WV) appears willing to take the bait and to authorize Congress to give the FCC authority to become such a referee. He said at a Congressional Hearing yesterday that “If you fail to fix this situation, we will fix it for you.” While Congress has many priorities, it’s unclear whether imposing more governmental regulation on the marketplace for retransmission consent – a system that works -- is likely to be high on the list given the shift in the House to a Republican majority and the general mood of the country. Moreover, there are more compelling communications law issues, such as finding more spectrum for broadband or clarifying the FCC’s authority to regulate the Internet, that are in need of governmental action.

This strategy is puzzling. The unintended consequences of inviting government regulation of the marketplace, in the absence of a market failure, could lead to a-la carte pricing regulation as consumers demand to know why they are paying for cable and satellite programming services they never watch. The truth is that broadcast programming is provided to cable operators at bargain basement prices relative to cable programming services and yet remains some of the most-watched and popular programming. It is likely to remain so even in this new media era as TV stations continue to lead in providing local news, emergency information and other programming to their communities.

Congress wisely carved a narrow role for itself in 1992 when it gave TV stations the option of negotiating carriage fees or demanding mandatory carriage. Calls for the government to require mediation or interim carriage during a dispute would mean that more, not fewer, deals, would get bogged down as the players attempt to game the FCC process to their advantage. These proposals are not justified by marketplace failures, changed circumstances or any other grounds. Stripped down, it’s clear this is nothing more than one private party seeking additional unwarranted negotiating leverage against another through governmental regulation in the guise of protecting the public.