Legislators, Industry Commenters Slam FCC Set-top Plan

The FCC set-top box proposal is a threat to consumer cybersecurity, goes far beyond the will of Congress and can't accomplish what the agency says it can, said recent filings from legislators, trade groups and companies in docket 16-42. Monday was the deadline for reply comments, and a rule is expected to be issued this summer, industry officials have told us. Only some replies were available Monday. The decision essentially has been written already, disregarding all the industry objections to the proposal, said downloadable security company Beyond Broadband Technology. “Efforts to explain and navigate through the difficult issues raised by the 'proposed' rules are a waste of time and effort.”

Senate Judiciary Committee Chairman Chuck Grassley, R-Iowa, and the bipartisan leadership of the Senate and House Homeland Security committees were critical of the set-top proposal, in letters sent to FCC Chairman Tom Wheeler Monday. “It is unclear how some of the FCC’s proposed rulemaking aligns with the [National Institute of Standards and Technology] Framework’s recommended practices or how existing cable and satellite providers can adequately inventory devices attached to their network, including devices owned by a third party,” said the four Homeland Security committee leaders. They want Wheeler to provide answers by June 10 to their questions on how the set-top proposal deals with cybersecurity. “It remains unclear” how the FCC's proposal will deal with the industry questions about how it affects consumer privacy and cybersecurity, Grassley said. The proposed rules will replace market-based solutions with greater regulation, he said.

The record overwhelmingly shows the proposal isn't viable, said AT&T and industry-backed set-top opponent group Future of TV Coalition. The record “has laid out detailed, substantive concerns about how the mandate will impact innovation, programming diversity, consumer privacy and costs” as well as copyright, said Future of TV in an email. Pay-TV carriers, 150 members of Congress, diversity groups, video programmers, MPAA and 70,000 consumers have put filings into the record showing the set-top proposal is “unnecessary and unworkable” and would “damage the quality, quantity, and diversity of programming, dampen innovation, raise consumer costs, undermine existing consumer privacy protections, and facilitate content piracy,” AT&T said in its reply comments.

The proposal is “a radical unbundling scheme” that “bears no relationship” to the congressional mandate to establish a retail set-top box market, AT&T said. “Indeed, the Commission has not even tried to hide its unlawful bait-and-switch.” The NPRM “stretches” the definition of terms such as using the word “equipment,” to refer to software apps, AT&T said. “Equipment includes the software used to run it, but that does not turn the software itself into equipment, any more than icing by itself is 'cake' because it is often part of a cake.”

The set-top proposal exceeds FCC authority and could contravene the First Amendment, which “would also lead a court to reject the Commission’s statutory interpretation to avoid serious constitutional difficulties,” AT&T said. The NPRM “appears premised on the erroneous idea that numerous unresolved issues regarding technical mandates and rule implementation can be circumvented by passing the buck to a proposed external 'Open Standards Body,'" emailed the Free State Foundation. “But the Commission's overreliance on an external standards body would constitute an improper delegation of agency authority.”

The Association of National Advertisers also raised a First Amendment objection. “By allowing the alteration of both programming and advertising, the Commission's proposal violates the First Amendment rights of advertisers and content producers,” ANA said. “When programming is altered, the value of advertising underlying that programming is reduced."

Small cable companies will be greatly affected by the rules, emailed the American Cable Association. “More than 200 small providers would either go out of business or cease offering video service,” ACA said. “For those that do manage to stay afloat, they’ll be faced with having to forgo important investments in innovations and broadband expansion or pass on increased costs to their subscribers.”

The FCC proposal "will lower prices for consumers, increase opportunity for diverse and independent voices, and promote new, creative devices and apps for subscribers to access the content for which they pay," said Public Knowledge in its comments. Contrary to industry criticisms, the set-top plan will "continue to protect content creators’ copyright rights, and preserve critical privacy protections by providing parity between current MVPD set-top boxes and third-party devices and apps," PK said. Many industry attacks on the proposal are an attempt to avoid competition, said PK. "There is little that the Commission can do to compromise with critics who, for business or other reasons, are opposed to opening this market to competition." The FCC should clarify that its proposal won't allow third parties to alter the integrity of a pay-TV carrier's programming or channel line-up, PK said. The FCC "should be open to ways to assure programmers and MVPD that competitive apps and devices will simply give customers more options to access their programming and services," said PK in reply comments. "If necessary to assure programmers that this is the case, it can adopt requirements which ensure that third-party devices present the complete MVPD programming package to consumers."