House Republicans Outline STELA Draft Pre-Markup

Retains pro-cable elements, but also provision blocking FCC from limiting TV JSAs
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The House Communications Subcommittee draft of the STELA bill that will be the subject of a markup March 24 and 25 still contains the provision that would undue the FCC's planned March 31 vote to limit TV JSAs. That will certainly be a bone of major contention with Democrats at the hearing.

FCC chairman Tom Wheeler has decided to take action on JSAs, and limiting coordinated retrans negotiations among the top four stations in that March 31 vote, while launching a combined 2010/2014 quadrennial ownership reg review. The FCC is already four years late on the 2010.

STELA is the Satellite Television Extension and Localism Act, whose distant signal license, prohibition on exclusive retrans deals, and good faith retrans bargaining mandate to the FCC must be renewed by the end of the year or it expires.

The draft bill also limits coordinated retrans, though in a slightly different way than chairman Wheeler's proposal—it is not limited to the top four and cable operators could elect to allow for coordinated negotiations if they chose—but would disallow any commission action to make JSAs attributable until it has wrapped up that 2010 quadrennial review. Wheeler tabled the 2010 quadrennial item offered by his predecessor Julius Genachowski, in part because it loosened crossownership regs.

The draft would still eliminate the ban on integrated set-top boxes, something cable operators have been pushing for, but that will also get pushback from Democrats.

The markup begins late in the day March 24 (5:30 p.m.). But per custom, that will be for opening statements only, says the majority. The real work—debate, amendments, a planned vote—is scheduled to begin March 25 at 10:30 a.m.

Here is the draft as currently constituted, according to the majority memo on the markup (Section 1 is the title; Section 9 provides definitions of terms):

"Section 2. Section 2 extends the exemption from retransmission consent for distant signals where a satellite subscriber is outside the area served by the broadcast signal. The section also extends the prohibition on exclusive retransmission consent deals and requirement that broadcasters negotiate in good faith with multichannel video programming distributors (MVPDs).

Section 3. Section 3 prohibits multiple broadcast stations from negotiating retransmission consent jointly unless the cable or satellite operator agrees to joint negotiations or the stations are directly or indirectly under common de jure control approved by the Federal Communications Commission (FCC or Commission).

Section 4. Section 4 prohibits the Commission from issuing rules to treat stations under shared service agreements, local news service agreements, local marketing agreements, or joint sales agreements as resulting in attribution to the media ownership rules until the Commission concludes its 2010 quadrennial review of the media ownership rules as required under Section 202(h) of the Telecommunications Act of 1996.

Section 5. Section 5 eliminates the so-called 'sweeps week' provision that prohibits cable operators from dropping broadcast signals during the weeks when Nielsen Media Research does its major audience measurements (so called 'sweeps' weeks). Since cable providers do not have a corresponding right to demand access to programming during a retransmission dispute, and satellite providers are not subject to the rule, the change will provide regulatory parity and remove the government from this aspect of the negotiation for signal carriage.

Section 6. Section 6 eliminates the regulatory requirement that cable set-top boxes leased from cable system operators contain a separate security element (the so-called 'integration ban').

Section 629 of the Communications Act, added as part of the Telecommunications Act of 1996, requires the FCC to foster a market for third-party set-top boxes – set-top boxes that could be sold at retail and used on any MVPD’s network. In adopting rules to comply with Section 629, the Commission required that the portion of the cable box that decrypts the cable signal be physically separated from the other functions of the box ('the separable security requirement'). The consumer electronics (CE) and cable industries developed the CableCARD, a module that could be deployed in third-party electronics (televisions or retail set-top boxes) to decrypt the cable signal for viewing via a third-party set-top box.

Later, the Commission adopted additional rules to apply this regime to both third-party boxes and those leased from a cable provider. This ban on integrating the security into the cable-owned boxes was intended to motivate cable systems to work with the CE industry by forcing reliance on a common technology. Today, of the more than 42 million CableCARDs deployed in set-top boxes, the vast majority of them are in leased boxes. TiVo, the most widely deployed retail set-top accounts for only 600,000 CableCARDs.

Section 7. Section 7 requires the Government Accountability Office to conduct a study and issue a report on necessary changes to the Code of Federal Regulations and the impact on consumers should Congress repeal the statutory compulsory copyright regime that governs broadcast content.

Section 8. Section 8 requires each satellite direct broadcast service provider to report the local signals that it provides for each market in which it broadcasts such services and also report."

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