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As a record three billion dollar political advertising season comes to a close, broadcasters must remember that the FCC requires many broadcast stations to stay open for business this weekend. Specifically, all radio and television stations that have provided weekend access to any commercial advertiser within the twelve months prior to the election must provide similar access to federal candidates the weekend before the November 2 election date.

A station only needs to offer federal candidates the same kinds of weekend services that it has previously offered to commercial advertisers. This means that if a station has provided weekend access only for deleting copy or canceling spots, as opposed to selling and scheduling new spots, the station is only required to provide those same pre-election weekend services for federal candidates. Stations also need to keep in mind that they cannot discriminate between candidates with regard to providing access.

According to FCC staff, unlike federal candidates, state and local candidates do not have a similar right to weekend access even if the station has provided such access to commercial advertisers.

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The FCC’s Media Bureau released a Public Notice today announcing a freeze on the filing of applications for new digital low power television (“LPTV”) and TV Translator stations, and major modifications to existing analog and digital LPTV and TV Translator stations in “rural areas.”

After the completion of the nationwide transition to digital broadcasting by full-power television stations, the FCC announced that it would permit the filing of applications for new digital LPTV and TV Translator stations on a first-come, first-served basis. The FCC announced the filings would commence in two phases, with the filing of applications in “rural areas” beginning on August 25, 2009, followed by “non-rural areas” on January 25, 2010. The January 25, 2010 filing date for non-rural areas was delayed until July 26, 2010, and then ultimately suspended indefinitely. “Rural” area stations are those with a transmitter site that is farther than 75 miles from the reference coordinates for the 100 largest cities listed in Appendix A of the Media Bureau’s original Public Notice on this matter.

Today’s Public Notice indicates that the FCC will continue to accept and process applications for minor changes to existing facilities, flash-cut applications, digital companion channel applications for existing analog stations, and displacement applications where the applicant can demonstrate actual interference from existing full-power television operations, or from stations still operating on channels 52 to 69.

As the basis for its action, the Media Bureau cited the recommendation in the National Broadband Plan to make an additional 500 MHz of spectrum available for broadband use over the next ten years. The Media Bureau stated that the freeze would allow the FCC “to evaluate its reallocation and repacking proposals and their impact on future licensing of low power television facilities.” The Public Notice goes on to state that, after the FCC has completed its broadband rulemakings, the Media Bureau will determine when LPTV filings can be made again. However, given the number of rulemaking proceedings the National Broadband Plan will generate, it is reasonable to assume that a lifting of the freeze will not occur anytime soon.

For assistance in analyzing a station’s options in light of the Media Bureau’s action, please contact any of the attorneys in the Communications Practice Section.

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In a Public Notice released yesterday, the Consumer & Governmental Affairs Bureau of the FCC established new comment dates to refresh the record on several closed captioning issues first raised in proceedings initiated in 2005 and 2008. Comments are due November 24, 2010, with reply comments due December 9, 2010.

2005 Closed Captioning Notice of Proposed Rulemaking (“2005 NPRM”)

First, the FCC is seeking to refresh the record on several items that were raised in its 2005 NPRM that remain outstanding. Specifically, it is asking for additional comments on whether the FCC should establish “quality” standards for non-technical portions of the captioning rules. Such standards would be aimed at ensuring the accuracy of the captions themselves. In this regard, the FCC would like comments on what the adoption of such standards would cost to programmers and distributors, whether there are enough competent captioners to meet the demand, and whether different captioning quality standards should apply to live and pre-recorded programming.

Second, the FCC seeks to refresh the record regarding the need for new rules that go beyond the current “pass through” rule. The “pass through” rule requires video programming distributors to deliver all programming containing closed captioning with the original closed captioning data intact in a format that can be displayed by decoders meeting the standards of Part 15 of the FCC’s Rules. According to the Public Notice, the FCC is looking for ways to prevent technical problems in the delivery of captions and to remedy technical problems quickly when they do occur.

With respect to violations of the captioning requirements, the FCC seeks comments on whether to establish specific “per violation” forfeiture amounts, and if so, what those amounts should be. The FCC is also seeking comments on whether video programming distributors should be required to file periodic captioning compliance reports.

