Sound Recordings Copyright Bill Would Better Secure Rights, Reduce Inequities

The basic right of music authors and producers to the fruits of their labors is secured by copyright. The Constitution's Article I, Section 8 IP Clause gives Congress the responsibility to ensure that the copyrights of authors and producers of creative works are secured.

But in some respects, existing federal law provides inadequate and unequal copyright protections in sound recordings. And in other respects, federal law provides no copyright protections at all for sound recordings. Newly-introduced legislation in Congress would implement overdue copyright reforms for sound recordings. If enacted, the legislation will better secure those rights and bring the law into closer alignment with the Constitution.

On April 13 the Fair Play Fair Pay Act of 2015 was introduced in Congress. Sponsored by Rep. Jerrold Nadler and co-sponsored by Rep. Marsha Blackburn, the Fair Play Fair Pay Act (H.R. 1733) includes a handful of provisions that would put copyright in sound recordings on more of a free market footing. The bill's provisions would eliminate favoritism towards certain kinds of technology platforms. Such favoritism results in copyright holders receiving either no royalties or royalties significantly below market value for public performances of their sound recordings.

Included in the Fair Play Fair Pay Act - H.R. 1733 - are three important reforms for copyright in sound recordings:

H.R. 1733 finally ends terrestrial radio broadcasters' free-rider exemption from paying royalties for transmitting copyrighted sound recordings. Existing federal law specially privileges over-the-air radio broadcasting over competitors by permitting AM/FM transmission of copyrighted sound recordings without any need to obtain copyright holders' consent or pay royalties. This gives broadcast radio stations an unfair advantage over commercial music services reliant on other transmission technologies that must obtain consent or pay royalty rates. It is also an inequitable deprivation of rights for the owners of sound recordings. Under H.R. 1733, radio broadcasters would have to respect performance rights in sound recordings by negotiating with copyright holders or paying rates according to the "willing buyer/willing" seller standard (discussed below).

H.R. 1733 ensures that cable and satellite video services playing copyrighted sound recording pay copyright holders royalties approximating market value. Current federal law applies different royalty rate standards to different service technologies. Cable and satellite video services are subject to the so-called 801(b) rate standard, which misguidedly is calculated to "minimize any disruptive impact on the structure of the industries involved and on generally prevailing industry practices." We have elsewhere criticized the Section 801(b) standard, which results in royalty rates set well below market value. H.R. 1733 would end the disparate rate regime. The bill would require cable and satellite video services transmitting copyrighted sound recordings to either negotiate with copyright holders or pay royalties according to the "willing buyer/willing seller" standard applicable to non-interactive Internet-based digital music services like iHeartRadio, Pandora, and Spotify. The "willing buyer/willing seller" standard defines "reasonable" rates, as payments that "most clearly represent the rates and terms that would have been negotiated in the marketplace between a willing buyer and a willing seller." In other words, the "willing buyer/willing seller" standard at least attempts to approximate market values in order to secure to copyright holders the returns they deserve.

H.R. 1733 recognizes copyrights in sound recordings made prior to 1972. Federal law does not recognize public performance copyrights in music recordings made before early 1972. Of course, recent judicial rulings strongly indicate that state common law protects public performance rights in pre-72 sound recordings. Under H.R. 1733, public performance copyrights in sound recordings would be recognized in federal law. According to the bill, music service providers seeking to transmit such recordings must either negotiate royalties with the copyright holders or pay royalties according to the willing buyer/willing seller standard applicable to music services transmitting post-72 sound recordings.

The Fair Play Fair Pay Act includes carve-outs to keep royalty rates to an administratively simple, nominal amount for small, local radio broadcast stations as well as for public radio stations. A complete royalty carve-out is also provided for both religious services and non-incidental uses. In addition, H.R. 1733 includes provisions for recognizing industry custom for processing payouts of royalties to copyright holders of sound recordings through an entity designated by the Copyright Royalty Board – that is, through SoundExchange. This aspect of the H.R. 1733 is similar to the Allocation for Music Producers Act (H.R. 1457), which was introduced in March by sponsor Rep. Joseph Crowley and co-sponsored by Rep. Tom Rooney.

