TLJ News from December 11-15, 2013

Representatives Urge USTR Froman to Prioritize Cross Border Data Flows in Trade Negotiations

12/13. Rep. Michael McCaul (R-TX), Rep. Doris Matsui (D-CA), and 16 other members of the Congressional High Tech Caucus sent a letter to Michael Froman, the U.S. Trade Representative, regarding "issue of cross-border data flows in U.S. trade negotiations".

They wrote that the Trans Pacific Partnership (TPP), Transatlantic Trade and Investment Partnership (TTIP), and Trade in International Services Agreement (TISA) "provide unique opportunities to create new, common international rules to establish cross-border data flow policies that support global innovations and enhance economic growth".

They asked that the USTR "prioritize cross-border data flows as a key topic in TTIP, TPP, and other trade negotiations".

They also summarized the problem. They wrote that "Data is the lifeblood of the 21st century economy and a vital source of innovation and competitive advantage for all sectors."

"Unfortunately, some governments are seeking to erect new barriers to cross-border data flows and disadvantage U.S. companies. Some European Union (EU) officials are calling for discriminatory, protectionist policies that will undermine the ability of U.S. companies to compete fairly in Europe, such as an EU only cloud or an EU IT conglomerate along the lines of Airbus in aviation."

In addition, "Brazil's President is involved in an effort to force data localization requirements into legislation and has issued a Presidential Decree requiring that federal government agencies use only telecommunications and IT services provided by state organs or agencies."

They noted that "Protectionist data flow policies will only frustrate the development of cloud-based technologies and services, and deny customers and businesses around the world the potential benefits of the cloud."

Reps. Eshoo and Lofgren Introduce Retransmission Consent Bill

12/12. Rep. Anna Eshoo (D-CA) and Rep. Zoe Lofgren (D-CA) introduced HR 3719 [LOC | WW | PDF], the "Video Consumers Have Options in Choosing Entertainment Act of 2013", or "Video CHOICE Act", a bill that would revise the retransmission consent regime by giving the Federal Communications Commission (FCC) statutory power to "authorize interim carriage".

Rep. Anna EshooRep. Eshoo (at left) released a discussion draft of this bill on September 9, 2013. See, story titled "Rep. Eshoo Releases Draft of Bill to Alter Retransmission Consent Regime" in TLJ Daily E-Mail Alert No. 2,599, September 11, 2013.

47 U.S.C. § 325 provides that "No cable system or other multichannel video programming distributor shall retransmit the signal of a broadcasting station, or any part thereof, except ... with the express authority of the originating station". (See, subsection 325(b)(1)(A).)

Under Section 325, broadcasters can charge cable companies and other multichannel video programming distributors (MVPDs) for retransmission of their programming. The companies have been negotiating retransmission consent contracts since this section was enacted by the Cable Act of 1992.

Withholding of consent by broadcasters, and resulting the blackouts, have become common. See, for example, stories titled "CBS, Time Warner Cable, and Retransmission Consent" in TLJ Daily E-Mail Alert No. 2,588, August 7, 2013, and "CBS Reaches Carriage Agreement with Time Warner Cable" in TLJ Daily E-Mail Alert No. 2,593, September 2, 2013.

This bill was referred to the House Commerce Committee (HCC). Rep. Eshoo is the ranking Democrat on the HCC's Subcommittee on Communications and Technology.

Eshoo and Scalise Bills Compared. Rep. Steve Scalise (R-LA) and Rep. Cory Gardner (R-CO) also introduced a bill on December 12, 2013 that would alter the current retransmission consent regime. See, HR 3720 [LOC | WW], the "Next Generation Television Marketplace Act", and related story in this issue titled "Rep. Scalise Reintroduces Video Reform Bill".

Rep. Eshoo stated in a release that "I look forward to working with Rep. Steve Scalise (R-LA) and the leadership of the House Energy & Commerce Committee to advance meaningful bipartisan reform that promotes healthy competition, consumer choice and continued innovation across the video marketplace."

Rep. Scalise stated in a release that "I stand ready to continue working with Chairmen Upton and Walden, and other colleagues from both sides of the aisle, particularly Ranking Member Eshoo who today also introduced her vision of reform called the Video CHOICE Act. While there are significant differences in our approaches, Ranking Member Eshoo and I are committed to working in the best interest of consumers, innovation, and our nation’s economic growth."

The Eshoo/Lofgren bill is targeted solely at perceived problems with the retransmission consent regime. The Scalise/Gardner bill broadly addresses numerous video issues, including retransmission consent.

The approach of the Eshoo/Lofgren bill is to promote consumer welfare by adding new FCC regulatory authority to impose mandates on broadcasters and regulate the prices of MVPDs, and to further restrict the business practices of market participants. In sharp contrast, the approach of the Scalise/Gardner bill is to broadly repeal existing legislative mandates and FCC powers. Their bill seeks to promote consumer welfare by reliance upon free markets, competition, and property rights, including traditional copyright law.

Bill Summary. The Eshoo/Lofgren bill would amend Section 325 by adding a new subsection that provides that "If a negotiation for a replacement or extended retransmission consent agreement between a television broadcast station and a multichannel video programming distributor reaches an impasse that results in the expiration of the carriage rights of the multichannel video programming distributor, the Commission may, notwithstanding paragraph (1)(A), authorize interim carriage of such station by such distributor pending the conclusion of a new agreement."

This bill would also amend Section 325 to prohibit broadcasters from conditioning retransmission consent upon carriage of affiliated programming.