The 2005 NPRM also discussed the continued use of electronic newsroom technique (ENT), in which the closed captioning text is fed directly from a station’s teleprompter. Because this captioning technique does not provide captions for unscripted segments, the current rule limits its use to stations that are not affiliated with ABC, CBS, NBC, or Fox, or which are located outside the top 25 markets. Nonbroadcast networks serving at least 50% of cable/satellite households are also prohibited from relying on ENT. The FCC is asking whether the use of ENT for captioning should be further restricted by, for example, expanding the prohibition to stations outside the top 25 markets.

The FCC is also seeking comments on whether it should mandate that petitions for exemption from the closed captioning requirements be filed electronically.

2008 Closed Captioning Notice of Proposed Rulemaking (“2008 NPRM”)

With respect to the 2008 NPRM, the FCC is asking for comments to refresh the record on how the captioning exemption for “channels” producing revenues of less than $3 million should apply to digital multicasting. In 2008, the FCC asked whether each programming stream in a multicast signal should constitute a separate “channel,” or whether the broadcaster’s primary and multicast streams should be considered a single channel for purposes of determining whether they exceed the $3 million exemption limit. The FCC wishes to update the record, and is asking for comments on the ramifications of ruling that each multicast stream is a separate channel.

As noted above, comments on these proposals are due November 24, 2010, and reply comments are due December 9, 2010. Please contact any of the lawyers in the Communications Practice Section for assistance in the preparation and filing of comments or reply comments.

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With the Fox-Cablevision carriage dispute grabbing headlines, and the cable and broadcast industries preparing for battle in Congress and at the FCC over retransmission issues, you would be hard pressed to find common ground between these two media players. However, I have seen it, and it is now on file at the FCC.

When FEMA signed off on a technical standard for the next generation of emergency alert technology, known as CAP, a few weeks ago, it activated a 180 day deadline for the government to certify CAP-capable equipment and for media entities to acquire and install that certified equipment. At the time, we wrote that 180 days likely would not be enough time to have equipment based on the new standard manufactured, certified by FEMA (and possibly the FCC), installed, tested, and operational. While no one wants to hinder deployment of this next-generation emergency alert technology, the immense complexity of CAP, which is intended to distribute alerts not just on television and radio, but potentially through cell phones, the Internet, and myriad other communications channels, makes implementation very challenging. There are still a lot of issues to work out, and just as important as deploying the technology is making sure that it will work properly once deployment is complete.

To ensure that happens, and to try to facilitate an orderly rather than rushed deployment of EAS CAP technology, earlier today Dick Zaragoza and Paul Cicelski of our firm filed a request to extend the time period during which media entities must implement the CAP standard. The current deadline for EAS implementation is March 29, 2011. Today’s extension request urges the FCC to extend the implementation period through at least September 30, 2011, and to consider a longer implementation period tied to completion of the FCC’s own potential CAP equipment certification process and/or the FCC’s anticipated proceeding to modify its rules to complete the implementation of CAP.

This is the interesting part. Participating in today’s extension request were 46 of the state broadcasters associations, the National Association of Broadcasters, the National Cable and Telecommunications Association, the Society of Broadcast Engineers, the American Cable Association, the Association for Maximum Service Television, National Public Radio, the Association of Public Television Stations, and the Public Broadcasting Service.

I can’t recall any prior issue inspiring such unanimity among this diverse group of participants, and that should provide an indication of the seriousness with which they view the upcoming task. If implemented successfully, EAS CAP will bring a more ubiquitous and content-rich emergency alert system to the United States. If implemented poorly, vast amounts of time and money will have been expended without significantly improving public safety. Knowing many individuals who have dedicated themselves to making CAP a reality over the past few years, it would be a shame to not see the full benefits of the technology realized.

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By Richard R. Zaragoza

Talk about being in a tough spot. Members of Congress are urging the FCC to broker an agreement between Cablevision and Fox in their ongoing retransmission consent dispute. Cablevision’s subscribers in the impacted areas are worried that the contractual dispute will not end any time soon and the FCC is obviously concerned with the consumer disruption. But what can the FCC actually do? The answer is, not much, and it appears to be doing all it can at the moment.

As a matter of longstanding policy, the FCC has generally refused to get involved in private contractual disputes between companies it regulates. And as we discussed in a previous post, with respect to retransmission consent, the FCC does not have the authority under the Communications Act to force Cablevision and Fox to come to an agreement or to require interim carriage while the parties continue to negotiate.