In sum, the Fair Play Fair Pay Act – H.R. 1733 – takes several steps in the right direction for reforming copyright in sound recordings. The bill would secure stronger and broader protections of the rights of copyright holders. It would establish an across-the-board standard for royalty rates intended to mimic market outcomes. Also, the bill would reduce the incidents of favoritism and free-riding that exists under current copyright law. Certainly, Congress should give this legislation a prompt fair hearing.

Protecting Copyright: Securing Rights and Improving the Copyright Office

While estimates concerning the precise impact may vary, there is no dispute that entrepreneurial activity associated with and dependent upon the protection of intellectual property is key to the overall health of the U.S. economy. According to a March 2012 report released by the U.S. Commerce Department, “[t]he entire U.S. economy relies on some form of IP, because virtually every industry either produces or uses it.” The report determined that: “IP-intensive industries directly accounted for 27.1 million American jobs, or 18.8 percent of all employment in the economy, in 2010.” Moreover, according to the Commerce Department, “IP-intensive industries accounted for about $5.06 trillion in value added, or 34.8 percent of U.S. gross domestic product (GDP), in 2010.”

Copyrighted works – including books and other literary works, films, sound recordings, and more – comprise a large portion of the overall economic benefit derived from the protection of intellectual property. Indeed, a December 2014 report claimed that the core U. S. copyright industries generated over $1.1 trillion dollars of economic output and employed nearly 5.5 million workers in 2013.

It should be obvious, therefore, that it is important for the social and economic well-being of the United States and its citizens that the nation have in place a strong copyright regime. There are two requisites for such a system – the establishment of secure legal rights and an institutional framework that facilitates the protection and transfer of such rights.

First, the rights to protection that copyright affords must be secured and recognized by law. Of course, here in the U.S., the Constitution’s Intellectual Property Clause, and our copyright laws enacted thereunder, secure copyright protection as a matter of law. (Just because the Constitution and our copyright laws secure copyright protection does not mean that everyone respects intellectual property rights. My colleague, Seth Cooper, and I have written a series of essays addressing foundational principles of intellectual property with the aim of increasing public understanding of these principles. A list of these papers, with links, is at the end of this piece.)

Second, even though copyright may be secured under law, there must be an effective, well-functioning institutional system for registering and recording the rights in order to effectuate the purpose of the rights-creating legal regime. In the U.S., that institutional role presently falls to the Copyright Office (CO), which is part of the Library of Congress, and under the supervision of the Librarian of Congress.

The U.S. Copyright Office is the place where copyright claims are registered and where documents relating to copyright may be recorded when the requirements of the copyright law are met. The Copyright Office also furnishes information about the provisions of the copyright law and the procedures for making a registration or recordation, explains the operations and practices of the Copyright Office, and reports on facts found in the public records of the Office.

According to a recent story in Network World, “IT Troubles Plague Federal Copyright Office,” last year the Copyright Office registered almost a half million creative works for copyright, including approximately 219,000 literary works and 65,000 sound recordings. It recorded about 7600 copyright records.

With this volume of copyright registrations and recordations, and the social and economic benefits associated with these processes, it is important the vital Copyright Office functions be carried out effectively and efficiently. These basic functions serve to secure copyright protection, provide constructive notice of copyright claims, and establish priority between conflicting transfers of rights. As a practical matter, the registration and recordation functions enable copyright holders to enter into business transactions, secure financing, and combat intellectual property theft.

The reality is that there appears to be much room for improvement in the functioning of the Copyright Office, especially with respect to implementing digital technologies. As the Network World story put it in the opening line: “The IT department at the nation’s Copyright Office needs more than a little work.” A just-released GAO report echoes this sentiment. The GAO report tellingly is titled: “Copyright Office Needs to Develop Plans that Address Technical and Organizational Challenges.”

