House Energy and Commerce Committee Republicans have formally asked Federal Communications Commission chairman Ajit Pai to close the docket on the set-top box proceeding because it is no longer under active consideration, and because it “remains an unnecessary regulatory threat to the content creation and distribution industries” and casts a “shadow over investment and innovation.”
This is a wise, pro-competitive, pro-property rights and good government request from Congress to the new Pai FCC.
The FCC should efficiently utilize this decision opportunity to employ the statutory sunset provision in the law to permanently sunset and remove this unnecessary and serious regulatory threat to competition, copyrighted contractual content and its creation, investment, and innovation. It surely is among the top 75% of regulations that the Trump administration has targeted for removal.
The FCC can justify its sunset of the Section 629 set-top box provision based upon the rich and overwhelming official evidentiary record of:
• The video-related competition documented in the FCC’s Jan. 17 video competition report;
• The still-fresh 2016 FCC set-top proceeding record that provided copious evidence that video-related markets are fully competitive;
• The FCC’s June 2015 ruling “that cable operators are subject to Competing Provider Effective Competition” exempting cable from regulations; and
• The accurate and prescient competitive analysis and approach in the FCC’s 2008 approval of the XM Radio-Sirius Satellite Radio merger that correctly recognized that Internet-delivered content revolutionized how people access and consume content overall and flooded the market with new competition.
The Section 629 provision was written in 1996, when cable still was still largely a monopoly. It included a total sunset provision precisely because Congress anticipated that the 1996 Telecom Act’s overall purpose of deregulation to promote competition would in fact succeed, and enable the technological innovation and competition that eventually would make Section 629 obsolete and sunset-able.
That eventuality is now. Consider this summary of the evidence that these are fully competitive markets.
In 2016 and 2017, the FCC has documented that most Americans have three-plus wireline video distributors and seven-plus choices when wireless is included. That’s far more than any country in the world.
It spotlights a plethora of new online video distributors and competitive alternatives like Netflix, Amazon Prime, Google-YouTube, Dish Network’s Sling TV, Verizon Wireless’s go90, AT&T’s DirecTV Now, CBS All Access, Hulu, HBO Now, Showtime and Starz, among others — comprising about 70% of downstream Internet traffic in 2015, per Sandvine. As for competition for navigation devices, more than 200 million Americans watch their video content on smartphones and tablets, and even more do if one includes laptops and desktop computers.
In short, the markets for video distribution and navigation devices are fully competitive; deregulating will promote competition, as it has before; and that is in the public interest.
Scott Cleland is president of consultancy Precursor LLC and chairman of NetCompetition. For the full version of this piece, visit multichannel.com/Jan30.