In other words, the FCC’s hands are largely tied. FCC Chairman Genachowski as recently as last night issued a press release again urging the parties to reach a deal, but absent evidence of a lack of good faith negotiating tactics by the parties, there is little more that he or the FCC can do.

In order to help Cablevision’s subscribers figure out what to do, the FCC has issued a Consumer Advisory that explains what’s going on with the dispute and provides suggestions that may be at a Cablevision subscribers’ disposal. The Advisory is called “What Cablevision Subscribers Should Know About Receiving Fox-Owned Stations WNYW (NY), WWOR (NJ) & WTRF (PA)”, and the document provides an excellent informational resource for any pay-TV subscriber who might be affected by the expiration of a retransmission consent agreement. In my view, the Alert also strongly suggests that subscribers in such circumstances generally have a number of viable alternatives so that they can continue to view their favorite television stations.

The Alert makes it clear that Cablevision may carry the Fox station signals and their programming only if Cablevision and Fox reach a mutually acceptable agreement. Importantly, the Alert also makes clear that subscribers to Cablevision have a number of alternatives to allow them to continue to view the Fox stations and their programs by using other pay-TV providers such as AT&T, DIRECTV, DISH Network, RCN and Verizon FIOS, or viewing the stations over-the-air using a digital television set or an analog TV set connected to a digital-to-analog converter box (using an appropriate antenna in either case). In short, because a number of viewing options are available to the public, no one is prevented from continuing to watch the stations just because Cablevision and Fox have been unable to reach a mutual agreement on the terms of an extension or renewal of their carriage agreement.

The FCC’s Alert was issued in the midst of calls from Members of Congress, U.S. Senators and others that Cablevision and Fox be ordered to submit to binding arbitration. By the FCC’s action in publishing the Alert, the Commission signals that it does not have the authority either to command agreement between these private parties or to force them into arbitration. The Alert also supports the view that such action is not needed to protect the public because competition from other pay-TV providers, as well as free over-the-air access via indoor or outdoor antennae, assure the public of the continued availability of affected stations and their programming.

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In the heat of the battle raging over carriage of various Fox networks on Cablevision’s systems, Randy May, the founder and chief intellect of the Free State Foundation, has weighed in on the retransmission consent debate (available here). I read his comments with interest, because Randy often provides insightful observations on important telecommunications policy issues, and I care about retransmission consent.

I was disappointed. The paper only rehashes the cable television party line.

Surprisingly, Randy suggests that broadcasters’ exercise of retransmission consent rights should be scrutinized and possibly regulated even more. One would have to dig pretty deep to find the last time Randy advocated solving a problem by throwing more government at it.

The party line Randy endorses goes something like this: broadcasters get special privileges from the government with respect to signal carriage, which give them a retrans “negotiating advantage.” Retransmission consent negotiations don’t happen in a free market goes the argument. The solution? Broadcasters’ retransmission rights should be even more regulated than they are already.
Randy cites two “advantages” broadcasters supposedly enjoy in retrans negotiations: (1) must-carry and (2) program exclusivity. The cable industry party line is a little tortured, coming, as it does, from interests subject to a small fraction of the regulatory umbrella that shadows broadcasters. These are the same companies, after all, that argue government should stand back and let broadband carriers treat Internet traffic as they will.

The party line is also completely wrong about the carriage rules.
First, the existence of must-carry sometimes harms, but never helps, broadcasters that elect retransmission consent. Broadcasters must claim their retrans rights once every three years through a technical and exacting election process. If they make a mistake, they risk having to give away their signals for free. Cable companies routinely use this against broadcasters in retrans negotiations.

By definition, any broadcaster engaged in retransmission consent negotiations has forfeited its must-carry rights. It’s either-or. Each broadcaster makes its election once every three years — same election for all overlapping cable operators, no cherry-picking. If you elect retrans, you have no guarantee of being carried at all and no option to revert to must-carry if negotiations break down.

