The FCC has posted the agenda for its open meeting Thursday, October 12. And boy, that is some agenda.
1) Cable Competition: By federal law, the FCC is required to do an annual report on whether the 1992 Act (and the 1996 Act ) have made subscription television competitive and broken the cable stranglehold on programming and rates. Usually, this is an outrageous piece of trash designed to protect the cable industry. But Kevin Martin has signalled impatience with the cable industry and a desire to see that market become more competitive.
After last year's report, the FCC held a separate proceeding to determine if cable systems with 36 or more activated channels reached 70% of U.S. households, and if so, whether 70% of the households reached subscribed to these systems. Under Section 612(g) of the Communications Act, if this “70/70” test is met, then the FCC gets a power-boost to regulate cable in the name of diversity.
Public interest groups, no surprise, would like to see the FCC find that cable has passed the 70/70 threshold and start seeing some serious regulatin' of cable market power. Cable companies, of course, maintain that they are magically just below the limit and will always remain so, depsite continued subscriber growth. The spoiler in this is the telcos, who want to see cable regulated so they can get access to needed programming (and hope to leverage this to get out of local franchising). If Martin really wants cable a la carte, then finding that cable has met the 70/70 test is the way to go. Nothing else can give the FCC the authority to impose a la carte without Congressional action.
After taking comment on this issue last April (you can find the comments Media Access Project filed on behalf of a number of orgs here), the FCC has gone silent on the subject. Will this notice resolve the 70/70 question? Will it provide an answer to how the FCC intends to resolve the question? And what about the long delayed cable ownership proceeding? The limit has remained in limbo since the D.C. Cir. remanded the 30% limit to the FCC in 2001. The FCC “refreshed the record” in 2005. Will the latest competition report shed any light on this stalled proceeding?
2) Spectrum, Licensed and Unlicensed: The big news here is the first Report and Order and Further Notice of Proposed Rulemaking on allowing unlicensed devices to operate in the unused portions (or “white spaces”) in the broadcast bands. You can read a brief (and old) summary of why I think this is a critically important proceeding here. For anyone following unlicensed spectrum, getting access to the broadcast bands has been one of the top policy fights for the last few years.
Conventional wisdom has Martin hostile to this proceeding. But a number of leading Republicans, including Senator Stevens, have warmed to the idea of puting this otherwise unproductive but very valuable spectrum to use. So, just before Martin had to go in front of Stevens and the rest of the Senate Commerce Committee to get reconfirmed for another term, the Office of Engineering and Technology (which has jurisdiction of this proceeding) issued this public notice promising to move the white spaces proceeding forward.
Good news, right? Possibly. There are still several key issues that need to get resolved for this to be useful. It would suck worse than no proceeding if we ended up with rules that make it impossible to use the broadcast white spaces with unlicensed spectrum devices. As of last week, the critical unresolved issues are:
a) What technologies will the FCC approve? The broadcasters are pushing for restrictive technology mandates that would give them control over whether devices operated or not; pro-unlicensed folks have urged the FCC to define capacity requirements (e.g., power limits) rather than designate specific technologies. The later is the approach the FCC has traditionally used for unlicensed devices, and it has worked extremely well.
b) What frequencies will be available? The broadcasters are trying to minimize the amount of spectrum available by taking certain channels “off the table” even if they are not occupied by a full power licensee. In the FCC's first notice, the FCC proposed to prohibit the channels designated for auction (Channels 52-69), Channel 37 (set aside for medical devices), Channels 14-20 (used in 13 markets for public safety entities), and Channels 2-4 (used for consumer devices such as VCRs). The broadcasters would also like to see the FCC prohibit any activity on the “first adjacent channel,” the channel immediately next to an active channel. So, if a broadcaster is licensed in a market for Channel 7, a prohibition on “first adjacent” would mean no unlicensed activities in Channels 6 amd 8.
If you add up all the possible exclusions, then throw in spectrum soaked up by low power TV transmitters and other devices, there is damn little “white space” left for productive use.
