Category: FCC

The FCC, Net Neutrality, and a lack of jurisdiction

It has been a while since I posted, so time to catch up. One of the biggest things happeing in communications law is the recent decision of the US Court of Appeals for the DC Circuit in the case Comcast v. FCC. In this case, the court ruled that the FCC did not have jurisdiction over the Internet. While a surprise to the FCC and probably the Obama administration who tasked the FCC with Internet regulation, it is of little surprise to long-time scholars of media law.

The FCC was attempting to use its “ancillary” jurisdiction to regulated “net neutrality.” Ancillary jurisdiction has worked in the past – when cable television was a young, and at the time, inconsequential aid to a few people in rural areas who needed to receive over-the-air television. But in this case we have a mature, ubiquitous, and important media and the FCC tried to use its “ancillary” jurisdiction. The court said that the FCC exceeded its general regulatory authority when trying to apply plenary regulation to the Internet.

Congress gives authority to the FCC in the Communications Act of 1934. It is an interesting read of structural policy. For example, there is a chapter on “common carriers,” and one on “radio (and television),” and one on “cable television.” But nowhere do you find the chapter on “the Internet.” Not that the Internet needs its own chapter (but it should have one…), plenty of services are regulated under the big topics including cellphones (common carrier) and satellites (also common carrier). But even when looking for the provisions that apply to the Internet, there are few of them. So the FCC did see itself as having significant authority over the Internet, but the court saw the FCC has having what Congress has given it and not too much more.

And the importance of this case? First the FCC needs to think of another way to regulate things like net neutrality (and it is busy brainstorming right now) and second, perhaps this will encourage Congress to take up the topic of Internet regulation and jurisdiction (a new chapter in the communications act, anyone?). With clarity from Congress, the FCC could have its way with Internet regulation.

100 MB download speeds – Google and Medialawprofessor think alike

Back in 2001 I gave a presentation at a broadband conference where I made the then-bold assertion that each household would need a minimum of 100 MB of undiminishable (ie not shared) bandwidth.  I remember at this same conference that another speaker who was attached to slow DSL speeds made fun of me saying essentially that there was no need for 100MB of bandwidth to every home – he asserted that DSL( then 1.5MB tops) was as fast as anyone would need.  Well it feels good to be right and just about a decade ahead of my time.  Google is now imagining ultra high speed networks to the home and the FCC is proposing its “100 squared initiative” – 100 million homes with 100 MB of service.  In order to stay ahead of the curve, I can now foresee the need for 10GB of service to the home in the next 20 years.  It takes a lot to do a hologram even with good compression….

This is a link to my original 2001 presentation.  Towards the end you will see a couple of slides where I calculate what I think the then-foreseeable need for 100MB might be: https://medialawprofessor.files.wordpress.com/2010/02/broadband-presentation-morris1.ppt

The FCC and “The Future of Media”

The FCC (www.fcc.gov) has started a proceeding examining “the future of media.” The public notice lists 42 questions covering everything from the state of journalism to traditional radio and television to the Internet.  The FCC welcomes is requesting comments and they have started a new website at http://www.fcc.gov/futureofmedia.

Comcast v. FCC, net neutrality, and homework

In Comcast v FCC, the FCC is attempting to sanction Comcast for interfering with internet services – and interfering with internet services is against the principles of “net neutrality.”  However, Comcast is defending on what this author believes is a very effective ground – that the FCC does not have authority to regulate net neutrality.

The FCC is given its authority by the Communications Act of 1934, as amended many, may times over the years including by the Telecommunications Act of 1996.  The problem for the FCC in this case is that the Communications Act has not been amended to empower the FCC to address net neutrality.  The FCC normally needs explicit jurisdiction, granted by Congress and the President, in order to regulate communication subjects.