Must-carry benefits some broadcasters, no doubt. But it doesn’t confer any advantage on a broadcaster that elects retransmission consent. The cable/DBS/telco party line suggests that must-carry gives broadcasters a retrans advantage, but it never identifies what that supposed advantage is. Randy doesn’t explain the advantage either. There is none.
Second, the program exclusivity rules impose huge burdens on broadcasters. Start with the unregulated baseline: producers and distributors are free under the law to agree to exclusive distribution territories. The broadcast networks and affiliates, if they wanted to, could agree that each affiliate has unfettered nonduplication protection throughout its DMA. That would be a free market.

But this is anything but a free market: even if broadcasters purchase exclusivity rights, they may not enforce those rights except within limited, FCC-defined areas. If you doubt me, just read the notes to the network nonduplication and the syndicated exclusivity rules. And this is a bargaining advantage? A reason to pile more rules on broadcasters?
Having read hundreds of Randy’s usually insightful postings over the years, I’m disappointed to see him republish boilerplate cable industry advocacy. His comments run counter to the Free State Foundation’s guiding principles and lack Randy’s trademark sharpness and passion. More to the point, they bizarrely suggest that the government somehow does broadcasters a favor by limiting their free market rights.

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The FCC’s Further Notice of Proposed Rulemaking seeking comment on the conversion of low power television stations from analog to digital operation was published in the Federal Register today. Comments on the FCC’s proposals are due on December 17, 2010, with reply comments due on January 18, 2011.

Although Congress established a deadline of June 12, 2009 for all full-power television stations to discontinue analog operations and begin operating only in digital, LPTV and TV Translator stations, as well as Class A TV stations, were seen as needing more time to marshal the resources to transition to digital operation. Accordingly, the Congressionally-mandated analog cut-off date did not apply to these stations. As a result, all full power television stations have ceased over-the-air analog broadcasts, but a significant number of Class A, LPTV and TV translator stations continue to transmit in analog and many questions persist as to how to transition these stations to digital-only operation. The FCC has released a Further Notice of Proposed Rulemaking (FNPRM) in its proceeding examining the digital transition for Class A, LPTV and TV Translator stations. The FNPRM seeks comment on the procedures and timelines by which these stations will complete the transition to digital operations.

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In October of 1996 my boss, the chairman of a $3 billion television production and distribution empire (and one of the smartest television dealmakers I ever met) scoffed when I said that television could be delivered over the Internet. I told him to wait ten years. Well, in 2006 we had YouTube, but I doubt Bill Bevins would count that as television.

In the first ten days of October 2010:

  • I spoke on the “Hot Topics” panel at the annual TPRC conference, where leading academics and policy makers discuss legal, economic, social, and technical issues on national and international information and communications policy. The hot topic this year: over-the-top (OTT) television.
  • A friend called asking for advice – he’d been offered a senior executive post with a very large broadcasting company paying a great salary, and a senior position with a scrappy OTT startup, paying lots of stock and the chance to hit big. In 2010, he sees this as a tough call.
  • I watched Forrest Gump in “high definition” on a 50″ plasma monitor, streamed by Netflix to my son’s Xbox. The quality was stunning.
  • I installed my new AppleTV and watched a high definition podcast, also streamed, and several “high definition” videos on YouTube and Netflix. In several cases, the quality was very good. And the Apple TV interface is much more elegant and easier to use than our FiOS set top box.

I should have told Bill 14 years.

OTT is here. There’s a lot of long tail and niche content online. It’s getting easier to find and use, and if you have a fast broadband connection, the quality can be outstanding. So just what is cord cutting and how do you define OTT? And what do they mean for traditional video providers?

Cord cutting at its extreme means a household drops MVPD service and relies on other sources of television – primarily free OTA television supplemented by long-tail OTT internet services like Netflix and Hulu. OTT means traditional television content delivered through non-traditional (generally Internet) television distribution channels. It doesn’t refer to non-traditional video content (YouTube and other user generated content) regardless of distribution channel. We make this distinction because, rightly or wrongly, we consider YouTube and Vimeo to be something entirely different (and less threatening to incumbent providers) than the delivery of high resolution, full-format, traditional programming over the Internet.

Many fear OTT will lead to tens of millions of households to cut the cord. This is naturally a concern for cable and satellite providers, but many broadcasters worry too, because MVPDs won’t pay broadcasters for cord cutting households. Personally, I think we are likely to see a fair amount of cord cutting in the next few years, and an even larger amount of what I call cord trimming – dropping premium services or higher tier services. In new households, broadband is essential, while pay television service is often optional. And the combination of gorgeous, over-the-air, live high definition broadcast service and increasingly compelling long tail OTT options is likely to be a better option for many households than traditional MVPD service.