Pro-unlicensed folks argue that the FCC should not take spectrum off the table until it has actually tested whether unlicensed use in these channels would cause harmful interference. The Further Notice is supposed to set the service rules and the FCC is supposed to conduct independent field tests before issuing final service rules. Why not wait until actual testing is complete before deciding what spectrum bands are off limits, rather than artificially limiting available spectrum from “an abundance of caution” and strangling the use of unlicensed spectrum in the band?
c) _Licensed v. Unlicensed_? Bet you thought we'd answered that question already, didn't you? But the broadcasters are not stupid and have their contingency plans worked out. When it became obvious they couldn't kill the white spaces proceeding outright, they looked for "poison pills" they could insert to make it impossible to use. So, using their sock puppet think tanks, they have been pushing to have the white spaces licensed (and the licenses distributed at auction).
The broadcasters are pushing to have the FCC consider the benefits of licensing the white spaces over allowing unlicensed use of the white spaces in the Further Notice of Proposed Rulemaking. Pro-unlicensed folks have denounced this as an obvious attempt to lob an Apple of Discord into the proceeding by raising the possibility that the FCC will not open the space to unlicensed use. If nothing else, it opens the possibility of a subsequent appeal to federal court if the FCC decides to open the space to unlicensed use, creating further delays and discouraging folks from trying to develop equipment that can use the spectrum.
All these things are in flux, and must be resolved before Thursday's meeting.
Less important but still of note: The FCC will look at a petition by Qualcom claiming that certain regulations designed to limit interference in the 700 MHZ band (where broadcasting and public safety live) prevent it from offering a splendiforous high-speed broadband service.
3) AT&T/BellSouth Merger and Net Neutrality: You can read Art Brodsky's take on these two items here. Art argues that a net neutrality proceeding is just bait for a trap to get the two dems to go along with dropping their demand for a stronger net neutrality condition in the AT&T/BellSouth merger. Once the merger is cleared, the FCC will then conclude in its seperate net neutrality inquiry that there is no problem and therefore no need to take action. Based on such an official finding of fact, Stevens and other foes of NN in Congress could push back against the network neutrality proponents when we take up the cry again for pro-NN legislation next year.
Art's analysis has a lot to commend it. For one thing, without offering the Democrats something, it may be very hard for Martin to get his merger through. Commissioner McDowell, the third Republican in the five-member Commission, would like to recuse himself from the AT&T/BS merger because his old outfit Comptel is pressing heavily for conditions. So although McDowell signalled in the Adelphia merger last summer he would vote with Martin against any new network neutrality conditions, McDowell would prefer not to cast such a vote in the pending Bell merger. Shifting the network neutrality piece to a separate proceeding gives Martin his 3-2 majority again, without asking McDowell to participate in a proceeding in which he would prefer to recuse himself.
There is, however, one interesting piece of the equation that opens the door for potential leverage. As Art observed in a different post, the cable companies are discovering that a world without network neutrality creates its own set of problems. The ability to mess with competing VOIP services hurts all new entrants, including cable operators. The telcos are no slouches when it comes to using their market power and intrinsic network advanatges. For the first time, the cable companies find themselves facing an opponent just as nasty, just as anticompetitive, and just as entrenched as themselves.
So the cable companies have come whinnying to Washington like frieghtened circus ponies demanding that the federal government regulate interconnection and network neutrality, but only for “facilities based” VOIP (read: cable, not folks like Vonage or Skype). Natually, they have a list of nonsensical reasons why they, and they alone, are worthy of regulatory favors. Meanwhile, they want to maintain the right to mess with the rest of us and withhold programming from the telcos.
Cable needs their VOIP protected. Telcos need access to programming. Is there a way to leverage these competing needs for the common good? If the FCC moves ahead with it's proposed Notice on network neutrality, we may find out.
What's not in, and what may drop out: Two items that have been rumored as circulating for a long time did not make it on the agenda. The digital radio conversion order remain on hold, and the Continental/Massport proceeding also remains on hold. Given that the later was supposed to be all set for a vote a few weeks ago, it is puzzling why it remains unresolved.
Finally, it is important to realize that an item can get pulled from the agenda at any time, right up to the day of the meeting if the Commissioners are unable to reach agreement and the Chairman does not want to force a vote. If the Commissioners can't reach a deal on AT&T/BS or on Broadcast White Spaces, the Chairman may pull those items in the hopes of achieving a better consensus later.
We'll just have to wait and see what Thursday brings.