Monday, May 11, 2015

FCC Shouldn't Push Video Device and Content Controls on Advisory Committee

It's been mere months since Congress repealed the FCC's costly and innovation-inhibiting integration ban on video device designs. But the Commission already appears to be pushing for new controls on video devices.
The FCC has charged the new technical advisory committee on downloadable security to include methods for unbundling video programming content and menu displays. That strays from Congress's mandate for a report on downloadable security for next-generation devices. The Commission has created new obstacles to consensus and completion of the required report. Its charge to the committee, if implemented, would enable third-parties to repackage and rebrand video programming and menus, thereby infringing on the editorial rights of video service providers.
The FCC should respect the limited role Congress gave it. Its assistance to the committee should not include influencing the report to reflect broader regulatory ambitions. The Commission should let the committee focus its report on downloadable security.
The STELA Reauthorization Act of 2014 (STELAR) repealed the FCC's misguided "integration ban" on video devices. The integration ban prohibited multi-channel video programming distributors (MVPDs) providers from including security functions and navigation functions in the same video device. In other words, no cable or DBS set-top box could, by itself, both surf video channels or menus and de-crypt secured video transmissions for viewing. The FCC even forbade video navigation devices from directly downloading security functions.
Section 629 of the Communications Act only requires the Commission to "assure the commercial availability, to consumers" of MVPD services of video devices "from manufacturers, retailers, and other vendors not affiliated with any multichannel video programming distributor." The integration ban was an anti-innovation obstacle of the FCC's own making.
Thankfully, Congress finally repealed the integration ban. Accompanying the repeal, STELAR required the FCC to facilitate a report recommending future downloadable security standards for video devices:
[T]he Chairman of the Commission shall establish a working group of technical experts representing a wide range of stakeholders, to identify, report, and recommend performance objectives, technical capabilities, and technical standards of a not unduly burdensome, uniform, and technology- and platform-neutral software-based downloadable security system designed to promote the competitive availability of navigation devices in furtherance of section 629 of the Communications Act of 1934…
Pursuant to STELAR, the FCC established the Downloadable Security Technical Advisory Committee (DSTAC). The committee includes select working groups and convenes monthly meetings as it works toward reporting to Congress in September of this year.
Unfortunately, in its setup of DSTAC the FCC needlessly overcomplicated an already complex undertaking. The Commission staff's preliminary instructions stated the "committee shall develop" a method to disaggregate its bundled content and menu products into outputs through a "black box" for third-parties to repackage "even if participants believe that those features should not be mandatory."
Requiring DSTAC to develop methods for disaggregating bundled video programming and menu contents are outside the scope of STELAR's mandate. Congress directed the FCC's Chairman to establish a working group focused on a "downloadable security system."
By directly including disaggregated video programming and menu content outputs in its charge to DSTAC, the FCC has created an unnecessary hurdle. Getting different and competing industries, companies, and other stakeholders to reach consensus on technical specs is hard enough. But including extraneous matters over which DSTAC members are strongly at odds compounds the difficulties. Not surprisingly, members of DSTAC as well as observers have voiced objections to the Commission needlessly bringing in technical and regulatory side issues.
Unfortunately, the FCC staff's instructions are reminiscent of its misguided 2010 AllVid plan – a comprehensive set of proposed new controls on how all MVPDs design and operate the video navigation devices they make available to subscribers. The AllVid proposal would have mandated that all MVPDs make available to subscribers a special "adapter" or a "gateway" device for allowing all consumer electronic devices throughout a subscriber's home network to access MVPD services. AllVid also would have required disaggregation or unbundling of MVPD video programming and related content for rebranding and repackaging to consumers by unaffiliated providers.
Aspects of FCC's instructions to DSTAC that bear similarity to AllVid repeat some of AllVid's basic mistakes. Government controls on how video devices are designed or operate undermine basic freedom to design and market products and services for consumers. AllVid would have hampered MVPDs' future ability to innovate and compete with unregulated manufacturers of mobile devices, tablets, video game consoles, and other video viewing devices. And by pushing a DSTAC toward a "black box" for third-parties to repackage content and menu products, the Commission again appears to urge a restrictive approach to innovation.
In addition, AllVid posed a serious First Amendment problem. Requiring disaggregation of MVPD video programming and related content would have interfered with the editorial discretion of MVPDs in their provision of a retail service. AllVid would have undermined an MVPD's ability to select, control, and identify its own unique message under its own branded service. The Commission staff's instructions that DSTAC develop a method to disaggregate bundled content and menu products into outputs for third-parties to reassemble and rebrand presents similar First Amendment problems. Such an approach would undermine protected speech selection and presentation choices of video programming and displays by MVPDs.
In a set of follow-up instructions issued on April 27, the FCC staff appeared to partly walk things back. It called on DSTAC to make video and menu content disaggregation an alternative approach to be included in its report. But the revised charge to DSTAC is still outside the scope of what Congress called on the FCC Chairman to do. And the underlying anti-innovation and First Amendment problems posed by requiring MVPDs to surrender editorial control over video programming content and menu displays remain.  
The FCC should completely remove video and menu content disaggregation methods from its charge to DSTAC. The Commission should instead focus the group on downloadable security. Keeping DSTAC's charge narrowly confined to the terms of STELAR offers the best chance for achieving consensus in its report to Congress.
In any event, the process and work of DSTAC warrant only modest expectations going forward. The FCC should do its best to follow Congress's mandate. But Congress assigned a difficult task. Downloadable security for video services is a multi-faceted and complex topic. And the FCC has a sorry history regarding regulation of video devices. Aside from the integration ban and AllVid, one shouldn’t overlook CableCARD – a $1 billion set-top box regulatory regime that few consumers adopted and which was later thrown out by the D.C. Circuit. The unsuccessful CableCARD experience suggests the practical limits to government controls over how video devices are designed and operate.

DSTAC's assembly of a report that will satisfy all stakeholders is unlikely given the technical and other issues surrounding video services and devices. But the FCC should stick to the law and avoid any future actions that risk making an unavoidably complicated task utterly impossible.