My purpose here is not to denigrate the Copyright Office, its past actions, or its personnel. Rather, looking forward, it is to urge that serious attention be paid to improving the way the CO operates and to modernizing the office’s information technology infrastructure. In today’s digital environment, there is no reason why the office’s registration and recording functions – the guts of a working copyright system – should not employ up-to-date digital technologies in order to maximize efficiency and effectiveness. It may also be the case that the CO needs more personnel and funds in order to do its job.

In light of the just-released GAO report, and a spate of similar reports and comments, Congress should hold hearings soon on improving the functioning of the Copyright Office. These congressional hearings should focus both on information technology improvements, personnel resources, and budget requirements as well as fundamental structural issues involving the location of the Copyright Office within our government. (This structural issue is a subject we may well have more to say about in the future.)

In order for our copyright system to achieve its important purposes, it is necessary not only that the rights protected be secured by law, but also that the institution charged with administering the system do so in an effective and efficient manner.

*   *   *

Randolph J. May and Seth L. Cooper, "The Constitutional Foundations of Intellectual Property," Perspectives from FSF Scholars, Vol. 8, No. 13 (2013).

Randolph J. May and Seth L. Cooper, "Reasserting the Property Rights Source of IP," Perspectives from FSF Scholars, Vol. 8, No. 17 (2013).

Randolph J. May and Seth L. Cooper, "Literary Property: Copyright's Constitutional History and Its Meaning for Today," Perspectives from FSF Scholars, Vol. 8, No. 19 (2013).

Randolph J. May and Seth L. Cooper, "The Constitution’s Approach to Copyright: Anti-Monopoly, Pro-Intellectual Property Rights,” Perspectives from FSF Scholars, Vol. 8, No. 20 (2013).

Randolph J. May and Seth L. Cooper, "The 'Reason and Nature' of Intellectual Property: Copyright and Patent inThe Federalist Papers," Perspectives from FSF Scholars, Vol. 9, No. 4 (2014).

Randolph J. May and Seth L. Cooper, "Constitutional Foundations of Copyright and Patent in the First Congress," Perspectives from FSF Scholars, Vol. 9, No. 18 (2014).

Randolph J. May and Seth L. Cooper, "Life, Liberty, and the Protection of Intellectual Property: Understanding IP in Light of Jeffersonian Principles," Perspectives from FSF Scholars, Vol. 9, No. 25 (2014).

Randolph J. May and Seth L. Cooper, "Intellectual Property Rights Under the Constitution's Rule of Law,"Perspectives from FSF Scholars, Vol. 9, No. 31 (2014).

Randolph J. May and Seth L. Cooper, "Reaffirming the Foundation if IP Rights: Copyright and Patent in the Antebellum Era," Perspectives from FSF Scholars, Vol. 9, No. 38 (2014).

Randolph J. May and Seth L. Cooper, “Adding Fuel to the Fire of Genius: Abraham Lincoln, Free Labor, and the Logic of Intellectual Property, ” Perspective from FSF Scholars, Vol. 10, No. 2 (2015).

Congress Should Emulate Florida's Approach On Cellphone Taxation

In January, Florida Governor Rick Scott announced a plan to cut $470 million in cellphone and television taxes. Fortunately, Florida State legislators appear to be receptive to his plan. On April 9, the Florida House passed a $690 million tax cut that would save cellphone users a significant amount of money if the Senate signs off on the bill.

Currently, Florida residents pay the fourth highest wireless tax rate in the country when including federal, state, and local taxes. Only New York, Washington, and Nebraska have higher wireless tax rates.

Cutting wireless taxes will substantially benefit the low-income Florida residents considering that over 56 percent of all poor American adults had only wireless Internet service as of December 2013. (This percentage has likely increased as wireless networks and wireless plans have become more available.) So not only is it important that wireless taxes be cut throughout the United States – not just Florida, but also that taxes on Internet access are as low as possible in order push prices to an affordable level so every willing consumer can get online. As I’ve encouraged Congress before, this is why the House and Senate should vote to permanently extend the Internet Tax Freedom Act (ITFA), which would ban taxes on Internet access at the state and local levels. (See here and here.)

