FCC Hitting Pause On Pay-TV Overhaul?

For much of the past year, the Federal Communications Commission has been conducting a pair of proceedings that together, depending on their outcomes, could go a long way toward remaking the pay-TV business as we’ve known it. But at an oversight hearing before the House Energy and Commerce Committee yesterday, FCC chairman Tom Wheeler seemed to turn down the heat under both of them.

Receiving the most attention at the hearing was the recently completed report by the Downloadable Security Technical Advisory Committee Federal Communications Commission (FCC) Chairman Tom Wheeler gestures at the FCC Net Neutrality hearing(DSTAC), in particular a controversial proposal in it to require pay-TV operators to disaggregate their services into discreet components that would allow third-party set-top box makers to design their own user interfaces that could leverage elements of pay-TV services to create new user experiences (see our previous discussions of the debate here, here and here).

Republican members of the committee were sharply critical of the proposal and accused the FCC of exceeding Congress’s mandate for DSTAC in allowing the committee to consider non-security elements of pay-TV interoperability. Some members all but endorsed a competing proposal, put forth by pay-TV service providers, to adopt an app-based approach to interoperability under which service providers would, in effect, virtualize their existing STBs, complete with proprietary UIs, into apps that could be downloaded and run on third-party devices.

Push-back from Republicans on the Hill on the disaggregation proposal was neither surprising nor anything new for the Democratic chairman, who has faced more or less unwavering criticism of his regulatory efforts from the GOP since taking office. But Wheeler, who has shown himself to be more than willing to pick a fight in the past, was decidedly non-committal on the proposal, claiming, implausibly, not to have read or been briefed on the more than 100 comments filed in the proceeding.

Perhaps he’s just playing his cards close to the vest at this point, but he offered no defense of the disaggregation proposal nor of the decision to allow DSTAC to consider non-security elements of pay-TV/STB interoperability in the first place. His only unambiguous comment on the proposal was to assure lawmakers “that it is no one’s goal to thwart the security that protects the sanctity of copyright,” as many content owners fear would result from disaggregation.

One reason he may not have came out in his comments to the committee regarding another controversial proposal before the FCC to change the definition of a multichannel video programming distributors (MVPD) to include certain types of online video distributors (OVDs). The proposal, initially pushed by Wheeler, is aimed at promoting competition in the pay-TV business by enabling OVDs to qualify for program access rules enjoyed by facilities-based MVPDs — much as the disaggregation proposal in the DSTAC proceeding is aimed at promoting competition to pay-TV providers’ proprietary STBs.

As recently as June, Wheeler was saying he expected the commission to move ahead with the proposal this fall. At yesterday’s hearing, however, Wheeler said the proposal is off the table, at least for now.

“The purpose of rule making is to learn,” Wheeler told the committee. “We learned that [a] vast number of things are developing very rapidly, and we have not moved forward on that notice of proposed rulemaking and don’t see, until situations change, we would.”

One of the things that developed, of course, is that few of the players the proposal as intended to help showed much appetite for being classified as MVPDs. Apart from Verizon and the currently court-enjoined FilmOn X, no other OVDs filed comments endorsing the change, and some, such as Amazon, strongly opposed the idea for fear of bringing further regulation on themselves.

Given the lack of appetite for wholesale changes within the industry, including among those the proposed changes are intended to help, it may be that Wheeler is losing his appetite for revolution as well.

 

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