Specifically, the bill would provide that "A television broadcast station that elects to exercise its right to grant retransmission consent under this subsection may not enter into a retransmission consent agreement with a multichannel video programming distributor that is directly or indirectly conditioned on carriage of any other programming affiliated with such station (or with a person who owns or controls, is owned or controlled by, or is under common ownership or control with such station)." (Parentheses in original.)

This bill would also require the FCC to "complete a rulemaking proceeding to determine whether, during retransmission consent negotiations or after the parties to such negotiations reach an impasse resulting in the expiration of an existing retransmission consent agreement, the blocking of online content owned by or affiliated with a television broadcast station (or a person who owns or controls, is owned or controlled by, or is under common ownership or control with such station) constitutes a failure to negotiate in good faith under section 325(b)(3)(C)(ii) ...". (Parentheses in original.)

See also, story titled "Blocking Access to and the FCC's Network Neutrality Regime" in TLJ Daily E-Mail Alert No. 2,588, August 7, 2013.

Next, this bill would provide for further regulation of tiers and rates. It would amend 47 U.S.C. § 543 , which pertains to rate regulation by the FCC.

The bill would provide that "Each cable operator of a cable system shall offer its subscribers a separately available retransmission consent service tier that consists only of the signal of each television broadcast station electing retransmission consent under section 325(b) that is carried on the cable system." Then, this tier "shall be subject to rate regulation" by the FCC. (These provisions would be in a new subsection 543(b)(9).)

Moreover, "A cable operator may not require the subscription to any tier other than the basic service tier required by paragraph (7) as a condition of access to, or discriminate between subscribers to the basic service tier and other subscribers with regard to the rates charged for (i) video programming offered on a per channel or per program basis; or (ii) the retransmission consent service tier described in paragraph (9)."

The existing subsection 543(b)(7) pertains to "Components of basic tier subject to rate regulation".

Finally, the bill would require that the FCC conduct a study of sports programming costs.

Reaction. MVPDs are dissatisfied with the current retransmission consent regime, and support legislation change.

Michael Powell, head of the National Cable & Telecommunications Association (NCTA), stated in a release that "The bills introduced today by Reps. Eshoo and Scalise are very different, but each independently highlights what is quickly becoming a growing consensus -- namely, that laws enacted over twenty years ago are out of sync with the realities of today's video marketplace and in many cases serve to inhibit innovation, thwart fair competition, and harm consumers. In particular, we welcome an examination of a retransmission consent regime that is increasingly fractured and in need of some repair."

Matthew Polka, head of the American Cable Association (ACA), praised the bill, stating in a release that it would "provide relief to consumers harmed by outdated retransmission consent rules that broadcasters' relentlessly abuse". He added that the bill would end "the regulatory asylum broadcasters have exploited for decades". See also, ACA web page titled "Retransmission Consent".

Broadcasters are content with the current retransmission consent regime.

Gordon Smith, head of the National Association of Broadcasters (NAB), stated in a release that "these two pieces of legislation are utterly inconsistent with each other, and we find it sad that pay TV companies who built their broadband, voice and video businesses on the backs of local TV signals now balk at the notion of paying a fair market rate for the most-watched programming on television. NAB and America's local broadcasters respectfully oppose both of these bills. We will constructively engage with policymakers seeking to improve upon a retransmission consent law that is now working over 99 percent of the time."

John Bergmayer of the Public Knowledge stated in a release that the Eshoo/Lofgren bill "puts forward a number of creative ideas that, if implemented, would move the video marketplace in a good direction. Under the provisions of this bill, not only would viewers be protected from the effects of corporate contract disputes that black out channels from their TV lineups, but they would get more choice in what channels they subscribe to, and could see their monthly fees go down."

Rep. Scalise Reintroduces Video Reform Bill

12/12. Rep. Steve Scalise (R-LA) and Rep. Cory Gardner (R-CO) introduced HR 3720 [LOC | WW], the "Next Generation Television Marketplace Act".

This is a reintroduction of a bill that Rep. Scalise introduced in the 112th Congress, HR 3675 [LOC | WW]. No Committee or Subcommittee reported that bill.

Rep. Steve ScaliseRep. Scalise (at right) stated in a release that "While the compulsory licenses of '76 and '88, and the '92 Cable Act may have made sense years ago, competition from new players in the video marketplace have rendered these laws obsolete".

He continued that "Decades-old broadcast, cable, and satellite laws dramatically restrict access and limit consumer choice. Broadcast television is a unique and important platform. Valuable local affiliate programming, strongly demanded by consumers including myself, is proof that archaic government regulations are unnecessary today. Instead, traditional copyright law should facilitate the distribution of this programming so that broadcasters are rightfully paid for their content, rather than for the use of a signal."

This bill would, among other things, repeal subsection 325(b).

It would amend section 543 to provide that "No Federal agency, State, or franchising authority may regulate (1) the rates for the provision of the service of a multichannel video programming distributor; or (2) the retransmission of television broadcast signals by a multichannel video programming distributor except in accordance with the requirements of sections 338 and 615 related to qualified noncommercial educational television stations."

This bill was referred to the House Commerce Committee (HCC) and the House Judiciary Committee (HJC). Rep. Scalise and Rep. Gardner are both members of the HCC and its Subcommittee on Communications and Technology.

People and Appointments

12/12. The Senate confirmed Patricia Wald to be a member of the Privacy and Civil Liberties Oversight Board (PCLOB) by a vote of 57-41 for a term expiring on January 29, 2019. See, Roll Call No. 264. The cloture vote was also 57-41. See, Roll Call No. 263. Both were straight party line votes, except that Sen. Lisa Murkowski (R-AK) and Sen. Susan Collins (R-ME) joined with 55 Democrats in voting yes.