As of now, the current tax moratorium of the ITFA expires on October 1, 2015, so the permanent moratorium should be adopted as soon as possible. Permanently extending the ITFA should be legislation both parties and chambers can support because it will lead to additional market-driven innovation, content, and economic growth.

Study Finds Low-Income Persons Gain Most from 'Sharing Economy' Markets

I have written several follow-up blogs to a Perspectives from FSF Scholars entitled “The Sharing Economy: A Positive Shared Vision for the Future,” which was published last year. These pieces have referred to the welfare gains consumers have experienced in the new “sharing economy.” Many new companies employing Internet-based applications, such as Airbnb and Uber, have emerged to provide competition to traditional business models and subsequently pushed down prices in their respective markets.

In the Perspectives from FSF Scholars entitled “The Sharing Economy: A Positive Shared Vision for the Future,” Randolph May and I stated the following:

These new online applications facilitate the exchange of goods and services in a way which easily enables a range of peer-to-peer connections and which reduces transaction costs. Individuals have always been able to sell or borrow goods and services through yard sales and community markets, but the Internet has changed the process with a faster, easy-to-use information exchange. For over a decade now, companies like E-bay and Craigslist have used the Internet to lower the transaction costs of modern commerce. But more recently, an influx of new companies and Internet-based applications has emerged enabling individuals to more easily “share” their underutilized things, including, for example, their homes, apartments, and cars.

In a newly-published March 2015 scholarly paper entitled “Peer-to-Peer Rental Markets in the Sharing Economy,” New York University professors Samuel Fraiberger and Arun Sundararajan empirically tested how rental markets within the “sharing economy” are impacting consumers. Professors Fraiberger and Sundararajan found, with statistical significance, that the benefits of “sharing economy” markets have a greater impact on low-income persons than high-income persons.

The new study states:

We highlight this finding because it speaks to what may eventually be the true promise of the sharing economy, as a force that democratizes access to a higher standard of living. Ownership is a more significant barrier to consumption when your income or wealth is lower, and peer-to-peer rental marketplaces can facilitate inclusive and higher quality consumption, empowering ownership enabled by revenues generated from marketplace supply, and facilitating a more even distribution of consumer value.

The explanation of the results is quite simple. Due to the accountability and transparency that many sharing applications provide about their users, the emergence of trust between individuals to share their goods and services has shifted consumer preferences from owning to renting. People who could not afford to own a house, car, or even a power saw can now more easily rent them from others and ultimately enjoy a higher standard of living than they would have otherwise. Additionally, people who would have owned a car or power saw in the past might now rent them instead, saving a significant portion of their income.

Of course, high-income people gain from the sharing economy as well. But the savings accumulated from a shift in owning to renting is more valuable to people with low incomes than to people with high incomes. In economic terms, this is the law of diminishing marginal returns. All else equal, each dollar earned is valued less than the previous one.

Similarly, low-income people, who already own goods that can be rented out, stand to gain more from these transactions than high-income people. The extra income from sharing a car with someone is much more valuable to a poor college student than it is to a wealthy professional. As I have written before, Airbnb, for example, makes traveling less expensive, not only because it provides competition – and often lower prices – to traditional hotels, but also because travelers can share their living space while away. (See here.) In other words, as a result of the sharing economy, the same traveler on the same trip may realize economic benefits in his or her capacity as both a lessor and lessee.

The emergence of the “sharing economy” has provided large welfare gains to the economy as a whole. Consumers have additional, and often less expensive, options in everyday markets, and entrepreneurial activity has been created by ordinary people because Internet-enabled applications have vastly lowered the barriers to market entry.  

