Policy

The District Line

8/13/2012 12:01 AM Eastern

Program access, how to regulate over-the-top video and network neutrality were among the hot-button
issues tackled in a recent Multichannel News/Broadcasting & Cable webinar featuring Robert McDowell, the senior Republican on the Federal Communications Commission, and veteran cable
attorney Daniel Brenner of Hogan Lovells, a former top FCC staffer and lobbyist with the National
Cable & Telecommunications Association. Washington bureau chief John Eggerton moderated the
conversation. Some edited highlights follow:

MCN: Following the FCC’s recent decision in favor of
Tennis Channel over Comcast (“Comcast Vows to Sue
FCC Over Tennis Channel Decision,” June 30, 2012), we got this email from a cable-industry reader
in Denver: “I can’t help but wonder if there is another
agenda that is creeping into the FCC’s decision-making,
and that is to send a message to other distributors
not to own content, especially considering that this is
the first finding ever based on the program-carriage
rules.” Is it a stretch to say that a carriage decision by
one distributor of one channel could have far-reaching
implications for the future of the entertainment
business?

Robert McDowell: There is zero case law under section
161 (the program-carriage rules), so It does set an
important precedent, and the more I looked at it, the
facts didn’t seem to be there to support the administrative
judge’s decision. In fact, we thought the ALJ missed
an opportunity to analyze a lot of key facts.

Section 161 isn’t designed to say every independent
channel has a right to get on a network, nor does it have
a right to get on a cable network within a specific tier,
or be paid a specific rate along the way. I think there
are some far-reaching implications here under the First
Amendment.

But I do understand that folks at the Tennis Channel
have great content, if you like tennis; and it has been
able to beat out its competitors at signing deals, and
that is all well and good; and I understand that Comcast
is the largest MVPD, and that is important. We
could be at a point now where just because companies
can’t reach terms in a normal business transaction, that
now all of a sudden that is considered discriminatory.
So it is a one-way ratchet for MVPDs.

MCN: And what about discouraging distributors to
also develop their own content?

RM: That very well could be the case. I think that, from
a business perspective, it has been interesting over the
past couple of years to have seen Time Warner [Inc.]
and Time Warner Cable part ways, which the parent
company wanted, and also for Comcast to buy content
through the NBCUniversal purchase. Does that mean
that the future of the cable industry is the reselling of
content? So, the question becomes, will we end up with
two worlds someday, where there are just companies
offering connectivity and those offering content, especially
in the wake of a big-market signal like the commission
gave with its Tennis Channel case?

MCN: Dan, what is your take on the impact of this
decision. How would you argue if you had to argue it?

Daniel Brenner: I think what is really striking about
this is there is very little precedent under section 616 of
the program-carriage rules. People who were around
when the 1992 Cable Act was passed, and this is part of
it, saw this as primarily an issue of an earlier, now-extinct
cable operator [Tele-Communications Inc.], which
allegedly used to say: “If you want to be on our system,
you have to give us a piece of the action,” which is clearly
not at all what is involved in this case.

I do think the way 616 has been applied here does
raise some interesting First Amendment problems. I
have to think at some point a court is going to say, “Can
The Washington Post be forced to put a certain comic
strip in the main group or only put it online, or does
that violate the First Amendment?” And if you think
it does, because it tells an editor where to put content,
why is it that the cable operator is subject to that kind
of restriction and a newspaper isn’t?


MCN: In your opinion, what facts would be needed to
constitute a valid 616 claim?

RM: The way I read the statute, it says you can’t discriminate
for the wrong reasons and, as we laid out
in our dissent, commissioner [Ajit] Pai and I, the facts
were really given short shrift by the ALJ in terms of
what the marketplace really looks like and how Tennis
Channel is being carried. It actually has a better
deal [with Comcast] than it does with [satellite-TV providers]
Dish Network or DirecTV, which I believe have
some equity interest in the Tennis Channel. So that
kind of undercuts the case right off the bat.

From a more macro perspective, the issue is, how
much editorial control is the government going to exercise
on platforms?

DB: I did not litigate the case, and I am a fan of the Tennis
Channel, but in fairness to the complainant, it is really
hard to know what Congress told the commission
to do, because the statute is so convoluted. It was clearly
a horse designed by a committee, in terms of the different
bits and pieces that made it in there.

MCN: The FCC is trying come up with a definition of
over-the-top video. Do you have any concerns about
the agency’s authority to apply similar rules to overthe-
top video and traditional cable channels?

RM: Any thoughts I have should not be attributed
to the Sky Angel complaint or any other specific
matter before the commission, but I have been saying
for a number of years that over-the-top video
is changing the market to the benefit of consumers
incredibly.

I think this really puts pressure on Congress to start
rethinking the statute. I would hope that we would not
be applying old laws from the past onto the marketplace
of the future.

DB: I think there are some broad, general principles
that can be developed. Before you act, there has to be a
market failure, generally speaking, and then the FCC
asks the question: “If we try to fix this, will we have a
better answer than just leaving it as it is, because what
we don’t want to do is make it worse.” And I think to
some degree this is one of the challenges the FCC is
facing with online video distribution.

MCN: Do you think the network-neutrality rules are
going to survive court scrutiny, and what happens if
they don’t?

RM: I do not think they will survive. I think they will
be vacated in their entirety. I would hope we would
close the Title II docket now, but certainly in the wake
of that.

MCN: Dan, if that happens is it a good or
bad thing given the continued lack or regulatory
certainty?

DB: There are legitimate issues that are going to arise
in Internet governance. For example: should there be
protocol-agnostic rules when deciding how to deal with
bandwidth congestion, which was really the essence
of the Comcast complaint? But I feel very strongly that
taking those issues in the first instance to the FCC is
not a good idea. Many of these issues were settled by
the parties by talking through it and working through
it. It is a new medium, and we’re trying to figure out
ways that it works for everybody.

October