FCC Pulls Set-Top Box Proposal From Meeting Agenda

The FCC has called off a planned Thursday vote on a contentious proposal that would require that cable and satellite operators offer a free app so subscribers could forgo the rental of set-top boxes.

FCC Chairman Tom Wheeler said that they were unable to finish deliberations on the proposal, which has been met with opposition from Hollywood studios, many major guilds and multichannel video distributors. But technology companies backed the effort as the next step in the evolution of TV navigation, allowing subscribers to access the content they pay for on services like Apple TV and Roku.

“We are still working to resolve the remaining technical and legal issues and we are committed to unlocking the set-top box for consumers across this country,” Wheeler, Commission Mignon Clyburn, and Commissioner Jessica Rosenworcel said in a statement released about a half an hour before the meeting.

Rosenworcel has been seen as the key vote for passage of the proposal, but earlier this month, at a Senate hearing, she expressed reservations over the plan’s creation of a licensing body to authorize device manufacturers and streaming services to use the app. The MPAA objected to provisions for FCC oversight of the licensing body, and have characterized it as akin to a “compulsory copyright license.”

“The MPAA is pleased that the FCC is taking more time, and we hope they use it to ensure any set-top box proposal remains consistent with copyright policy and avoids harming creators,” MPAA Chairman Chris Dodd said in a statement.

The FCC said that the proposal would be put on the commission’s circulation list and would remain under consideration, but Wheeler set no specific time for it to return to the FCC agenda.

“It’s time for consumers to say goodbye to costly set-top boxes,” the three commissioners said their joint statement. “It’s time for more ways to watch and more lower-cost options.”

In recent days representatives from Wheeler’s office and Rosenworcel’s staff have been trying to resolve the licensing issues. At a press conference after the FCC meeting on Thursday, Wheeler said that it was “not unusual that commission items run up to the last minute. The point of the matter is that we ran out of time.”

He added, “All that has happened here is that the deliberative process that has been going on continues to go on.”

Studios and programmers, including Scripps Networks Interactive, CBS Corp. and The Walt Disney Co., have been meeting with FCC officials this month in the lead up to the vote, objecting to “any arrangement in which they are required to allow their content to be distributed on terms or conditions to which programmers would not agree would be tantamount to a compulsory copyright license.”

But the FCC has insisted that the proposal would prohibit the agency from “altering terms of contracts between programmers and pay-TV providers,” a spokeswoman said earlier this month, and that the commission’s oversight would be limited. Copyright protections would remain in place, and that control of the app would remain in the hands of a cable provider, supporters have noted. In other words, subscribers would access the same channel lineup as they do via set-top boxes.

The two Republican-appointees on the commission, Michael O’Rielly and Ajit Pai, were expected to vote against it.

The challenge for Wheeler is to come to an agreement before a new administration is brought in, with it likely that either Hillary Clinton or Donald Trump would name a successor as FCC chair.

Wheeler unveiled a proposal to “unlock the box” earlier this year, which would have required that a cable operator provide their feeds to device makers who could sell competing boxes to consumers.

After fierce opposition from industry lobbyists, Wheeler unveiled a compromise proposal earlier this month that called for cable distributors to offer a free app. But that plan, too, was met with criticism. At the recent Senate hearing, he signaled that he was open to further changes in the proposal, leading to a series of meetings in recent days.

Last week studio and media lobbyists met with FCC officials and discussed an alternative plan in which the agency would conduct a review of the marketplace in 2020, in lieu of oversight, although FCC officials are said to be adamant that the agency be allowed some kind of role in monitoring the arrangements.

Wheeler’s proposal also calls for “real cross-platform search,” in which a consumer could search for content in one place. For example, if they searched for the title of a TV series, the results would show the availability on apps from the likes of Comcast, Netflix, and CBS. While that would be beneficial to promoting a studio or network app, entertainment industry lobbyists have also raised concerns that their content would compete in search results with pirated options.

Wheeler has stressed that the rationale behind the proposal is a congressional mandate for competition in TV navigation. He has cited studies that households spend an average of $231 per year on rental fees.

A group of lawmakers on Capitol Hill last week called on Wheeler to put the proposal back up to another public notice, which would trigger a new comment period. Wheeler was cool to that idea, noting that there already has been an extensive period for the public to weigh in.

Speculation is that the cable industry will challenge the proposal in court if it moves forward.

David L. Cohen, senior executive vice president of Comcast, said in a statement that “it is now critical that the Commission heed the bipartisan calls of dozens of members of Congress and respected third parties and release its new proposal and associated rules to allow the public to provide comment. This is an extremely complicated and technical item that should not be adopted without the opportunity for expert and public input.”

The Directors Guild of America, IATSE and SAG-AFTRA opposed the proposal, warning that content creators.

“Although supportive of providing consumers free choice, the DGA has vigorously expressed its concerns regarding the proposal and its potentially devastating effects on the rights and livelihoods of the creators of film and television,” the DGA said in a statement.

The Writers Guild of America West is backing the proposal, saying that it would help boost competition and visibility for independent programming.

Rep. Anna Eshoo (D-Calif.), who earlier this week urged the FCC to approve the plan, said that “consumers have been waiting for twenty years for relief from these fees. This disappointing delay will cost them even more money.”

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