Professors Fraiberger and Sundararajan’s paper is significant in its use of empirical data to conclude that access to peer-to-peer rental markets has the effect of increasing savings for renters and increasing incomes for suppliers. While this economic effect of the “sharing economy” is beneficial to all market participants, it proves most valuable to low-income persons. The paper makes for an interesting read as well as a scholarly contribution to the limited academic literature regarding the new “sharing economy.”

Remarks from Chairman Boucher, Commissioner Ohlhausen, and Commissioner Tate at FSF's 'Future of the Internet' Conference

The videos are up from the Free State Foundation’s seventh annual telecom policy conference entitled “The Future of the Internet: Free Market Innovation or Government Control?” The distinguished series of panels and speakers delivered insightful discussions and statements on various issues within telecommunications policy.

In one of the sessions, Free State Foundation President Randolph May had the privilege of speaking with a panel which included Honorary Chair of the Internet Innovation Alliance and former Chairman of the Subcommittee on Communications and the Internet Rick Boucher, FTC Commissioner Maureen Ohlhausen, and FSF Distinguished Adjunct Senior Fellow and former FCC Commissioner Deborah Taylor Tate. The conversation covered many aspects of the FCC’s recent Open Internet order and the Commission’s regulatory authority.

In her opening statement (around the 8-minute mark of the video), Commissioner Tate listed all of the issues that FCC’s Open Internet order does not address. Despite having 400 pages of regulations, she said that the FCC’s Open Internet order does not:

• Provide broadband to all citizens
• Try to reach the most rural, remote, or tribal lands
• Ensure that schools have the broadband connections they need for our global educational competitiveness
• Provide cybersecurity or trusted environments
• Encourage investment, innovation, or infrastructure expansion
• Streamline government regulations or make them easy to understand
• Reduce costs, whether that be direct costs or indirect costs
• Make data driven decisions

Commissioner Tate then added:

These are all the things that I believe the Commission should be focused on, whether it's cybersecurity, incentivizing private investment, ensuring that our education is globally competitive, certainly providing broadband to our entire nation, and of course reducing the costs to consumers. Those are the areas I think we should be concentrating on. I don’t think this [Open Internet] order does any of these.

In his opening statement (around 11:45 in the video), Chairman Boucher said that the FCC’s Open Internet order is the not correct way to solve Network Neutrality issues. He said:

I’m just going to endorse the statement Commissioner Pai made when he said effectively [the Open Internet order] is using a sledgehammer to hit a nail.

In today’s modern broadband world [with] multimedia [and] many competitors in the space, this [Commission action] is truly a poor fit.

Chairman Boucher then said that Congressional legislation regarding Network Neutrality is the only way to finally put an end to this decade-long debate. He added:

The Title II guarantees for Network Neutrality are highly impermanent. They really rest on a bed of sand. They literally can be swept away in the next presidential election, which in time would create a 3-2 Republican majority in the FCC. And one can be relatively certain that an early order of business for an FCC with a 3-2 Republican majority would be to reclassify broadband as a Title I, lightly-regulated information service.

So the Democrats are, at the moment, celebrating what is a temporary victory. 

Now, the Republicans, ten years after the start, have come to the point where they are saying to Democrats, ‘we will provide the Network Neutrality assurances from the 2010 Open Internet order.’ They have offered that and Democrats should seize that victory.

In her opening remarks (about 23 minutes into the video), Commissioner Ohlhausen showed concern that the FCC’s regulatory overreach will adversely impact the effectiveness of the FTC. She added:

I’m concerned that moving ahead [the Open Internet order] might create some challenges for the FTC to be able to continue to protect consumers online in the way it’s so actively and efficiently done until now.

Given the troubling, very broad language of the FCC’s order, [the FCC] will, at the very least, take up a lot of the FTC’s resources, and perhaps, shut us out of some of the very active consumer protection we’ve been able to do.

