Cable

cable, franchising, related issues

My Insanely Long Field Guide To The War On CableCARD — Part II: STAVRA Section 203.

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When it comes to special interest sleaze, Section 203 of the Satellite Television Access and Viewer Rights Act (STAVRA) is just an absolute brilliant work of art. We like to talk about how much money cable throws around, about Comcast Chief Lobbyist David Cohen golfing with President Obama, yadda yadda yadda. But that is just crude muscle.  Getting a blatantly anti-consumer provision inserted in a pro-consumer bill behind the scenes, and getting it rammed through by a combination of obscurity, chicanery and log-rolling, is where that army of lobbyists earns their 6-and-7 digit salaries.

 

I gave the whole bloody history in The War on CableCARD Part I: More Background Than You Can Possibly Imagine. To review, Section 203 of Stavra (and its matching provision in the House STELLA 2014 bill) cripples CableCARD  by eliminating the “integration ban.” This effectively ends any hope third party devices will compete with the cable industry, and we remain stuck leasing digital video recorders (DVRs) and set-top boxes (STBs) and other equipment and services from cable operators rather than owning our own or using cheaper, better rival services. Consumers pay over $1 billion in rental fees annually to cable operators for equipment they could otherwise own. So eliminating the integration ban (and thus killing CableCARD) pretty much condemns consumers to keep getting gouged for the foreseeable future just when independent equipment like the TiVo Romaio is finally starting to take off.

 

To add to the special interest sleaze factor, Section 203 of STAVRA converts a pro-consumer bill (that was originally a lot more pro-consumer) into a billion dollar rip off of consumers for the profit of one of the most loathed industries in America. And it does so in such a subtle way that it is almost impossible to detect. AND it comes with a fake pro-consumer ‘solution’ so the cable industry (and, more importantly, members of Congress seeking cover) can claim to have the best interests of consumers at heart.

 

Happily, it has an easy fix and a champion to convert this back into an actually good pro-consumer bill and have this blow up all over the cable guys so that they will be hoist by their own petard. Oooh, such justice would be sweet. And eminently achievable.

 

If you want the short version of this, without the appreciation of all amazing special interest sleaziness, you can see these Public Knowledge blog posts: here, here, here and here. But if you want the full TotSF treatment with all the wonk and snark you’ve come to expect from yr hmbl obdn’t blogger, then see more below . . . .

 

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My Insanely Long Field Guide To The War On CableCARD — Part I: More Background Than You Can Possibly Imagine.

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We often talk about the power of cable lobbying in the context of big proceedings like network neutrality. But where the real power comes, and where consumers routinely get screwed the most, happens off-screen. Because people hardly ever know what is happening, cable lobbyists play an outsized role in working their magic and making it legal to find new ways to screw over subscribers. Nothing illustrates this better than the fight over the Satellite Television Access and Viewers Rights Act (STAVRA). As my Public Knowledge colleague John Bergmayer explains in this blog post, unless Congress passes STAVRA, a lot of satellite TV subscribers will lose access to some of their broadcast channels. Since Americans totally freak out if they cannot watch their favorite show, and channel this rage to their members of Congress, that makes STAVRA “must pass” legislation.

 

The cable industry lobbyists have managed to append this bill designed to protect consumers a little gift to themselves. Cable operators make over $1 billion a year on equipment rentals to subscribers. Section 203 of STAVRA eliminates the FCC rule (“the integration ban”) that makes it even vaguely possible at the moment for people to avoid these rip off rental fees and actually buy your own cable set top box (STB) or digital video recorder (DVR) using something called CableCARD.

 

From a policy wonk perspective, I have to say that Section 203 of STAVRA is a work of art. Unless you know what to look for, you will never find it by flipping through the bill. And unless you know the whole background on how the cable industry has frustrated the effort to get competition in the STB and cable device attachment business, you would never know how the cable arguments about how CableCARD doesn’t work are self-serving baloney. And, best of all, Section 203 contains a fake solution so members of Congress and the cable lobby can pretend this will make things better, rather than continue to screw consumers out of hundreds of millions of dollars in cable fees annually.

 

Hence the need for two insanely long posts. But since we are talking about consumer rip offs of over $1 billion a year, I kinda hope you will consider it worth reading. Here in Part I, I will give you everything you need to know about the history of how cable has ripped us off on equipment rental fees despite Congress passing two separate laws (here and here) to make it possible to actually own equipment and avoid this nonsense (which worked from 1992 until we went digital), what the heck the “integration ban” is, and why CableCARD — lame as it is — actually does make things mildly better and is picking up steam as a result of stuff the FCC did back in 2010.

 

In Part II, I will cover the current fight over the Section 203 of STAVRA, what makes Section 203 such an amazing work of art and how Senator Ed Markey (D-MA) is standing up for consumers on this. With help, Markey can actually flip this around and convert this from a gift to the cable industry to something that would genuinely help consumers by making the promise of stand alone STBs and other cable equipment real. But, at a minimum, Markey needs help getting the bad provision stripped from the bill so we can at least keep what we have and keep working to make it better.