Of course there are some exceptions.  For example, when the subject is “reasonably ancillary” to a subject that the FCC has explicit authority over, the courts have held that regulation is OK.  Even so, the FCC can go too far in that regulation.  The reasonably ancillary doctrine was applied to cable television cases.  US v. Southwestern Cable 392 US 197 (1968).  However, the FCC went too far in its “ancillary regulation,” and the courts rejected additional regulation in FCC v. Midwest Video. The jurisdiction of the FCC over cable television was eventually cleared up in the Cable Communications Policy Act of 1984.

So which will it be in this case? The appeals court has yet to rule.  So this is an instance where FCC regulation is not certain.  In cases where the FCC overreaches, or where the FCC does not “do its homework,” the courts are not afraid to overturn the FCC’s rules.

Will the Jay Leno Show survive – part 2

As discussed in a previous post (Dec 22) the Jay Leno show has been at risk due to low ratings.  Yesterday Jay made light of the current cancellation rumors.  Video clip here: http://www.thejaylenoshow.com/video/clips/leno-talks-cancellation/1191249  There are lots of business reasons for the potential re-working of late-night television.  Reports seem to indicate that Jay would go back to late-night where he is a dominant figure and has been for 17 years.  Why the problems with low ratings?  NBC knew that the Jay Leno show would not attract as many viewers as its prime-time offerings.  The problems are that the low ratings are destroying affiliate and O&O stations’ new ratings as well as having a deleterious “halo effect” on prime-time.  One could say that everyone is losing money on the deal.

Taking one money-losing portion at a time: First the local affiliates and their newscasts.  A broadcast network actually owns the stations that cover a large portion of the country, up to approximately 35%, varying slightly by network and NBC’s percentage is 27% owned-and-operated coverage.  That leaves approximately 73% of the country that is covered by affiliate stations and the cable systems that pick them up. the local stations depend on the network for a good lead-in to their news to get good ratings.  The problem for the networks is that people tend to “fall in love” with their local newscasters and have a very high loyalty to a local news team.  If NBC is effectively chasing away viewers to other stations, the viewers have a chance to “fall in love” with another news team.  The effects would take a long time, perhaps years to undo.  So the affiliates want the problem fixed and fixed fast.

The O & O stations have a similar problem and the O & O stations deliver a lot of profit to the networks.  But if the network was making money otherwise, it could take the decrease in revenue from its O & O newscasts.  It sometimes happens during special events (the Olympics, etc.) that the network might take a brief hit to the O & O newscasts for the greater good of the network.  But a long-term hit might take years for the O & O stations to undo, the same as for the affiliates.  News is a very competitive business.  The other stations will be doing all they can to attract and keep the disaffected network viewers.

Most important, however, to the network is the developing “halo effect” – all of NBC’s primetime ratings are falling.  Is it due to the Leno experiment? Or partially due to the Leno experiment? It is hard to tell but ratings for NBC have clearly fallen to very low numbers.  NBC’s primetime was not doing well before Leno (http://www.huffingtonpost.com/2009/05/28/nbc-primetime-ratings-hit_n_208518.html) and had already hit lows.  So it is difficult to sort out the reason for the Fall decline, but various outlets are reporting that NBC has as many as 18 pilots in the pipeline for next year – a possible sign that they were preparing to bail on the Leno experiment a while ago. (http://www.forbes.com/feeds/ap/2010/01/08/entertainment-broadcasting-amp-entertainment-us-tv-jay-leno_7261171.html).

Back when I worked at NBC, the two big revenue generators for the network were primetime and latenight. Primetime ratings are in the tank and Conan has not kept the same latenight ratings that Leno had when he ran the “Tonight Show.”  My guess is that NBC is hurting and changes are coming very soon.

Name calling in elections and the FCC rules

What happens when a candidate for federal office calls another candidate gay in an attack ad? (see an article on the subject here: http://www.suntimes.com/news/metro/1961750,mark-kirk-gay-attack-ad-election-122809.article) Well as far as the broadcast stations are concerned, nothing – they are required to carry the ad in accordance with federal rules and they may not censor nor change the ad.  Carriage on broadcast stations is required by the reasonable access provision of section 312 (a)(7) and the no-censor provision of section 315 of the communication act.  What if the statement is a lie?