Around the 35-minute mark of the video, Chairman Boucher said “Congress created the FCC to be an independent agency and to exercise its independence apart from policy positions announced by the administration.” He then talked about President Obama’s unprecedented announcement in support Title II reclassification and why it is unfortunate that this announcement impacted the FCC’s rulemaking:

In the 25 years that I was a member of the House Energy and Commerce Committee and served for virtually all of that time on what we use to call the Telecommunications and Finance Subcommittee…I can’t remember a single time in that quarter of a century period when any president, Democratic or Republican, was as explicitly directive of the FCC as President Obama chose to be. I think it really is extraordinary. And frankly, I was quite surprised.

I think the White House involvement made a difference. I think it’s unfortunate. It is extraordinary. And to come back to the precise question you ask, yes, I think it does put in question the extent to which the Commission is truly going to be able to function as an independent body in those instances where the White House announces such clear determination with regard to any particular issue the Commission’s considering.

About 44 minutes into the video, Commissioner Ohlhausen talked about the vast transformation that has occurred in the communications market over the past couple decades. She said that we’ve seen broadband and telecommunications transform from highly concentrated markets to very competitive ones and that such a transformation has allowed antitrust and consumer protection to become useful tools for addressing the occasional problems that might arise.

Commissioner Tate subsequently added to this point. While holding up a news article, she stated:

I have actually brought the headline that the FTC is suing AT&T for throttling, so the FTC is already involved in many of these issues. They have so much of the expertise, as Maureen so eloquently stated, to be able to protect us, consumers!

Commissioner Tate also added that the FCC’s Open Internet order has huge problems “from the individual to the international,” and not to mention that states will be able to use Title II reclassification to levy taxes, fees, and additional rules on Internet Service Providers.

Towards the end of the discussion (around the 54-minute mark of the video), Chairman Boucher discussed how the FCC’s Open Internet order could adversely impact applications, such as Facebook and Twitter:

It seems to me that any application that has any kind of two-way communication component could very well now be classified as a telecommunications service and fall under the ambit of Title II regulation.

Chairman Boucher concluded that the uncertainty about the extent to which applications will regulated by the FCC “is going to have a major adverse effect on investment, and not just investment in the broadband sphere but investment among edge providers.”

The FCC’s Open Internet Order was a popular topic at the conference but other topics such as video policy, spectrum auctions, and universal service were also discussed. Check out and subscribe to the Free State Foundation’s YouTube page for more videos from the conference and past events.

Don't Force-Fit Outdated Cable Regulations onto Internet Video Services

The FCC is proposing to bring Internet-based streaming video services within the scope of its legacy cable regulations, and reply comments have just been filed. Specifically, the FCC seeks to re-define the legal meaning of the term multi-channel video programming distributor" – MVPD – to include subscription-based online video distributors – OVDs. According to the FCC, its proposed changes would take stock of new video competition from online services, such as Netflix or Amazon Prime.

But the FCC's new-wine-in-old-wineskins approach to video regulation raises profound law and policy issues. The text of the Communications Act appears to foreclose the agency making such a change. Extending regulations based on early 1990s assumptions about cable monopolies to the dynamic Internet is also dubious. And such a redefinition of terms raises serious First Amendment questions.

If anything, the FCC's move should prompt Congress to act with greater urgency in bringing about the reforms that are truly needed. Today's dynamic market for video services calls for a new framework that reflects technologies and competition that didn't exist when the cable legacy regime was established. Congress should adopt a simplified market-based framework for video services. A streamlined approach to match today's video market should treat competition rather than regulation as the norm, seek to treat all video providers equally, and respect the First Amendment.

The FCC proposes to redefine the Communications Act's term for "multi-channel video programming distributor" – or MVPD – by including within its scope "services that make available for purchase, by subscribers or customers, multiple linear streams of video programming, regardless of the technology used to distribute the programming."

In particular, the FCC proposes extending to OVDs the ostensible benefits of program access regulations enjoyed by MVPDs. Program access regulations limit the ability of MVPDs to withhold satellite programming from competitors in the video distribution market. In effect, those regulations are intended to ensure that MVPDs that also own video programming make their programming available at wholesale for their rivals to sell at retail to subscribers. Program access regulations thereby impose restrictions on free market entrepreneurship and decisions about protected speech content. The FCC suggests that expanding such regulations will spur further video competition.