 

Part I with all the background you need to understand Part II below. You can find Part II by clicking here.

 

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I Summarize (Some of) My Net Neutrality Arguments in 15 Minutes

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Back in August, I spoke about network neutraliy as part of a panel the Federal Communication Commission (FCC) Consumer Advisory Committee. My opening 15 minutes hit most of what I think are the important (and often overlooked) arguments around network neutrality. Specifically:

1. In terms of real world experiments, the service that has never been Title II is cable television. The service that has always been Title II is wireless voice (or, as we telecom folks call it, “Commercial Mobile Radio Service,” (CMRS)). As we know, consumers loooooove their cable television provider more than any other service, and hate wireless as completely not innovative. Oh wait, other way around.

2. Net neutrality is extremely important for maintaining diversity of voices. Not simply the ability of commercial entities to compete on a level playing field, but the ability of anyone to speak without an intermediary. When we eliminate that, even with the best of intentions, we destroy something that makes the Internet special.

3. Title II is a flexible and well understood tool for protecting consumers, protecting diversity of voices, and protecting competition. Title I and Section 706 are a roll of the dice with our fundamental rights.

This is not a comprehensive list of arguments in favor of net neutrality by any means. I also recognize that “Harold Feld Talks For 15 Minutes About Net Neutrality” is probably the Worst. Clickbait. Headline. EVAR! But I hope some of you will find it useful and entertaining.

 

Stay tuned .  .  . .

The Comcast Witness Protection Program and Misplaced Rage.

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There is a style of article I find online occasionally that takes a classic work of film or literature and tries to flip your idea about who are the good guys and who are the bad guys, or vice versa. For example, this piece explaining why Glinda the Good Witch is really the villain of the Wizard of Oz and the Wicked Witch of the West is just an innocent woman wronged.

 

I thought of that when I saw recent pieces by Randolph May and Geoffrey Manne explaining how the Federal Communications Commission (FCC), by complying with its rules and doing its job soliciting input on the Comcast/Time Warner Cable from stakeholders scared to come forward for fear of reprisals, makes the FCC the bad guy and Comcast the innocent victim. Some of this concern seems to flow from a misunderstanding of the law. The FCC can’t act on anything outside the public record, so the concern that Comcast won’t get to make its case because of some body of secret evidence is groundless.

 

In addition – and this is why I’m particularly bitter here – Comcast set the precedent more than ten years ago for having the FCC look at stuff outside the public record as part of a merger review, and the D.C. Circuit affirmed it when I challenged it as a due process violation. So even if it did make a practical difference, the D.C. Circuit says it’s totally OK (at least when exclusion of evidence from the record favors Comcast).

 

Nor is this process so unusual as my Opposite Numbers (as I call my colleagues on the Libertarian side) believe. True, this is the first time the FCC actually listened to me (and others) and publicized the relevant FCC rules (although, as I explain below, I don’t think I actually had much to do with this). But this is also a rather exceptional merger. As for use of the relevant procedures, my experience is rather contrary to that of Randy May. I’ve not only urged the FCC to use (and publicize) the relevant procedures, I’ve invoked them.  Nor is it unusual for the FCC to solicit input from stakeholders.

 

Below, I offer an alternate perspective and deal with the various objections my Opposite Numbers raise for why they think the FCC shouldn’t be telling stakeholders afraid of retaliation to come in and speak off the record.

 

More below . . .

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Is Comcast’s Awful Service Grounds For Blocking The TWC Deal? Yes, Actually.

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The last few months have brought us a spate of Comcast horror stories and Comcast-hate. As captured by this totally not safe for work “Comcast — We Don’t Give a F—“ video from Funny or Die, the announcement that Comcast would acquire Time Warner Cable (TWC) has brought to boil a great deal of simmering resentment. Most recently, a recording of a subscriber spending 20 minutes trying to disconnect his Comcast service has prompted some investigating into Comcast’s service and employment practices. In particular, Adrianne Jefferies at  The Verge has been running an excellent series called “Comcast Confessions” based on hundreds of interviews with current and former Comcast employees showing that these long-standing customer service problems are not a blip but the result of systemic problems and deliberate business and strategy decisions pursued by the company (first three articles published so far here, here and here). I want to highlight this article in particular that puts together the pieces and shows how the TWC acquisition makes things worse.

 

From an academic standpoint, the wealth of data coming to light provides a great study on how conflicting economic incentives and difficulties in melding together a giant company by merger create awful customer service despite the persistent efforts of Comcast top management to improve customer service. But this blog isn’t about industrial organization and business practices for the fun of it. For me at the moment, the hot question is: does Comcast’s awful customer actually provide legal grounds for the FCC to block the Comcast/TWC merger?

