FCC’s AllVid Rulemaking Delayed Amid Pay-TV Concerns

A delayed FCC proposal to let all pay-TV subscribers connect video devices, such as set-tops boxes and DVRs, bought from retailers or other third parties seems to have been slowed by concerns expressed by many multichannel video programming distributors and their content suppliers, said commission, industry and nonprofit officials on both sides of the issue. An AllVid rulemaking notice on a gateway device to connect CE gear to all MVPDs was supposed to have been voted on by commissioners last quarter, under the National Broadband Plan’s agenda. The item may not circulate until later this quarter or Q2, said officials inside and outside the commission watching development of the item.

Media Bureau staffers drafting the rulemaking notice seem to be grappling with how to propose workable AllVid rules that will deal with some of the concerns from MVPDs and cable programmers, said FCC, industry and nonprofit officials. The issues that career commission staffers are thought to be considering are whether there’s a ready-made market among consumers for the use of gateway devices or whether there’s technology to comply with the planned rule. Attention at the FCC was diverted by last month’s net neutrality order and last week’s approval of Comcast’s purchase of control of NBC Universal, and that may help account for the delay, said industry and nonprofit officials. A bureau spokeswoman declined to comment.

Whether the commission should issue a rulemaking notice proposing AllVid mandates could be controversial among commissioners, an FCC official said. The Republican members said at CES that they don’t think rules are necessary, attendees said. The office of Chairman Julius Genachowski may need to decide whether to move forward with the rule proposal that was envisioned in an earlier notice of inquiry, a commission official said. If Genachowski decides to push forward, it may be a month or longer before a rulemaking circulates, commission officials said.

CE companies seeking AllVid rules have been visiting the commission this week, and more meetings are likely, said FCC and industry officials. CE interests and their allies contend that it’s time for commission action, but cable operators say rules are unnecessary because of the many new over-the-top video and other deals unveiled at CES in Las Vegas and elsewhere (CED Jan 27 p8). “Today’s hypercompetitive marketplace with DBS, telco TV and cable providers providing video programming alongside the rapid emergence of Internet-connected TVs, smart video devices, game consoles and video over the Internet” are “unprecedented choices” to meet “consumer demand without any technology mandate or regulatory guaranty,” NCTA President Kyle McSlarrow wrote Genachowski on Wednesday (http://xrl.us/bigc9o).

"Technologies are at hand to produce a standard, IP-based interface that serves the needs of consumers” and it’s possible to require “innovation and competition without compromising the legitimate expectations of content distributors and providers,” an array of CE interests and allies said Wednesday in a filing. “Obstacles to this competitive future are not technological,” and “the necessary tools are at hand through private sector standards that can be referenced” in FCC rules, CEA, the CE Retailers Coalition, Google, Free Press, Media Access Project, Public Knowledge and Sony (http://xrl.us/bigdac) said in an ex parte filing. “The obstacles lie in a skewed marketplace that stifles innovation and competition."

"The time to act on AllVid is now,” CEA Vice President Julie Kearney told us. “Consumers deserve choice, as Congress directed” in Section 629 of the Telecom Act, she added. “Pay-TV providers will always give excuses not to comply with Congress’s directive. The question is: Will the FCC keep buying those excuses? We hope not.” CE and Internet companies believe that “business objections” more than technical hurdles are at issue regarding AllVid, said communications lawyer Robert Schwartz of Constantine Cannon, who represents CERC and who made this week’s filing seeking a rulemaking. “There are public benefits as spelled out in the broadband plan that are not being realized as long as AllVid isn’t getting done,” he said.

The filing’s signers “should take a page” from the new book by CEA President Gary Shapiro “about how government mandates stifle innovation,” said NCTA General Counsel Neal Goldberg. The group is speaking with other MVPDs about principles for devices that can get over-the-top video to work with pay-TV systems, as McSlarrow proposed in 2010, Goldberg said. “We haven’t had any major opportunity to sit down” but hope to get one soon, he said. “We think the chairman and the commissioners are trying to achieve certain goals that are consistent with our principles,” which were recognized in last year’s AllVid inquiry, Goldberg said. “There are ways of monitoring the marketplace short of imposing rules on the participants to adopt certain technologies by certain dates."

"This is a lot more complex than might have been understood going into” work on the inquiry, Goldberg said of the commission. “So it’s going take them a little while longer to think things through.” A reason for rules is that the cable industry has unveiled ways for consumers to connect plug-and-play interactive devices to systems, “and then nothing ever happens,” said a CE executive. “Remember all of those tru2way announcements they pointed to. What happened to those products? Why is this any different?"

Nonprofit groups seeking AllVid mandates aren’t overly concerned by the delay in the rulemaking notice, which they hope will be circulated and approved by commissioners soon, representatives said. Public Knowledge had hoped for a vote in December and then January,

"but if you consider the large number of things the FCC was taking on, some of which we wanted them to take on, some delay is understandable,” said staff attorney John Bergmayer. “We're reaching the point where the FCC really needs to advance the discussion by issuing a rulemaking. Maybe they won’t have all of the answers at this time based on objections that people have raised.” But consumers “demand demand innovative video devices,” and the hurdles keeping them from market “are largely business and regulatory problems,” Bergmayer said: “It’s really hard to compete with subsidized devices” from MVPDs.

"I don’t think anybody is going to say there are going to be woeful repercussions in the market from being a quarter behind” on the rulemaking, said Free Press Policy Counsel Chris Riley. “I would rather it would have been sooner.” He doesn’t know why technical and business concerns “are gaining the traction they are” and “there is still a lot of active debate going on,” Riley said. “I'm happy that the FCC is still pushing it through.”