Back in 2010, the FCC's Media Bureau concluded that the agency lacked the statutory authority to redefine MVPD in the manner the agency now proposes. (It’s discussed briefly in my Perspectives from FSF Scholars essay "Keep Online Video Free from FCC Regulation.") The Media Bureau concluded the text of the Communications Act appeared to foreclose it from re-defining MVPD to include OVDs that do not offer their own physical transmission path directly to video consumers.

Related to the statutory problem with re-defining MVPD, as the FCC now has proposed, is the First Amendment problem. Cable operators and other MVPDs have free speech rights in the editorial choices of their video programming channel lineups and tier packages.

The U.S. Supreme Court has recognized that the constitutional permissibility for several cable-related regulations depends upon Congress's findings of so-called cable monopoly bottlenecks in the early 1990s. But there has been a dramatic technological transformation of the video market since then. The competitive landscape now includes two nationwide direct broadcast satellite services (DBS), former telephone company entrants in the MVPD market, as well as OVDs. Wireless delivery options also exist now. The prevalence of these innovative and competitive forces reinforces the First Amendment problem with expanding cable monopoly-era regulations, as the FCC proposes.

Under the canon of constitutional avoidance, a statute susceptible to more than one reasonable construction is interpreted to avoid raising constitutional problems. Should the FCC follow through with its proposed redefinition of MVPD, the constitutional avoidance canon could likely be invoked by a court of law to prohibit such a redefinition. In fact, this canon already has been invoked in the cable regulation context.

In Comcast v. FCC (2013), Judge Brett Kavanaugh of the U.S. Court of Appeals for the D.C. Circuit issued a concurring opinion concluding that government interference with the editorial discretion of video programming distributors is only permissible where such distributors possess market power in the relevant market. Judge Kavanaugh's antitrust-based reading of Section 616 program carriage regulations was bolstered by the constitutional avoidance canon. First Amendment protections for editorial decisions related to video programming tipped the scales in favor of free speech absent market power. (Free State Foundation President Randolph J. May and I discuss Judge Kavanaugh's excellent judicial opinion in an essay we called "The Case for Program Carriage Reform.")

The larger point is that the technological and competitive disruption to the video market posed by online video services should lead Congress to do away with the legacy cable regulatory apparatus. The FCC's proposed jerry rigging of the old system to suit current market realities should add urgency to comprehensive legislative reform efforts. Congress should pursue a market-based framework that is more streamlined, reduces regulations, seeks to treat video providers similarly, and respects the First Amendment.

In January 2015, FSF President Randolph J. May, myself, and several members of FSF's distinguished Board of Academic Advisers submitted a written response to the House Energy and Commerce Committee's white paper questions about modernizing federal video policy. The FSF Board of Academic Adviser members were Professors Michelle Connolly, Richard A. Epstein, Gus Hurwitz, Daniel Lyons, Bruce M. Owen, Glen O. Robinson, James B. Speta, and Christopher C. Yoo. Our response proposed that "[a] new framework should be established that is applicable all video services in the digital marketplace, the organizing principle of which is a rebuttable presumption that runs in favor of marketplace freedom and against regulatory intervention in the video market." Such a framework would eliminate the existing silo regime that subjects different providers of similar services to different regulatory burdens. It would also limit the FCC's authority to adopt broad anticipatory ex ante rules by confining the agency's actions to an ex post process based on adjudication of individual complaints alleging specific abuses of market power and consumer harm.

The Next Generation Television Marketplace Act – legislation that has previously been introduced in Congress by Rep. Steve Scalise – also offers a promising approach to comprehensive reform for video services policy. The bill was designed to eliminate outdated legacy regulations in the video marketplace.

The FCC's MVPD redefinition proposal should prompt Congress to comprehensively reform the outdated federal video services regulatory policy. Congress should regard competition rather than regulation as the norm, seek to treat all video providers equally, and respect First Amendment free speech strictures.