All of these years, I wondered why you find folks in the cable industry who are such a pain in the neck about maintaining and getting stuff from their “public file.” Now I understand that this was really a last line of defense against an army of terrorists and saboteurs bent on destroying our way of life. Unfortunately, according to the National Cable & Telecommunications Association (NCTA), the FCC’s recent action approving the technology for the broadcast white spaces may undermine this defense of our vital public infrastructure. How? Read below. And pray, PRAY, that the FCC heeds this warning and helps NCTA protect us from the army of lazy, easily frustrated terrorists inspired by Family Guy to destroy cable head ends that apparently surrounds us.
It’s been rather busy the last few weeks. Between my unfairly holding Sprint responsible for its own screw ups, shamelessly cheering on the documentation of our national broadband drought by Our Great Google Overlords, and generally crushing all who dare oppose me, it’s been hard to find time to blog about stuff. So naturally, while I was away for the last day of Passover, the DC Circuit issued its long awaited decision in the Comcast/BitTorrent case, Comcast v. FCC.
Needless to say, the opinion was greeted with the total hysteria that has become the hallmark of the network neutrality debate — with terms like “Nuclear Option,” “World War III,” and “spanking.” Opponents of FCC jurisdiction rejoiced, supporters of network neutrality lamented, and a few shrewd observers noted that the actual outcomes could prove far worse for Comcast and the incumbents than if Comcast had lost (as I noted after oral argument last January).
My co-counsel, Marvin Ammori, has written up his retrospective here. Understandably, he’s rather bummed. Despite this whole thing being my idea in the first place, however, I’m actually rather pleased and amused with how this whole thing is turning out. Sure, I would much rather have won. But as the history of the last 2+ years of this unfolds, the tale of how Comcast managed to bluff, badger, and bungle itself into a position where it has not only guaranteed harsher condition on its merger with NBC-Universal, but revived the possibility of classifying broadband access as a Title II telecom service for the first time in 10 years, is the stuff of high farce. And while I wish I could claim credit for this outcome, the real “heroes” here are Brian Roberts (head of Comcast) followed closely by AT&T, NCTA and the Republican party.
To try to keep this manageable, I’ll divide this into two posts. Below, I will try to set forth what the court actually said and the immediate legal implications, without worrying too much about the overall policy. While I can hardly claim to be an impartial observer, I’ll do my best to identify my editorial comments as such and note where reasonable minds can differ. In Part II, I shall shamelessly indulge myself with my own eyewitness to history and why I think the Comedy of Comcast v. FCC deserves its special place in the realm of farce — although we have by no means reached a certain conclusion.
More below . . .
D.C. Circuit Affirms Inside Wiring In Fairly Broad Opinion. Terrestrial Loophole Next? And What About Time Warner's TV Anywhere?
While folks in the suburbs sometimes forget this, a lot of people live in what we call “multiple dwelling units” (MDUs) — which is a fancy way to say things like apartment buildings and condos. One of the problems for people trying to switch from one provider to another for cable (for example, from Comcast to RCN) is that a cable operator may already have an exclusive deal with the landlord to provide cable services to everyone in the building. Competitors asked the FCC to ban such practices. In 2003, under Michael Powell, the FCC refused to ban such exclusive deals because “regulation is always bad, mmmmkayyy.” In 2007, as part of Kevin Martin’s
attack on cable market power evil vendetta against the helpless cable industry, the FCC reversed this determination and found that under Section 628(b) of the Communications Act (47 U.S.C. 548) it needed to prohibit cable operators from entering into or enforcing such exclusive deals because Verizon can’t sell FIOS w/out being able to offer triple play. Predictably, this was widely denounced by the cable companies and their cheerleaders as not merely unwarranted, but a violation of law and certain to be overturned on appeal.
Turns out, not so much. In fact, in a rather broadly worded opinion, the D.C. Circuit affirmed the 2007 Order. Indeed, the language affirming the decision opens the door to the FCC tackling other cable issues, such as the terrestrial loophole (which Verizon wasted no time in pointing out to the FCC). Mind you, it remains unclear at this point whether the new FCC will have any interest in cable market power or not.
Still, there are a number of important aspects about this case, especially its implications for the FCC to regulate Time Warner’s TV Anywhere strategy, aka “how cable operators plan to preserve their existing business model and fight off Netflix.” I discuss this in more detail below . . . .
So my old friends at the National Cable Telecommunications Association (NCTA) are doing a blogger outreach event today. Oddly, I was not invited. No doubt my invitation was blocked or degraded.
I never get this crap from Verizon.
Stay tuned . . . .