But there’s a silver lining for cable systems and broadcasters, and even for DBS providers.

  • Cable systems may lose video subs, but demand for OTT television will drive broadband adoption into more of the 40 million households that haven’t adopted it so far, and it will lead others to upgrade their connections, at higher prices. Since broadband service is generally more profitable than video services, cable profit margins could actually rise even if gross revenue shrinks.
  • Broadcasters could lose retransmission consent fees from cord cutting households, but cord shrinking will affect broadcast competitors – cable networks – before broadcasters, because it’s the expensive higher tiers and premium services that cord-shrinking customers drop. The broadcast and sports channels are the last to go before cord is cut altogether.
  • If total MVPD penetration falls from the high eighties to the mid sixties in the next seven to ten years, as I suspect it will, tens of millions in advertising will migrate back from cable and satellite to broadcast, because reach is still important. Twelve or so years ago, with MVPD penetration in the mid 60s, broadcasters were far more profitable, even without retransmission revenue.
  • Much higher broadband penetration could breathe new life into the DBS business model, which is an incredibly cost efficient way to distribute high quality linear television. With more broadband homes to sell into, DBS providers can create a hybrid satellite-OTT service that meets and in many ways exceeds what the cable operators can do with their own video services.

OTT service will have many effects beyond cord shrinking and cord cutting. But incumbent providers should embrace OTT, because the opportunities it enables – the best of which we can’t imagine yet – far outweigh the risks that it poses to all incumbent business models. It creates opportunities for greater efficiencies and more varied service offerings for all incumbents, if they have the vision to see the opportunities and the perseverance to follow through. Best of all, OTT can make television more satisfying for consumers, more measurable, and easier to use – leading, inevitably, to more usage. In the television business, we all like more usage, as long as we get our share. Getting that share is the challenge and the opportunity.

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Last week, Congress passed the Twenty-First Century Communications and Video Accessibility Act of 2010 (the “Act”) which, among other things, reinstates the FCC’s former Video Description rules for television broadcasters, extends closed captioning of video programming to the Internet, and requires the FCC to examine methods of increasing the accessibility of emergency information. The President signed the bill today, October 8, 2010.

The Act is designed to update the Communications Act to account for the many new technologies available in today’s marketplace and to assure that they are accessible to persons with hearing or vision impairment. The Act outlines a decade-long timetable for the submission of various reports by a new advisory committee to the FCC, and then by the FCC to Congress, and the implementation of further regulations based on the findings of those reports. When fully implemented, the Act will require that specific amounts of digital television programming contain video descriptions, that certain video programming distributed via the Internet contain closed captions, and that consumer electronics devices contain features to promote accessibility and be hearing aid compatible. We have summarized the Act’s requirements in three phases below.

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After we published our Advisory reminding licensees of the deadline to electronically file the Quarterly Children’s Television Programming Report on FCC Form 398 for the Third Quarter of 2010, the FCC disclosed that it has modified its electronic filing system to require the entry of a Federal Registration Number (“FRN”) and password as the final step before the report can be filed. The FCC issued no advance public notice of this requirement, but instead placed the following notice on its webpage dedicated to the Children’s Television Act of 1990, although NOT on the page that licensees visit to prepare and file the report itself:

To enhance the security and integrity of the KidVid database, we now require authentication with an FRN and password associated with the broadcast facility for each Form 398 filing. After you have completed Form 398, you will be prompted to enter this information. You must enter your FRN and password to complete the form. If you have forgotten your FRN password, please contact the CORES helpdesk at 877-480-3201.

Because of the potential for surprises associated with the implementation of this new requirement, we recommend that, if possible, licensees complete their Form 398 filings in advance of the filing deadline. The filing deadline for this quarter falls on Tuesday, October 12, 2010 due to the Columbus Day holiday, so Friday, October 8, 2010 is a good target date for completing the Form 398. This will allow additional time for station personnel to address any issues that arise, such as determining which FRN and password combination(s) will be accepted by the filing system, and, if necessary, to locate the correct information.

Should you have any questions regarding this Alert or the FCC’s children’s programming requirements in general, please contact any of the attorneys in the Communications practice section.