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Seeking Support for Open Internet, FCC Chairman Plays the Cable Card

In speech to broadcasters, Wheeler likens web regulations to must-carry rules

Updated 10:15 a.m. PDT LAS VEGAS — FCC chairman Tom Wheeler courted broadcasters’ support for the FCC’s Open Internet rules in his keynote address to the National Assn. of Broadcasters Wednesday, comparing the government’s plans with “must carry” rules broadcasters have advocated and supported.

“Broadcasters have always been concerned about gatekeepers. The must carry rules are a manifestation of that concern. It was that kind of sensitivity that has led us to focus on maintaining an open Internet,” said Wheeler. “The Open Internet order safeguards an increasingly important distribution channel for your most important product – local news and information.  It assures that your use of the Internet will be free from the risk of discrimination or hold up by a gatekeeper. Again, I liken this to the concept behind must carry – updated for the 21st century.”

Continuing, Wheeler effectively played the cable card, hinting that if control of the Internet were left to the Internet Service Providers — typically the cable companies the broadcasters count as bitter rivals — they might find themselves shut out.

“Your goals as an important and innovative public service provider and our Open Internet goals are the same: When you want to offer something over the Internet, no one should stand in your way,” he said. “Least of all, no one should stand between you and the consumers who will benefit from your service. I believe, by the way, this is equally applicable for both radio and television.”

Smith spoke to reporters after Wheeler’s speech. “The NAB has not taken a position on net neutrality. Some of my members are for it, some of my members are against it, and I’m with my members,” he said with a laugh.

Wheeler noted that the FCC’s annual Video Competition Report said pay TV subscriptions were down for the first time since the FCC began issuing the report, and that consumption of over-the-air TV was up, along with OTT streaming. “I expect that we also will see more broadcast channels incorporated into OTT service offerings,” said Wheeler.

Wheeler also voiced his support for a proposal to allow foreign ownership of broadcast properties above the current 25% cap. He cited “benefits including additional inbound investment possibilities and potential reciprocal treatment in our foreign trade and investment activities.”

“I am optimistic that this is an opportunity that we will grasp successfully,” he said. Smith called Wheeler’s support for the proposal “a positive.”

Wheeler spent much of his speech outlining plans for next year’s voluntary spectrum auction, which had been a source of considerable friction with the NAB in years past. This auction will give TV stations the chance to move their spot on the dial or give up some spectrum to make room for more wireless services. Wheeler recounted that the recent AWS-3 spectrum auction had generated “a record-shattering $41 billion in net bids,” confirming the strong demand for more spectrum for wireless broadband. He rejected suggestions that the auction strained the financial capability of bidders, saying he expected AT&T, T-Mobile and Dish to all participate, as well as nontraditional bidders.

The vast sums generated by the previous auction suggest that TV stations are sitting on an untapped fortune, and Wheeler cited Smith’s own reaction to the previous auction, when he said, “My members who are public companies, they have earnings calls to make, boards to report to, return on investment to investors, so they have to look at this now.” Wheeler added “Obviously, I agree.”

Smith said afterward: “And I appreciate the fact that (Wheeler) was responsive and sympathetic to my call to simplify the (incentive auction) rules. That will go a long way to allowing market forces to work as opposed to government predeterminations to be imposed. I think he signaled that he heard.”

Smith confirmed that there has been a thaw the sometimes chilly relationship between the NAB and FCC and chairman Wheeler. “I’m pleased to say that our workings with the FCC are dramatically improved from last year to this,” said Smith. Asked about reasons for the improved relations, he said, “I clearly think we were very helpful to them in getting issues resolved so the AWS auction could move forward, and I think he appreciated that, and it produced a number far greater than anyone had forecast. And I think that is a floor for the next auction, and that naturally will get the attention of an awful lot of broadcasters, who, again, if they’re public companies, they really do have a duty to at least investigate participation.”

“How many in the end do participate? The market will determine that. And the market should determine that, not the FCC.”

Wheeler’s praise of broadcasters’ public service role and importance to local communities could have been lifted from one of Smith’s addresses, while Smith’s show opening keynote Monday was less combative toward the FCC than in years past. Wheeler’s comment that “broadcasting is an important part of our future just as it has been an indispensable part of our past” mirrored Smith’s theme in that speech.

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