Draft Retrans NPRM Eyes Blocking of Broadcast Programming Streams, Including Online

While Congress directed the agency to review its totality of circumstances test for good-faith negotiations as part of the Satellite Television Extension and Localism Act Reauthorization (STELAR) Act, the rulemaking would go further, asking whether those practices also constitute a per se violation of "good-faith" negotiating, said the person. If a practice is found to be a per se violation, any individual action by itself would be a violation, while under the totality of circumstances test, the FCC would look at that action and others to see whether they add up to a good-faith violation, said the person. “Congress gave the FCC a limited directive and it appears that the chairman is intent on taking it much further, as he did just recently by declaring the entire nation effectively competitive, enabling big cable operators to raise prices without consequence," NAB said in a statement. "It’s disappointing, but we are confident that the Commission will see that the pay TV industry is using the commission as its next stop in trying to increase its bottom lines with no discernable benefit to consumers.”

Practices being questioned include blocking the online streaming of broadcast programming, network involvement in retrans negotiations, bundling practices, tying arrangements and ceding retrans negotiation rights to a third party, said the source. The list of practices was culled from a variety of sources, such as petitions made to the FCC and ex parte meetings with industry representatives, the informed person said.

Such an NPRM is likely to be voted on favorably by all five commissioners, because the totality of circumstances proceeding was mandated by Congress, and dissent from NPRMs is relatively rare, said one cable attorney.

Almost since STELAR passage, multichannel video programming distributors and broadcasters have squabbled over questions of bad faith through numerous filings in docket 10-71. MVPDs have pushed the FCC to declare such actions as blacking out marquee events, stopping import of an out-of-market signal and charging for subscribers who don't receive a broadcaster's service as per se bad faith (see 1507170048). In an ex parte filing posted Friday, the American Cable Association said ACA President Matt Polka, in a meeting with Jessica Commissioner Rosenworcel, urged the review "be wide ranging and that rules be adopted expeditiously."

In its own ex parte filing posted Friday, the Independent Telephone & Telecommunications Alliance said President Genny Morelli, in a meeting with Maria Kirby, legal adviser to Chairman Tom Wheeler, urged that the agency tentatively conclude a failure to negotiate in good faith includes such actions as failure to make an initial contract proposal at least 90 days before the existing contract expires; prevention of an MVPD from disclosing to the FCC or other pertinent public entity the rates and terms, and conditions of a contract proposal or agreement in connection with a retrans consent complaint; and price discrimination among MVPDs in a market unless legitimate economic benefits can be demonstrated. When asked Friday about the draft NPRM, NCTA declined to comment.

The FCC typically hasn't involved itself much in good-faith negotiations "beyond using its bully pulpit" to urge the sides to reach a deal, Wilkinson Barker broadcast attorney David Oxenford said in a blog post Thursday. While only cable operators have been found guilty of bad-faith negotiating in the past, pay TV "has long sought to alter the traditional meaning of 'good faith' in an effort to limit certain negotiating tactics," he said.