GAO Says FCC Lacked Analytic Backing for Set-Top Draft

Any FCC rulemaking about the set-top box market first needs more-thorough study of the market and its dynamics, GAO reported. It may be moot because odds of Chairman Ajit Pai's administration picking up the set-top issue seem scant, experts tell us. "If I were Pai, I wouldn't want to touch this," Public Knowledge Senior Counsel John Bergmayer said. Pai conceivably could initiate a study of the set-top market just so it could be declared effectively competitive, closing the door on the matter permanently, said Gigi Sohn, who was an aide to former Chairman Tom Wheeler. She disputed the GAO saying the FCC didn't have enough analyses to back Wheeler's set-top regulation course.

The commission lacks comprehensive analysis it needs about the extent of consumer set-top choice and about how more video service options affect the notion of how important consumer choice among navigation devices is, GAO reported Friday. It said about half of the stakeholders and experts it interviewed said regulations to assure a commercial market for set-tops aren't necessary.

The report said the analytic work the FCC did before its 2016 draft order was limited, not looking more fully into issues why most customers lease a set-top from an MVPD instead of buying a CableCARD device. The analyses didn't consider how more video competition affects the importance of consumer choice for set-tops. Done in response to an April 2016 request by House Communications Subcommittee Chairman Greg Walden, R-Ore., and Rep. Yvette Clarke, D-N.Y. (see 1604010053), the study recommended the FCC use its annual video competition report to analyze how the video market is affecting set-top competition.

Included is a reply dated Sept. 21 from Media Bureau Chief Michelle Carey saying the agency will ask in future video competition reports for data and comments on whether there's a need for more set-top regulation. Comments on the next annual report -- which asks some related questions, such as about the competitive strategies associated with leasing set-tops to consumers -- are due Oct. 10 (see 1708250052).

Given changes in the video market, "it's not clear what anybody would propose" in the unlikely scenario the Pai administration did take up set-top regulation, said cable consultant Steve Effros. "There's no really good reason to do this at this point," he said, saying a proceeding aimed at declaring the set-top market effectively competitive would be a waste of agency resources.

The FCC didn't comment. In January, it pulled the set-top draft order from circulation (see 1701280001). In April, Pai wrote House Commerce Committee Republicans that with the set-top proceeding no longer pending, he didn't "intend to resurrect it" (see 1704200028). GAO noted Pai didn't include any analysis with his letters to Congress. Set-top maker Arris and CTA didn't comment.

The document, if it had come out a year ago, likely wouldn't have changed the proceeding's trajectory, experts said. "More data is always good," but advocating more study "is a recipe for delay," Bergmayer said. An expert said if the report came out during the Wheeler administration, the net effect would have been more political cover to opponents of the proceeding. If Copyright Office criticisms of the set-top draft order (see 1608040062) didn't sway the Wheeler FCC, the GAO report likely would have had zero effect, a cable industry official speculated.