I had hoped to be able to tell all my friends at the National Conference on Media Reform in the beginning of June about the fantastic opportunity to put independent progressive programming, minority-oriented programming, and local programming on cable when the new rates and improved rules for cable leased access became effective June 1. Unfortunately, due to a decision by the Federal Court of Appeals for the Sixth Circuit granting the cable request for a stay pending resolution of the challenges to the rules, that won’t happen. While not a total loss (the Sixth Circuit rejected the NCTA’s motion to transfer the case to the D.C. Circuit) and not preventing programmers from trying to take advantage of leased access now, this is a serious bummer for a lot of reasons — not the least of which is the anticipated crowing by the cable guys (ah well, we all endure our share of professional hazards).
But mostly, I am disappointed that the cable operators will continue to withold the real rates under the new formula. As part of the stay request to the FCC (and subsequently to the 6th Cir.), the cable operators had submitted affidavits claiming that under the leased access rate formula adopted by the Commission, the new rate would be FREE!!! and they would have to drop C-Span and any other programming you like as a result. Since the cable operators always claim that the impact of any regulation is that they will need to charge higher rates, drop C-Span, stop deploying broadband, etc., etc., I am not terribly inclined to believe them this time and had looked forward to either their releasing real rates or putting programmers on for free. But since cable operators uniformly refuse to make the new rates available before the new rules go into effect (another reason I disbelieve the “the rate will be zero” claim), and because they control all the information relevant to the rate calculation, I can’t actually prove they are blowing smoke. Now it looks like we will have to win the court case (which will likely take a year or more) before we find out the real leased access rates.
Mind you, leased access had already hit a few roadblocks, owing to the inexplicable delay in sending the rules to the Office of Management and Budget (OMB). Although the rules were approved in November ’07, released on February 1, 2008, and published in Fed Reg on February 28, the order was not sent to OMB for the mandatory review under the Paperwork Reduction Act until April 28. I might almost think the cable folks in the Bureau were less than enthusiastic about supporting leased access reform. OTOH, since it also took the broadcast enhanced disclosure rules a a few months to get to OMB, it may just be the natural slowness of the process. After all, by federal law, the carrier pigeons used to take the text in little scraps from FCC across town to OMB can fly no more than two flights a day.
But to return to the critical point, what does the court ruling mean for leased access reform and the hope that local programmers, progressive programmers, minority programmers and others could have an effective means of routing around the cable stranglehold on programming?
See below . . . .
Quick On Cable: Martin and Copps Pull Out A Partial Win By Persuading Adelstein To Meet Them Halfway
Well, I’ll have a lot more to say over the next few days. And there were a bunch of very good Orders that came out on other subjects, like Low Power FM and mandatory disclosure requirements for broadcasters. But here’s the summary:
1) The Commission acknowledges that data about the 70/70 threshold remains unclear, and will therefore require that all cable operators must report real subscriber numbers, including all MDU subscribers, for 2006 and 2007.
OK, as regular readers will know by now, I think it was clear that cable penetration passed this threshold long ago. But since we at MAP have been asking the FCC to collect real data on this stuff from the cable operators since 2000, I am pleased with the ultimate outcome. Hell, I was telling Steve Effross of NCTA last night that I’d wait on the result to get real data from all cable operators so that we could do this right.
If I’m wrong on penetration, so be it. This is an empirical question and we should solve it through the obvious expedient of telling cable operators to actually report their subscriber numbers. Three cheers for Kevin Martin for having the courage to stand up to the wholly bought cable subsidiaries in the GOP, and three cheers for Michael Copps for pushing for collecting actual data from cable companies for years now.
As for Jonathan Adelstein. _sigh_ Yes, I’m still disappointed. I get that Adelstein doesn’t like being in the hot seat, that he thinks Martin is a — if you’ll excuse me — martinet who cooks the books, etc. etc. But he is just plain wrong on this one. As noted with copious citations in the MAP filings (see links in comments in previous post) the FCC has always relied on Warrens data and exclusively on Warrens data, which showed cable penetration hovering at pretty damn close to 70%.
And as for the much vaunted Cable 325 Reports that Adelstein and McDowell went on at great length about, I shall refer interested parties to the GAO’s analysis, with the lengthy but descriptive title “Data Gathering Weaknesses in FCC’s Survey of Information On Factors Underlying Cable Rate Changes.” And, as also mentioned in MAP filings, the FCC’s regulatory fees NPRM determined that cable gained 1.5 million subscribers in 2006. If we’re going to include all the FCC data, the fact that everyone (including McDowell and Tate) already voted to find that cable gained 1.5 million subscribers in 2006 should be included in the discussion as well.
But, at the end of the day, Adelstein voted to demand the cable companies provide the data and end this debate once and for all. That counts for a lot. Nevertheless, for me on this, Adelstein comes out of this a lot less like Han Solo and a lot more like Hamlet, spending five acts waffling and causing havoc before finally managing to stab the right villain.
