Wheeler Pounds The Bully Pulpit

Demands Documents From TWC, Explanations From Verizon Wireless
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WASHINGTON — Federal Communications Commission chairman Tom Wheeler last week was pounding his bully pulpit with one hand while he penned some tough-talking letters with the other.

Broadcasters have felt hammered by recent FCC decisions on joint-sales agreements and spectrum auctions, as well as the advisory on sharing arrangements in general.

But broadband companies were in the chairman’s sights last week, the latest targets of his promise to use his office’s power to protect consumers, ensure access to networks and preserve competition.

After receiving a letter from an unhappy California delegation in Congress, Wheeler fired off a letter to Time Warner Cable chairman and CEO Rob Marcus threatening to intervene in the ongoing carriage fight TWC, DirecTV and other distributors are engaged in over TWC’s SportsNet LA, television rightsholder for Major League Baseball’s Los Angeles Dodgers.

Former FCC chairman Julius Genachowski was known to encourage parties in high-profile disputes to the table, for the sake of viewers, and the Media Bureau regularly monitored retransmission disputes, particularly when they drew input from Capitol Hill.

But Wheeler’s letter was particularly terse, accusing Time Warner Cable of being the bad guy, invoking program- access rules and suggesting a broadband-adoption angle. “I am also concerned about the negative impact that this dispute may have on the growth of broadband services in the Los Angeles area,” Wheeler wrote.

Amid the Hill pressure and in advance of the Wheeler letter, TWC agreed to outside arbitration with DirecTV, and to put the games on the national satellite service in the interim. But DirecTV didn’t jump at the offer, and Wheeler was not assuaged.

“While I am encouraged by TWC’s willingness to enter arbitration, I am troubled by the negative impact that your apparent actions are having on consumers and the overall video marketplace,” Wheeler told Marcus in the letter, demanding copies of contracts and other relevant documents and giving TWC 10 days to comply.

Wheeler also called Marcus about the impasse last week, according to a FCC spokesman, and placed calls to a pair of House Democrats from California, Reps. Tony Cardenas and Henry Waxman.

For cable operators, Wheeler’s threat of intervening if arbitration doesn’t pan out could cut both ways.

Time Warner Cable signaled it would cooperate, but suggested the chairman needed to widen his net.

“We’re grateful for the FCC’s intervention and happy to work with them to gain carriage for the Dodgers — that has been our goal all along,” the company said in a statement. “We hope that chairman Wheeler is making similar inquiries of DirecTV and other L.A. television distributors to determine their rationale for refusing to carry SportsNet LA, which we have offered at terms similar to other regional sports networks, including those owned by DirecTV. We look forward to a productive discussion.”

Time Warner Cable was hardly expected to fire back at the FCC, given that it is currently working with Comcast to get the commission to approve the MSOs’ merger.

Cable operators don’t like to be in the chairman’s sights, but they have been looking for the FCC to get involved in programming negotiations on the retrans front. Wheeler’s interest in the Dodgers blackout could translate to a high-profile retrans blackout as well.

COMMERCIALLY UNREASONABLE?

Wheeler also last week put an exclamation point on his warning to ISPs, wired and wireless, that subscribers ought to be getting the speeds they paid for. He has said he doesn’t think failing to deliver those speeds is “commercially reasonable,” the proposed new definition of allowable discrimination in network management.

Verizon Wireless was the target of a second letter Wheeler wrote, this one because of the company’s announcement that it planned to slow speeds for the heaviest 5% of users with unlimited plans at peak times.

Two weeks ago, the FCC’s Enforcement Bureau advised ISPs that “consumers rightly expect to receive the Internet access that they have been promised by their service providers.” That statement came from acting Enforcement Bureau chief Travis LeBlanc, who in a Congressional hearing last week demonstrated a passion for rooting out bad actors.

“We are committed to holding broadband Internet providers accountable if they fail to deliver on the commercial promises they make to the American people,” LeBlanc said.

Subsequently, Wheeler last week told Verizon, “ ‘Reasonable network management’ concerns the technical management of your network; it is not a loophole designed to enhance your revenue streams,” adding: “I know of no past Commission statement that would treat as ‘reasonable network management’ a decision to slow traffic to a user who has paid, after all, for ‘unlimited’ service.”

Wheeler asked Verizon for a prompt explanation of what the company thought it was doing. Verizon said he would get one, and previewed it in a statement: “What we announced … was a highly targeted and very limited network-optimization effort, only targeting cell sites experiencing high demand. The purpose is to ensure there is capacity for everyone in those limited circumstances and that high users don’t limit capacity for others.”

The FCC has no enforceable anti-blocking or anti-discrimination rules on the books — though those would not apply to wireless — but Wheeler asked how the Verizon policy would square with the transparency rule still in place for wireless and wired broadband, and pointed out that Verizon is subject to conditions on its purchase of wireless spectrum in the C-block auction.

On July 23, the FCC released an enforcement advisory reminding broadband providers of their responsibilities under the transparency rule, the only Open Internet order rule that survived intact after court review.

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