Well there are two remedies envisioned, the first is the power of the public forum.  The aggrieved candidate can respond in the new media, by internet website, by blog, by twitter, by standing on a rock and proclaiming the statement a lie.  Those are the quickest and probably most effective ways that a corrective response can be made.

Can they sue? Yes, probably (the law of defamation has high thresholds for public figure) but the legal process is a slow one.  Compared to the speed of a campaign, the legal process will never catch up with the campaign rhetoric.  so a lawsuit is possible, but most effective for post-campaign redress.

What about the broadcast stations? Why don’t they stop the speech? Well congress has immunized the stations and their responsibility is to carry the political speech.  Censoring or changing political speech could be so dangerous that Congress has crafted rules that let the speech go forward and the consequences follow.  In times of election, the policy is to let the electorate hear everything and decide for themselves.

Political speech is the most protected speech we have. Censoring it could keep important information from the public.  Letting speech that might be a lie go forward also has its problems, but the other candidate has lots of options to correct it in the public forum.

American elections have been knock-down, drag-out affairs with name-calling since the beginning of time.   The rules regarding broadcast carriage of spots continue the tradition of open speech.  There have been many instances of this, for example in the 1992 election several candidates used the rule to compel broadcast stations to carry pictures of aborted fetuses in campaign advertising to call attention to their perspectives on abortion.

Do you think the rule needs changing? Or is the open forum on broadcast stations fine the way it is?

I have been interviewed in recent days on both WBBM radio and WLS-TV (ABC) as an expert on this issue.

Net Neutrality – Why is it important to me?

The Federal Communications Commission (FCC) has an open proceeding on net neutrality.  What is net neutrality and what does it mean to me?

Net neutrality is a nominative term for equal access to all of the services that the internet has to offer.  In contrast to net neutrality is a variety of activities that restrict the end-user from transmission of the full range of internet communications.  For example, suppose that you want to use a VOIP service that is much cheaper than what your internet service provider provides.  Say you can get Skype for $3.95 a month but your internet service provider – the phone company that provides your DSL or your cable company that provides your high-speed internet service – has a competing offering of VOIP telephone for $12.95 a month.  Your internet service provider might consider the competing service as undesirable and either block it entirely or at least slow down the access of that service.  In that case your internet service provider is not providing neutral, equal access to the internet.

There are plenty of legitimate reasons to block some services on the internet.  For example, certain services are obsolete and insecure, so some ISPs block them entirely.  Also, some services, especially database services, are often deemed premium services and the ISP is willing to let those services operate for a slightly higher monthly fee.  On the other hand, however, are actions by ISPs such as blocking services like competing VOIP providers – those actions seem to be an uncompetitive practice.  The most difficult questions come with services used for both legitimate purposes as well as purposes that may lead to illegitimate uses such as copyright infringement.  Some of the P-to-P protocols and services might be considered in this category.  The ISP will claim that the P-toP services consume too much bandwidth.  The end user will claim that they are entitled to be able to use the P-toP service.

The macro business issues are difficult.  The ISPs have invested millions of dollars into their physical plants and the labor it takes to run them.  shouldn’t they be able to make money off of their investment in appropriate ways?  The end users will assert that they are paying the monthly fee, shouldn’t they be entitled to use the internet in any way the wish?

You are an end user.  What do you think? Under what circumstances should ISPs be able to block services on the internet? For security reasons? For business reasons? Should end users have complete and unfettered access to all services on the internet?  The FCC has an open proceeding.  They will be holding public hearings on the issues, they will be posting information and notices, and they will be accepting comments from the public.

What about re-transmission consent? (Time Warner v. Fox)

What is retransmission consent an why is it importnat to me?  The current story about Time Warner and Fox prompts this post.  Once upon a time (prior to the cable act of 1992) cable systems (your local provider who brings a cable into your home) could just take the programming of the local stations and put it on the cable system along side of programming that the cable system owned and spent money on or purchased, often from other cable providers.

