Pai Seeks Cable Forbearance Statute in Any Cable Act Rewrite

The ongoing “Internet transformation” of video means the FCC should get from Congress the same authority to forbear from regulations as the agency now has for telecom issues, Commissioner Ajit Pai said. The 20-year-old Cable Act “is deterring progress, to the detriment of consumers,” he said Thursday at a luncheon of cable and telecom lawyers, lobbyists and executives also attended by commissioners Robert McDowell and Jessica Rosenworcel. Pai opposed, in a speech to the Media Institute event, a draft order’s making attributable for some TV station sharing agreements to the broadcaster contributing the resources, and said in a later interview that Democratic and Republican FCC members continue talking about ways to change the draft. Deadlock remains on the item, even as consideration of changes occurs, another agency official told us this week.

Pai wants a statutory framework for cable forbearance similar to what exists for telecom issues, whenever the Cable Act is rewritten, he told the luncheon attendees in reading prepared remarks (http://xrl.us/boff2e): “Nobody here expects a comprehensive rewrite of the Cable Act in the next two years. But even minor statutory changes could yield major benefits.” The House Communications Subcommittee’s hearing next Wednesday on a distant broadcast-TV signal law expiring in late 2014 is a “priority” for Congress to pass, Guggenheim Partners analyst Paul Gallant wrote investors Thursday. “Which means other things could get added."

The commission’s statutory authority should be expanded to include multichannel video programming distributors and cable service, from telecom carriers and services now, Pai said. It “makes no sense” to allow forbearance for voice and not video regulations, he said. Except for the order requiring Comcast to carry the independent Tennis Channel as widely as the cable operator’s own sports networks, on which McDowell and Pai jointly dissented (CD July 26 p5), the agency has generally avoided “heavy-handed intrusions” in the cable market, Pai said. He cited sunsetting must-carry broadcaster viewability rules for cable operators and a ban on all exclusive program access withholding of channels affiliated with operators. Google is among the companies backing some program access rules, which operators including Time Warner Cable oppose. (See separate report in this issue.)

The three criteria by which the FCC must consider whether to apply Section 10 forbearance under the Communications Act for telecom issues work well too for cable, Pai told us. He said he seeks for cable “a general framework that mirrors what’s in Section 10.” Those factors are that a regulation is no longer necessary in the interest of competition, isn’t in the public interest, and enforcement is not necessary to protect consumers, Pai said. Last year’s order allowing cable/CLEC combinations is an example of the type of deregulation he supports, he said: “That’s a sort of flexibility that we cannot show in other areas” affecting cable that don’t also encompass voice issues. The agency should be able to “really take a proactive approach” to not applying cable rules, which is sometimes “difficult” to do with its current authority, Pai said.

Pai made a pitch for TV joint services agreements, which he said save broadcasters money and shouldn’t be attributed. It’s worrying that the FCC might not grandfather existing TV JSAs, he said in Q&A. The draft order would attribute TV JSAs to a broadcaster brokering 15 percent or more of another separately owned station’s ads, which would mean some of the arrangements would need to be changed so they don’t violate ownership rules, agency officials have said. “The agreements have concrete value,” Pai said Thursday. “I remain hopeful” that the draft can be approved, he told us. “We have been working actively with our colleagues on both sides of the aisle to find a solution that would satisfy everybody’s interests and allow the item to move forward.” He’s “still actively engaged” on the issue, “and we are still hopeful that the chairman will have an item that can be adopted, even if it’s not unanimous.” Chairman Julius Genachowski supports more deregulation than what is supported by Rosenworcel and Commissioner Mignon Clyburn, while McDowell and Pai want more rule relaxation than what’s in the draft (CD Feb 1 p3).

Pai also continues to want to see newspaper/broadcast cross-ownership bans ended, he said in the speech: “It’s long past time.” Nonprofits opposed to media consolidation are continuing to lobby against the draft’s allowing radio/paper combinations in any market and shared ownership of a daily and non-top 4 rated TV station in the same top-20 market. (See separate report in this issue.) Newspaper/broadcast cross ownership is no “panacea” to circulation declines as some dailies have shuttered, Pai said, but “had we eliminated this prohibition a decade ago, the industry’s prospects might look brighter today. It might be too late for us to make a meaningful difference at this point. But that doesn’t mean we shouldn’t try.”