Senate Takes Hard Look at Video Marketplace

Powell suggests it is time to readjust underpinnings of video reg regime
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For the second time in as many days Congress dove into the video marketplace, in this case its change from appointment content on TV sets, to "how, where and when" content on a variety of devices. The consensus was that the laws need to reflect the video marketplace, and currently don't.

The Senate Commerce Committee held a hearing with top trade association chiefs, and representatives of Free Press and Nielsen to get their take on the impact of that change.

The previous day's House hearing was focused on renewal of the STELAR compulsory satellite license, while the Senate hearing ranged a little further afield though with plenty of STELAR talk. That was driven by National Association of Broadcasters President Gordon Smith, who also testified at the House hearing, the only witness to appear before both committees. 

Plenty of legislators also wanted to talk STELAR given their issues with "orphan" counties that currently lack in-market stations, sometimes resulting, Sen. Ed Markey (D-Mass.) pointed out in the "heresy" of Massachusetts viewers getting local stations focused on the Yankees or Giants.

Everyone was in agreement that the video marketplace had changed dramatically while the laws had not, but whether to start from scratch or modify existing laws--like STELAR and the 1992 Cable Act--generated a lot of different opinions.

Michael Powell

Michael Powell

Michael Powell, president of NCTA-The Internet & Television Association, has a reputation as one of the most eloquent and expansive speakers on communications policy, but also got a shout out--Commerce chair Roger Wicker (R-Miss.) dubbed it "breathtaking"--for his ability to summarize his history of video remarks in the allotted time (the hearing was somewhat abbreviated due to floor votes).

Powell talked about the need to look anew at video marketplace laws and regs, starting from the the predicates of that decades-old regime, including that cable had 92% of video share--true, but now 56%, he said--and some 60% of the programming--true then, but down to single digits.

But Powell was not ready to scrap existing rules just yet. He put in a plug for reauthorizing STELAR, but based on the associated requirement that broadcasters and cable operators negotiate in good faith rather than a defense of the other STELAR' component that sunsets at the end of the year if not renewed--the satellite distant signal copyright blanket license.

Powell said the FCC was needed as an important backstop to good faith negotiations, one that would go away if the provision sunset.

When it was his turn, Smith, who was laser-focused on STELAR amid the talk of broader reforms and larger issues, said he was fine with the good faith provision, saying it could be untethered from STELAR if need by, but that the license should expire, so satellite companies would have to negotiate for local station carriage rather than import TV station network signals from New York and L.A. 

Gordon Smith

Gordon Smith

When asked more than once about what his recommendations for updating video laws would be, he came back to letting STELAR expire. 

Powell offered what he called a schematic for change: 1) adjust the predicates for new laws on the new marketplace of reduced cable share and increased competition from satellite and the edge; 2) harmonize the regulations, some of which apply to cable but not satellite, satellite but not broadcast, and none of which apply to edge players, pointing out that those edge giants have tons of money and incentive to use video, a side business, to drive eyeballs to search and social media posts, all of which was not remotely contemplated when STELAR and the Cale Act were passed; and 3) clearing out regulatory underbrush that does not fit the digital age. 

Powell said undergirding that must still be a recognition of the "critical social values of diversity of voices, protection of children, trusted news and information sources and respect for the First Amendment.

Powell said he was a fan of light regulation, so was not reflexively saying regulate them like cable. But he said that at least those same fundamental principles should apply across the board. 

While relatively short, the hearing hit a number of topics. Here are some highlights.

■ Smith told Sen. Ed Markey (D-Mass.) that NAB supports his True Fees Act, which would require cable to advertise the "true" cost of service, waive early termination fees if subs wanted to drop service after a price increase, and mandate price disclosures in cable bills. The support was not a big surprise, but drew a thank you from Markey. Powell said he would work with the Senator on the issue of more transparency, but had issues with the bill given that he said there were already mechanisms to prevent misleading advertising. 

Craig Aaron

Craig Aaron

■ Free Press president Craig Aaron--who strongly supports Markey's bill--put in a plug for a la carte programming, the return of net neutrality rules, and an end to retrans blackouts, consolidation and broadcast ownership deregulation that abets it. In fact, he called for rolling back FCC broadcast deregulation by restoring the UHF discount and tightening local ownership rules. That, he said, was a way to create a consumer-centric and thriving video marketplace. He said the conversation should not about the interests of cable vs. broadcast vs. satellite, but about what is best for the audience that pays the bills. He said companies that control spectrum, dig up streets, put up towers and launch satellite have public responsibilities.

Sen. Markey is concerned about an FCC proposal, supported by Powell and NCTA, that it allow cable operators to calculate the expense of providing PEG channels, per a government mandate, and count that toward their local franchise fees. Aaron pushed back hard, saying that PEG was a vital local institution that should be protected.

David Kenny

David Kenny

■ Nielsen CEO David Kenny made a special guest appearance--he had to exit early--advised the senators that whatever they did about the changing marketplace, one value they needed to preserve was its independent measurement by a trusted third party (that would be Nielsen).

That is against the backdrop of some distributors questioning the ratings company's ability to accurately count viewers in a time of increasing fragmentation of viewing to different platforms. "Without an independent voice, industry would be left to grade its own homework, robbing consumers of their voice and sidelining critical investment from advertisers," Kenny said. "As Congress develops legislation on the Satellite Home Viewer Act and privacy, Nielsen feels there is a legitimate interest in the use of independent third party data collection through audience measurement." He asked Congress to "embrace" that interest.

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