So a typical channel lineup cost (pre-1992) might look like this: ESPN $2.00, CNN Networks $1.00, Lifetime, E!, A&E, etc. $.25 each, local origination channels $0 but the cable system might spend hundreds of thousands of dollars installing equipment for a local studio, hiring staff to run/coordinate the operation, etc, and then come the local television stations ABC $0, NBC $0, CBS $0, Fox $0.  Where was the viewing at that time? Seventy-five percent, perhaps more, of the viewing was on the networks and the cable channels had yet to blossom into what they are now.  At that time, a cable system could plan on spending approx 25% of its subscriber fees (what you pay for basic cable) on programming costs, with the most of any single network going to ESPN.  So cable systems received value (popular programming) from the networks for which they did not have to pay.

Enter the cable act of 1992 (technically the Cable Television Consumer Protection and Competition Act of 1992) and Congress changed the landscape by requiring cable systems to pay television networks in the same manner as it paid ESPN and the others.  This resulted in reasonably large payments to the networks.  However, the balance is a complex one, for example, TBS carries the series “Friends” which is much more valuable since it aired on the networks.  So while cable has eroded the audience share of the television networks, it is oftentimes with programming made successful on the networks.

With this audience share erosion  of the television networks (and therefore networks are hard-pressed to raise advertising rates), there seems to be a karmic-like balance with the cable systems having to pay the networks for the programming that helps people to decide to subscribe to cable.  The network shows are still popular and bring in audience.  For example, at stake in the Time Warner vs. Fox case was whether Time Warner subscribers would be able to receive shows such as  “American Idol” and “The Simpsons.”

Does the cost of paying the networks raise the cost of a cable bill? Perhaps.  But there are a lot of other things in your cable bill that are management decisions like how fast they upgrade their systems for features you and I are not subscribing to, and what profit they will make and even the amount of their executive compensation.  Since the busines particulars are beyond our control, I will not go into detail on them.  the central question is whether content creators are deserving of getting paid.  Content is expensive to produce, so my answer is “yes, certainly in this case.”

Does this mean I might lose access to my favorite programming? Probably not in the long run.  It is in the interest of both parties (the network and the cable system) to reach an agreement.  The cable system wants the programming and the programmer/network can’t survive without enough people seeing its programming.  So in the event that programming is pulled from a cable system (and it has happened in the past), it will probably be back in the near future.  The pulling of programming means that the proper marketplace value of the programming and the distribution channel did not reach equalibrium, or at least close enough that the two sides could sign a contract.

This is a complex topic and causes the eyes of law students all over the country to glaze over.  But is is important.  Hundreds of millions of dollars change hands each contract cycle on retransmission consent and lots of local consumers are played off by both sides during negotiations.  the cable systems try to gain consumer sympathy by saying bills are going up and the networks try to gain consumer attention by telling them that the cabe system is te reason they are going to lose their favorite programming.

The FCC and broadband spectrum

The FCC is considering new spectrum for wireless broadband.  In lay/market terms, the 2G and 3G spectrum is filling up and carriers want to launch 4G and 5G with higher download speeds.  All reasonably usable spectrum is assigned and has been for years.  So the FCC has two basic choices 1) Make the current wireless broadband providers turn over their 2G and 3G spectrum to new 4G and 5G uses, or 2) find new spectrum from other sources and re-allocate it to the use of wireless carriers.  Unfortunately, the FCC is once again looking at taking away broadcast spectrum.  They already did that once with the conversion to HDTV.  This time around, the broadcast service to the public is likely to decrease.  Where do you tune in to in case of local emergency (snowstorm, hurricane, tornado, etc.)? ATT? Sprint? or your local broadcast station? Answer: your local broadcast station.   Watch this proceeding carefully.  The FCC website is http://www.fcc.gov.