Monty Tayloe

Having to handle at once AT&T’s plan to buy DirecTV and Comcast/Time Warner Cable will tax regulators without overwhelming them, said former FCC officials, industry attorneys and analysts in interviews. While regulators will likely face the extra step of having to consider AT&T/DirecTV in light of Comcast/Time Warner Cable, the extra demand on staff in the deals each worth more than $65 billion is unlikely to substantively strain resources at the FCC or Department of Justice, said American Antitrust Institute Vice President Diana Moss. “You can’t stop the trains just because multiple deals come in,” said Moss. “You have to process them."

Broadcasters on the fence about participation in the incentive auction are unlikely to be encouraged to participate by Thursday’s auction order (CD May 16 p5), and aspects of the FCC’s repacking plans may lead to litigation before the auction, several broadcast attorneys told us. An NAB release immediately after the FCC vote criticized the commission’s handling of the $1.75 billion repacking reimbursement fund and commitment to the TVStudy auction software, and the attorneys said there’s widespread industry concern that the FCC deferred many of the auction decisions to later proceedings. That delay could force opponents to take the commission to court sooner rather than later, said Cooley broadcast attorney Jason Rademacher. It’s much easier for a court to prevent or change a repacking process that hasn’t happened yet rather than unwind one that’s already occurred, several attorneys pointed out. “By deciding just these major policy things they've put people in a strategic box,” Rademacher said.

The FCC shouldn’t include the TVStudy software planned for use in the incentive auction and repacking in its upcoming auction report and order, said NAB auction expert Rick Kaplan in an interview Friday. NAB commented Friday (http://bit.ly/1ghCXqp), urging the commission to use the original Office of Engineering and Technology-69 software instead, because even when running the same specifications as the original software, TVStudy produces different calculations for stations’ coverage area and population served. “Some stations lose and some stations gain, but Congress instructed the FCC to protect all stations,” Kaplan said. FCC officials and industry associations have said TVStudy has features the original OET-69 software doesn’t (CD June 3 p7), and it would be difficult to do the auction without them. “Not only does the new software improve upon the previous iteration, but it also contains features that will be necessary to conduct the incentive auction,” commented CTIA in docket 12-268.

Sinclair’s willingness to look outside Advanced Television Systems Committee 3.0 for a new TV standard friendlier to mobile uses caused disagreement among panelists and attendees at an ATSC conference Thursday. Sinclair’s plan (CD May 8 p7) to create a new platform that supports broadcasting across all media and then seek a standard for it could lead to two coexisting standards, said Jay Adrick, consultant to GatesAir. That would be “a disaster” for the industry, Adrick said. Other panelists praised Sinclair for investing in new technology but said they hoped the company’s efforts would end up being incorporated into ATSC 3.0. Offering two standards to the FCC would be “a bad idea,” said Lin Media Chief Technology Officer Brett Jenkins.

A new effort by Sinclair to bring about the creation of a new TV standard by designing technology to allow broadcasters to send their signals over wireless networks is not likely to capture the attention of an FCC consumed by the incentive auction, said several industry observers in interviews. “Once you get into a new standard it would delay everything,” while the FCC is focused on completing the auction on schedule, said broadcast engineer Don Everist, president of Cohen, Dippell.

The incentive auction rules to be issued at the FCC May 15 open meeting (CD May 6 p3) are more likely to face challenges on narrow issues such as reserving spectrum for wireless mics, rather than broad petitions for reconsideration of the entire order, said Drinker Biddle broadcast attorney Howard Liberman during a Digital Policy Institute webinar Tuesday. If petitions for recon are filed against specific aspects of the auction rules, it’s unlikely that it would slow the process of getting the auction off the ground, Liberman said. Protracted court challenges to the auction order also aren’t likely because the May 15 order can be termed an interim process, and only final decisions are subject to court appeal, Liberman said. “It will be difficult to appeal.”

FCC Chairman Tom Wheeler’s fellow commissioners weighed in on net neutrality at a Cable Show policy luncheon Thursday, but didn’t comment directly on whether they agreed with his proposal (CD May 1 p1). The commission should seek congressional guidance on how to proceed before taking action, said Commissioner Ajit Pai, who called the matter “a solution in search of a problem.” Commissioner Mike O'Rielly said he worries that the agency doesn’t have jurisdiction over the Internet, though he added that he would keep “an open mind.” Commissioners Jessica Rosenworcel and Mignon Clyburn said they support an open Internet, and that they were still considering Wheeler’s NPRM, which is currently circulating on the eighth floor. (See separate report above in this issue.) Clyburn said she is “still evaluating what the chairman circulated. Rosenworcel has “heard a lot from a lot of people” and said she will take “a hard look” at the proposal and the public perception of it.

Cable providers cutting a deal to provide faster service to certain companies isn’t bad for their other customers, said Cox Communications President Patrick Esser at the NCTA Cable Show’s general session Thursday here in Los Angeles. “I don’t think if Netflix is getting a faster lane that I'm hurting anybody,” Esser said. The cable CEO emphasized that his company would never block customers from having access to Internet content. Blocking access would be “the worst decision” a company could make, Esser said. However, he distinguished allowing access for all from deals granting faster access to certain parties. “We do commercial arrangements in our industry every day,” Esser said. He also commented on the Comcast/Time Warner Cable deal and Charter’s involvement, saying that greater cooperation in the industry is good for all. Several industry observers told us that Cox had been interested in acquiring the 3.9 million divested subscribers from Comcast before the announcement of the deal sending them to Charter. Asked about whether the growth of Comcast and Charter might lead to higher or lower programming costs for Cox, Esser disagreed with the question. “I don’t think it’s a content discussion, it’s a platform discussion,” he said. Platforms and increased use of the cloud are the future of the cable industry, said Rob Lloyd, Cisco president-development and sales. Companies will increasingly update their systems through software updates rather than new hardware, and cloud technology will eventually replace much of the functionality of set-top boxes, he said. These new systems will test new features and be updated in much the same way smartphone apps are, Lloyd said. The cable industry will move to the cloud as the new “manufacturing plan,” Lloyd said.

LOS ANGELES -- Aides to FCC Commissioners Ajit Pai and Mignon Clyburn said they themselves were encouraged by aspects of Chairman Tom Wheeler’s proposed net neutrality NPRM (CD May 1 p3), they said on a panel at the Cable Show. Clyburn aide Adonis Hoffman, clarifying that he was speaking only for himself, said he is “encouraged” that Wheeler’s plan is designed to prevent a “haves and have nots scheme.” Though Pai aide Matthew Berry said those in his office believe net neutrality “is a solution in search of a problem,” he said Wheeler’s plan is more palatable than other net neutrality proposals. “We need to recognize there’s some progress being made here,” Berry said. “The ball is moving in our direction.”

LOS ANGELES -- Comcast’s agreeing to buy Time Warner Cable and the divestiture of 3.9 million subscribers to Charter Communications (CD April 29 p4) will make the industry more competitive, said analysts at the Cable Show Tuesday. “It’s hard not to say that life is gonna be tougher for people competing with cable than in years past,” said J.P. Morgan’s Philip Cusick. Comcast/Time Warner Cable and the divestitures to Charter has been the dominant topic among show attendees, including speculation about how the deal came to be, several cable officials told us.