Set-Top Box Fiasco
There’s been more drama around the FCC in the last two years than in the entire previous decade. First we had the spectacle of the White House ordering an abrupt about-face on Title II broadband reclassification, followed by completely implausible denials, a court battle, and extraordinary deference. Then we had an open meeting delayed for several hours to allow Congress to twist the arm of one of the Democratic Commissioners. That was followed by the refusal of the Chairman to agree to step down after the election, in defiance of tradition. Then the Democrats in the Senate killed the most forward-looking spectrum bill we’ve ever seen in retaliation for a move that made perfect sense in light the Chairman’s rebellion. The removal of the Set-Top Box Order from Thursday’s open meeting agenda almost seems normal in the midst of this chaos.
The Set-Top Box Order
The set-top box order was teed up for a vote on Thursday amidst promises by Chairman Wheeler that it would incorporate the proposal put forward by the carriers for a software-based solution, the HTML5 apps approach. Carriers and content creators were skeptical because the specifics of the order were never revealed and the tea leaves didn’t look promising. Of particular concern is the notion that the FCC will oversee negotiations between carriers and video streaming device manufacturers in the shadow of a standard contract to be written by the Agency.
The FCC hasn’t regulated software before, but it’s not for lack of pressure from the so-called public interest lobby. Tim Wu, the law professor who coined the term “network neutrality” famously asked the FCC to regulate app stores in 2010 because he thought carriers had too control over them. There are more than 5 million mobile phone apps available today, of course.
The FCC doesn’t seem to grasp the issues that content creators have with making their work available to consumers without proper controls against freely distributing it over the Internet. Perhaps the Chairman’s staff should read up on the Stop Online Piracy Act (SOPA) fight. Not all of the solutions offered by SOPA are necessary, but some reasonable level of protection from piracy has to be included in streaming apps.
Set-Top Box Obligations
We’ve been down this road before, with CableCard. Devices had to be tested to ensure they utilized copying controls, and a dozen or so managed to comply. The apps that firms such as Charter and Comcast have created incorporate such controls, and are only licensed to devices that support them. Hollywood and Nashville firms are not charities, and they work very hard to ensure that creators are compensated for their labor. That’s the heart of the issue with the development and distribution of video streaming apps.
Video distributors – MVPDs – have to live up to their obligations to content creators in the course of distributing video. These obligations must extend to the devices for which they develop apps or the entire effort to block piracy and pay creators goes up in smoke.
FCC Won’t Take Piracy Seriously
Chairman Wheeler takes his cues from Public Knowledge (and similar organizations) on the apps question, which is to say he gets his orders from the device manufacturers and advertisers who couldn’t care less about piracy. These pressure groups are fundamentally opposed to copyright in principle, or at least to copyright in anything like its present form. But the protection of creative works isn’t some weird0 free market absolutist fixation, it’s an actual human right. Read the Universal Declaration of Human Rights, Article 27 (emphasis added):
(1) Everyone has the right freely to participate in the cultural life of the community, to enjoy the arts and to share in scientific advancement and its benefits.
(2) Everyone has the right to the protection of the moral and material interests resulting from any scientific, literary or artistic production of which he is the author.
We don’t want the FCC creating regulations that violate human rights, do we?
Chairman Wheeler apparently has the support of Commissioner Clyburn but not Commissioner Rosenworcel. Consensus on this issue should not be hard to come by. It’s often said that Hollywood has different interests from Silicon Valley, and if that’s true Chairman Wheeler is on the Silicon Valley side of the scale. This is not only true with respect to copyright, but in the privacy debate as well, although carriers are opposed to the Valley’s ad merchants in the latter case. I don’t know exactly what Wheeler and Rosenworcel disagree on, but the tea leaves suggest it’s the compulsory apps license the Chairman has been requested to include in the order. It seems to me that a stipulation for good faith bargaining is all we need, as we have in many other FCC issues.
That said, the long term interests of Silicon Valley and Hollywood are actually quite well aligned. Hollywood wants to be paid, and Silicon Valley wants a spigot of new content. So it’s not going to be hard for the parties to come to yes in their negotiations over app conditions. The compulsory license is overkill that won’t benefit anyone. The parties are thanking Wheeler for acceding on apps vs. boxes, and wishing him well. But they can handle business negotiations on the their own since that’s what they do. The MVPDs and content creators want their content on as many platforms as possible and the platforms want as much content as possible.
Show Congress the Meat
Congress has concerns about the compulsory license as well, but they’re dwarfed by its concerns about order’s lack of transparency. By refusing to show Congress what he’s got up his sleeve, Wheeler is telegraphing that he’s up to no good. Given the stormy relationship Wheeler has forged with Congress, it simply won’t do for him to just say “trust me, I know what I’m doing.” And he’s on solid ground to the extent that there’s no law (yet, anyway, but keep your fingers crossed) requiring the publication of draft orders before they’re approved.
But in matters of this magnitude with so many zigs and zags, it would be wise to go ahead and share the order with Congress. Influential members have asked for the text of the order or a Further Notice of Proposed Rulemaking (FNPRM), which is entirely reasonable. Either course is acceptable, but the FNPRM is better.
Too Many Conditions
To simplify, the set top box order as currently written (probably) goes too far into the business of the content creators, the MVPDs, and the streaming box merchants. They’re all grownups and they all want a deal where the MVPDs write apps for the boxes that protect the content from theft. The remaining issues are matters of detail, and there’s no reason for the FCC to meddle. If a light touch doesn’t work, a future FCC can always tighten the rules once it understands what the rub is.
Peering into a crystal ball in an attempt to foresee all possible problems is unnecessary and unproductive. Let the firms do what they do best.