 

Actually, yes. And I don’t just mean in the political “so many people hate Comcast the FCC can designate for hearing and survive Comcast’s political pushback.” I mean in the legal “the FCC has jurisdiction over this and should designate, as an issue for hearing, whether Comcast’s proposed acquisition of Time Warner Cable is contrary to the public interest and in violation of various provisions of the Communications Act” sense. And yes, I get that customers are pretty much equally dissatisfied with TWC, which would prompt one to think this should be a wash as “not merger specific” (i.e., service is crappy before merger and crappy after merger, so who cares — other than customers?)  However, as I shall elaborate below, the unique nature of Comcast’s pervasive problems — combined with several other factors — makes this a rare (but not unprecedented) case where the nature of the problems is both merger specific and subject to FCC review.

 

And while I would not normally suggest that such problems alone could block a merger, it becomes one more factor in a deal that already has a lot of problems. At a minimum, it becomes one more set of potentially pervasive behavioral conditions that would prompt Comcast to walk away whether or not the FCC actually designates for hearing, especially if lots of consumers write to the FCC about it (hint, hint).

 

More below . . .

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Two Years Later, The Supreme Court Still Doesn’t Want To Review Red Lion v. FCC.

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Almost exactly two years ago, I wrote a blog post called “The Supreme Court Does Not Want To Revisit Constitutionality of Broadcast or Cable Regulation. Get OVer It and Get On With Your Lives.” I bring this up because yesterday the Supreme Court rejected without comment what some commentators saw as the most likely vehicle for such a challenge, Minority Television Project v. FCC.

 

Not only did Minority Television Project provide the opportunity to overrule Red Lion and abolish all those pesky ownership limits and public interest obligations, it framed this as an opportunity to further expand Citizens United. How could the majority possibly resist, especially given the groupthink that the Supreme Court is simply lusting to overturn Red Lion and totally deregulate the broadcast industry at the first opportunity? And yet, somehow, they resisted. The FCC’s authority to impose broadcast ownership limits (and other spectrum ownership limits for that matter) remains not only intact, but subject to the lenient “rational basis” standard of scrutiny.

 

Nevertheless the groupthink that Red Lion and Turner Broadcasting are either already dead, or very sick and going to die, remains impenetrable. It has become the classic case of the self-fulfilling prophecy. except for stuff around the edges like the non-commercial set aside at issue in this case. To borrow from Stephen Colbert, the argument that Supreme Court has overruled Red Lion (and Turner Broadcasting) and therefore we should all ignore it doesn’t need facts; it has become “factesque.”

 

I unpack this below for those who don’t live and breathe this stuff.

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A Guide To The Mechanics of the Comcast/TWC Deal. Part IV: Congress, The White House And The Public.

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If you read most of the reporting on the Comcast/TWC deal, you would think that Congress and the White House play a huge role. In reality, as I alluded to in the Part I intro, not so much. The political stuff tends to get over-reported in part because it’s easier (it took me about 3000 words just to explain how the antitrust and the FCC review work never mind any actual reporting), and in part because everyone assumes that Washington is a corrupt cesspit where politics invariably determine outcomes.

 

As always, while the political matters, it plays a much more complicated role in the mix. Below, I will unpack how the political pieces (including public input) play into the actual legal and merits analysis. Again, keep in mind that I’m not talking about merits here. I’m just trying to explain how the process works so people can keep track over the course of the merger review (which will last a minimum of 6 months and may well run for more than a year).

 

Political details below . . . .

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A Guide To The Mechanics of the Comcast/TWC Deal. Part III: The Federal Communications Commission.

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In Part II, I described how the Department of Justice will conduct its antitrust review of the Comcast/TWC. Here, I describe how the Federal Communications Commission will conduct its review under the Communications Act. While the FCC and the DoJ will coordinate their reviews and work together, the two agencies have very different procedures and operate under very different legal standards. (For those wondering why, you can see this article I wrote on the subject about 15 years ago.)

 

Details on FCC process below . . .

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A Guide to The Mechanics of the Comcast/TWC Deal. Part II: Antitrust Review

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In Part I, I gave a general overview of the regulatory review process for the Comcast/TWC Deal. In Part II, I describe how the antitrust review works (which, in this case, will be conducted by the Department of Justice Antitrust Division). Keep in mind I am not discussing any of the arguments on the merits. I’m just trying to give people a sense of how the process will work and where they can weigh in if they feel so inclined.

Part III will address the review by the Federal Communications Commission (FCC) under the Communications Act.  Part IV will talk about Congress, the White House and the public.

 

Antitrust process described below . . .

 

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A Guide To The Mechanics of the Comcast/TWC Deal. Part I: Introduction

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Those unfamiliar with how the merger review process works will want to know what happens next in the Comcast purchase of Time Warner Cable (TWC). In this 4 part series, I sketch out how the application will proceed and what role Congress plays in all this. I’m going to save for another time the arguments on the merits and what the likelihood is of blocking the deal (or getting stronger conditions than Comcast/TWC have already put on the table). I intend this simply as mechanical guide so that folks playing at home can follow the action, and weigh in as they see fit.

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