National Cable & Telecommunications Association President Michael Powell says his association will sue if the FCC's set-top proposal is adopted.
In a press conference with reporters outlining the legal issues NCTA sees with that proposal, Powell said that the FCC has articulated its own vision of a product they want to see created, but one that would illegally re-use cable data and content to promote a third-party service.
He said that if the FCC continues along that path, the set-top proposal is not repairable and the association will take it to court.
The FCC has said its proposal does not force cable operators to create a second box, but Powell said that was semantics and that even some of the proponents concede that to meet the FCC's requirements, the cable industry would likely have to design and develop a new piece of equipment in order to make the info available to a third party.
"An agency of limited jurisdiction has to act properly within that jurisdiction," Powell said, making it abundantly clear the NCTA does not believe the FCC has not done so in this case.
He said that the statute empowers the FCC to create competition in navigation devices, not new services. "Every problem does not empower an FCC-directed solution. The agency is not an agency with unbridled plenary power to roam around markets and decide to go fix inconveniences everywhere they find them irrespective of the bounds of their authority."
He said the marketplace is already, obviously, providing that competition. He pointed to a whole host of streaming services that have gone from being "mail order companies" to the world's larges video subscription services (Netflix) in the course of five years.
He cited hosts of IP-enabled boxes and devices including Apple TV, Amazon Fire, Roku. "How many more boxes does it take to declare that the market is trying to solve the problem."
During the briefing, attorneys Ted Olson (former Solicitor General) and Helgi Walker, partners at Gibson, Dunn & Crutcher, previewed the legal tack NCTA will take if it has to go to court.
They argued that the FCC 1) is only authorized to promote equipment, not unbundle the service to create a new derivative service; 2) that the set-top proposal would violate other provisions of the Communications Act by regulating the content and provision of cable service; 3) that the proposal exceeds Constitutional limits on FCC authority by outsourcing its regulatory authority in a standards-setting body; 4) that it would violate free speech rights of programmers and distributors' 5) and that the proposal is arbitrary and capricious (in violation of the Administrative Procedures Act).
“The Chairman’s proposal implement’s Congress’ clear mandate to ensure a competitive marketplace. Nothing in the proposal requires a mandated technical design or requires pay-TV providers to re-engineer their networks," said FCC press secretary Kim Hart. "In fact, many MVPDs have already started the process of making information and content streams available through their own apps. The Chairman’s proposal simply opens that information to competitive devices and apps.”
Hart also responded to the claim the proposal threatened copyright protections and that it should not be outsourcing decisions to standards bodies.
“The proposal is clear—the Commission is committed to protecting the content creator’s copyright, and will not interfere in the business or content agreements between MVPDs and content providers," Hart said. "Copyright protections and remedies will remain fully intact. The Copyright Office’s procedures for enforcing copyright will remain intact, and content creators retain all of their right to utilize those remedies. The Chairman’s proposal would require third parties to abide by licensing terms agreed to by the MVPDs in order to receive the information from the MVPDs, just as it does with CableCARDs today.”
“When consumers are able to access all their content in a single place, they will be better able to find the programming most relevant to them. In turn, content creators, including those who are locked out of the pay-TV system today, having easier access to consumers will lead to more and better programming. Nothing in the proposal seeks to allow disaggregation of content.”
As to the use of standards bodies, Hart said: "Section 629(a) of the Communications Act states that the Commission shall consult with standards bodies when adopting rules to assure competition in the way that consumers access their pay-TV service. The cable industry urged the Commission to avoid technology mandates, therefore the NPRM propose that standards bodies develop the specific standards for MVPDs to rely on to provide information flows, and to ensure third parties comply with security and privacy requirements. This will allow the Commission to set ground rules that are technology-neutral and allow all parties to respond to changes in the marketplace and technology.”