Earlier this week, House Energy and Commerce Committee Chairman Fred Upton (R-MI) and Communications and Technology Subcommittee Chairman Greg Walden (R-OR) announced plans to hold hearings and commission white papers next year in preparation for a wholesale rewrite of the Communications Act in 2015. For the media industry, a Communications Act rewrite could substantially alter business as usual. The Communications Act plays a critical role in regulation of everything from broadcast licensing requirements, to retransmission consent, to indecency. As a result, the media industry not only should closely monitor, but also plan to participate so as to inform the forthcoming rewrite.
Why Is It Necessary to Rewrite the Communications Act?
The last major revision of the Communications Act occurred in 1996 – the year that America Online announced that it would support new modems offering blazing 56 Kbps speeds and offer unlimited plans to its subscribers. This was a time before even DSL was widely accessible and when a text message was better known as a “note.” In fact, to put things in perspective, some of the most substantial changes in the 1996 Act involved competition in the markets for local and long distance phone service. Needless to say, neither the 1996 Act nor the foundation on which it rests, the Communications Act of 1934, envisioned a world where full-length video programming is consumed on laptops, tablets, and mobile phones, where an app can substitute for a set-top box, and where Facebook, Twitter, and Instagram each have more users than the number of subscribers to all major-market newspapers combined.
The current version of the Communications Act is divided into seven titles, among them: (I) FCC administration and powers; (II) telecommunications services; (III) radio services, including broadcast, cellular, and other wireless services; and (VI) cable television. Whereas regulation of video content originally fell only under Title III, today it could just as easily fall under Title II or Title VI. And the laws—as well as the FCC’s ability to regulate—might vary based on the method of delivery. Thus, one of the key goals of any Communications Act rewrite is to develop consistent regulation of the same activity without regard to the distribution platform.
Who Will Benefit From a Communications Act Rewrite?
Without knowing how the final legislation will turn out, it is difficult to predict who will benefit from a Communications Act rewrite.
What we do know is that by announcing plans for an overhaul now, Congressmen Upton and Walden have removed some of the pressure to address impending contentious issues such as retransmission consent and online video rights. The Satellite Television Extension and Localism Act (STELA) is set to sunset on December 31, 2014. STELA includes authorization for DBS providers to import distant broadcast signals in certain circumstances and extends statutory copyright licensing to DBS under “local-into-local.” Several interested parties have urged Congress to address other video programming issues as part of any STELA reauthorization, with retransmission consent and digital video rights at the top of the list. In a speech the day after announcing the plans for a Communications Act rewrite, however, Chairman Walden called STELA reauthorization “the wrong place to make changes to the legal regime” governing the video marketplace.
What Issues Could Come Into Play in a Communications Act Rewrite?
A rewrite could involve numerous issues of interest to media companies:
- Regulation of the Internet: Current regulation of the Internet stems from both the FCC’s jurisdiction over more traditional communications systems (such as the transmission systems over which the Internet is delivered) as well as the FCC’s ancillary jurisdiction. But, as we have seen in the case of network neutrality, this patchwork approach has led to controversy and repeated litigation. Congress can instill clarity into the FCC’s regulatory authority through revisions to the Communications Act that define the agency’s power (or that of any other agency) in this area.
- Digital Video Issues: The rapidly changing digital video marketplace also is likely to get serious consideration. Several of the key issues – program access for online video distributors, carriage of broadcast stations online, and so-called “personal antenna systems” (i.e., Aereo) are teed up in outgoing Senate Commerce Committee Chairman Jay Rockefeller’s draft online video proposal. Although the Rockefeller bill almost certainly will not advance as a s
tandalone piece of legislation, it could serve as a starting point for any discussion of digital video issues.
- Retransmission Consent: Retransmission consent, network non-duplication, and syndicated exclusivity are likely to attract heavy lobbying efforts from the broadcast and MVPD communities. Already, we have seen these issues come to the forefront of several Congressional hearings this year. Not only does the prospect of a Communications Act rewrite reduce the likelihood that Congress will address these issues during STELA reauthorization, but it also all but ensures that the FCC will not act on its pending Notice of Proposed Rulemaking concerning the retrans regime.
- Broadcast Regulation: The primary justification for broadcast regulation stems from the scarcity rationale—as the Supreme Court said in its Red Lion case, “because of the scarcity of radio frequencies, the Government is permitted to put restraints on licensees in favor of others whose views should be expressed on this unique medium.” But many, including current Supreme Court Justices Thomas and Kagan, have questioned whether this public interest rationale extends to a world where anyone can upload a video to YouTube and generate millions of hits. Thus, Congress will need to consider whether to continue imposing public interest obligations upon broadcasters (including indecency regulation, ownership restrictions, EEO, children’s programming requirements, etc.) that do not apply to other methods of content distribution and, if so, what benefits broadcasters should receive in return.
Of course, any plan to rewrite the Communications Act is just that – a plan. And although FCC Commissioner Ajit Pai, the National Association of Broadcasters, and the National Cable and Telecommunications Association have expressed some support for a rewrite, the devil will be in the details. After a year that may prove to be Congress’ least productive ever, a healthy dose of skepticism about lawmakers’ ability to rewrite such a major piece of legislation is likely warranted. But, given the seemingly growing consensus on Capitol Hill that the existing law is outdated, we will keep an eye out and keep you apprised over the coming year.