As for Tate and McDowell — hardly a surprise. Given how thoroughly the cable guys appear to own the Republicans, the surprise is not that McDowell and Tate went with the cable boys but that Martin actually went ahead and defied them.
2) Leased Access: The Commission adopts a pretty good Order that will lower the rate, require cable operators to be more responsive, and generally force staff to get complaints processed quickly. Surprisingly, it took some convincing to get Adelstein to go along with this one, as the cable operator’s last minute complaint that they didn’t get enough due process struck a chord. (I love it that industry always discovers due process when they are about to get their comeuppance, but when it’s about shafting us the due process concerns go out the window.) Fortunately, Copps and Martin were able to broker a compromise that the FCC will stay operation of the new rate formula until after they process Petitions for Reconsideration. And surprise! Tate and McDowell dissented. McDowell’s comments about how leased access doesn’t work as an economic model run afoul of the fact that the record contains several examples of programmers that do make a go of it even under the existing abominable rules (such as CaribeVision). But when your “Mr. DeReg Guy” a little thing like facts will not figure into your theorizing.
A minor tweak. The Commission will not apply the new rate to home shopping channels, but rolled that over into a separate rulemaking. Given my general feeling on home shopping channels and the public interest, I can’t complain too loudly about this one. I don’t think it’s terribly needful, but I can live with it.
3) Section 616 Carriage Complaint: The process for independent programmers to file complaints with the Commission was up for major reform. It didn’t happen. Score a kill for the cable guys.
That’s the quick and dirty. I’ll try to have more over the next couple of days. But first I gotta take a little nap. It’s been a Hell of a month.
Stay tuned . . . .
I wish my employer, Media Access Project, had sufficient funds to hire me a research assistant. But they don’t. So I’m going to turn to the collective readership for a bit of fast research to help me refute the pack of lies the cable industry is spreading.
As regular readers know, Martin has proposed a slew of much needed cable reform rules. Chief among these is the finding that cable serves 70% of homes in areas served by cable systems of 36 or more activated channels. NCTA, the cable trade association, has denounced the dea that their members serve that many customers as a vicious lie and generally denounced Martin for carrying on a vendetta against his industry (where “vendetta”=”actually enforce existing law and regulate in the public interest“).
Turns out, however, that Martin did not just pull the numbers out of his posterior. They came from the Warren Communications News Television and Cable Factbook, a neutral and respected industry reporter. According to the Warrens data, cable serves over 71.4% of the relevant market — more than enough to trigger the 70/70 threshold and give the FCC authority to reregulate cable to promote diversity.
To my considerable surprise — given how much Warrens depends on their reputation for accuracy to convince customers to pay many thousands of dollars for this research — the cable industry prevailed on the managing editor of The TV and Cable Factbook to declare their own research unreliable. In fairness, they claim the research is unreliable only when used to prove that the cable industry has passed the 70/70 threshold, so I assume all the advertisers and businesses that rely on this data will not be troubled. They also claim tat the data are unreliable due to systemic underreporting by cable which, as my friend and fellow Wetmachine blogger Greg Rose observed, means that the number of households served must be even more than the 71% Warrens initially found.
Such is the power of cable, however, that the industry reporters following this have uncritically lapped up the NCTA party line while failing the elementary school math noted above (ironically, proving the point about how media consolidation is all about serving corporate interests). Martin’s fellow Republicans on the Commission, McDowell and Tate, apparently determined to make sure that everyone knows that they would never pursue a ”vendetta“ against an industry merely because it has demonstrated market power, sent this letter to Warrens asking for more information (and apparently missing the elementary school math that if you underreport cable subscribers that means they serve more than the number reported). The letter takes a rather nasty shot at Martin, as well as inviting explanation for why the other reporters come in so much lower and looking for validation of the numbers.
Of course, as Rose pointed out in his post, the other numbers come in lower because they are estimates where the cable operators provided even less info than they did to Warrens. But it occurred to me that there is a rather simple way to make the point that even incumbent cable operators passed the 70% threshold sometime ago.
Back for the 2005 cable report, NCTA submitted numbers ranging from 62% to 68.9%. Since then, with the exception of the most recent cable quarter, the cable operators enjoyed consistent growth in their basic subscriber numbers. I would like to find out the quarterly basic subscriber statistics for the largest cable operators (Comcast, Time Warner, Cablevision, Cox, and Charter). If the largest operators enjoyed significant growth after NCTA condeded 68.9% as a valid measurement, then we can have reasonable assurance that findings above 70% are accurate. Problem is, I’m a little strapped for time here.
So I’m turning to the distributed power of the web for help meet the McDowell/Tate Challenge of ensuring that the data meet the highest standards of ”trustworthiness, truthfulness, and viability” (which, I have to say, has not exactly been the case with Commission cable reports before Martin took over. Either make a donation to MAP to get me a research assistant, or send me an email with useful cable statistics.
Stay tuned . . . .