U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

87–023 PDF 2014

INNOVATION VERSUS REGULATION IN THE VIDEO 

MARKETPLACE 

HEARING 

BEFORE THE

SUBCOMMITTEE ON COMMUNICATIONS AND 

TECHNOLOGY 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

FIRST SESSION 

SEPTEMBER 11, 2013 

Serial No. 113–81 

( 

Printed for the use of the Committee on Energy and Commerce 

energycommerce.house.gov 

COMMITTEE ON ENERGY AND COMMERCE 

FRED UPTON, Michigan 

Chairman 

RALPH M. HALL, Texas 

JOE BARTON, Texas 

Chairman Emeritus 

ED WHITFIELD, Kentucky 

JOHN SHIMKUS, Illinois 

JOSEPH R. PITTS, Pennsylvania 

GREG WALDEN, Oregon 

LEE TERRY, Nebraska 

MIKE ROGERS, Michigan 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

Vice Chairman 

PHIL GINGREY, Georgia 

STEVE SCALISE, Louisiana 

ROBERT E. LATTA, Ohio 

CATHY MCMORRIS RODGERS, Washington 

GREGG HARPER, Mississippi 

LEONARD LANCE, New Jersey 

BILL CASSIDY, Louisiana 

BRETT GUTHRIE, Kentucky 

PETE OLSON, Texas 

DAVID B. MCKINLEY, West Virginia 

CORY GARDNER, Colorado 

MIKE POMPEO, Kansas 

ADAM KINZINGER, Illinois 

H. MORGAN GRIFFITH, Virginia 

GUS M. BILIRAKIS, Florida 

BILL JOHNSON, Ohio 

BILLY LONG, Missouri 

RENEE L. ELLMERS, North Carolina 

HENRY A. WAXMAN, California 

Ranking Member 

JOHN D. DINGELL, Michigan 

FRANK PALLONE, JR., New Jersey 

BOBBY L. RUSH, Illinois 

ANNA G. ESHOO, California 

ELIOT L. ENGEL, New York 

GENE GREEN, Texas 

DIANA DEGETTE, Colorado 

LOIS CAPPS, California 

MICHAEL F. DOYLE, Pennsylvania 

JANICE D. SCHAKOWSKY, Illinois 

JIM MATHESON, Utah 

G.K. BUTTERFIELD, North Carolina 

JOHN BARROW, Georgia 

DORIS O. MATSUI, California 

DONNA M. CHRISTENSEN, Virgin Islands 

KATHY CASTOR, Florida 

JOHN P. SARBANES, Maryland 

JERRY MCNERNEY, California 

BRUCE L. BRALEY, Iowa 

PETER WELCH, Vermont 

BEN RAY LUJAN, New Mexico 

PAUL TONKO, New York 

SUBCOMMITTEE ON COMMUNICATIONS AND TECHNOLOGY

GREG WALDEN, Oregon 

Chairman 

ROBERT E. LATTA, Ohio 

Vice Chairman 

JOHN SHIMKUS, Illinois 

LEE TERRY, Nebraska 

MIKE ROGERS, Michigan 

MARSHA BLACKBURN, Tennessee 

STEVE SCALISE, Louisiana 

LEONARD LANCE, New Jersey 

BRETT GUTHRIE, Kentucky 

CORY GARDNER, Colorado 

MIKE POMPEO, Kansas 

ADAM KINZINGER, Illinois 

BILLY LONG, Missouri 

RENEE L. ELLMERS, North Carolina 

JOE BARTON, Texas 

FRED UPTON, Michigan (ex officio) 

ANNA G. ESHOO, California 

Ranking Member 

MICHAEL F. DOYLE, Pennsylvania 

DORIS O. MATSUI, California 

BRUCE L. BRALEY, Iowa 

PETER WELCH, Vermont 

BEN RAY LUJAN, New Mexico 

JOHN D. DINGELL, Michigan 

FRANK PALLONE, JR., New Jersey 

BOBBY L. RUSH, Illinois 

DIANA DEGETTE, Colorado 

JIM MATHESON, Utah 

HENRY A. WAXMAN, California (ex officio) 

(II) 

(III) 

C O N T E N T S 

Page 

Hon. Greg Walden, a Representative in Congress from the State of Oregon, 

opening statement ................................................................................................ 1 

Prepared statement .......................................................................................... 3 

Hon. Robert E. Latta, a Representative in Congress from the State of Ohio, 

opening statement ................................................................................................ 4 

Hon. Anna G. Eshoo, a Representative in Congress from the State of California, opening statement .................................................................................... 4 

Hon. John Dingell, a Representative in Congress from the State of Michigan, 

prepared statement .............................................................................................. 10 

Hon. Marsha Blackburn, a Representative in Congress from the State of 

Tennessee, opening statement ............................................................................ 15 

Hon. Joe Barton, a Representative in Congress from the State of Texas, 

opening statement ................................................................................................ 15 

Hon. Steve Scalise, a Representative in Congress from the State of Louisiana, 

opening statement ................................................................................................ 16 

Hon. Peter Welch, a Representative in Congress from the State of Vermont, 

opening statement ................................................................................................ 16 

Hon. Ben Ray Lujan, a Representative in Congress from the State of New 

Mexico, opening statement .................................................................................. 17 

Hon. Fred Upton, a Representative in Congress from the State of Michigan, 

prepared statement .............................................................................................. 119 

Hon. Leonard Lance, a Representative in Congress from the State of New 

Jersey, prepared statement ................................................................................. 121 

WITNESSES

Sandra M. Aistars, Executive Director, Copyright Alliance ................................ 18 

Prepared statement .......................................................................................... 21 

Answers to submitted questions ...................................................................... 122 

R. Stanton Dodge, Executive Vice President and General Counsel, Dish Network, LLC ............................................................................................................. 31 

Prepared statement .......................................................................................... 33 

Answers to submitted questions ...................................................................... 129 

Edward L. Munson, Jr., Vice President and General Manager, KPHO–TV, 

on Behalf of the National Association of Broadcasters ..................................... 42 

Prepared statement .......................................................................................... 44 

Answers to submitted questions ...................................................................... 132 

Dave Rozzelle, Executive Vice President, Suddenlink Communications ............ 53 

Prepared statement .......................................................................................... 55 

Answers to submitted questions ...................................................................... 172 

James Campbell, Vice President of Regulatory and Legislative Affairs, Midwest Region, CenturyLink, Inc. .......................................................................... 66 

Prepared statement .......................................................................................... 68 

Answers to submitted questions ...................................................................... 179 

John Bergmayer, Senior Staff Attorney, Public Knowledge ................................ 77 

Prepared statement .......................................................................................... 79 

Answers to submitted questions ...................................................................... 182 

SUBMITTED MATERIAL

Letter of September 10, 2013, from Matthew Zinn, Senior Vice President, 

General Counsel and Chief Privacy Officer, TiVo, Inc., to Mr. Walden 

and Ms. Eshoo, submitted by Ms. Eshoo ............................................................ 8 

Report, undated, of the Motion Picture Association of America, submitted 

by Mr. Walden ...................................................................................................... 12 

Page

IV 

Advertisement, undated, of the American Television Alliance, submitted by 

Mrs. Blackburn ..................................................................................................... 102 

(1) 

INNOVATION VERSUS REGULATION IN THE 

VIDEO MARKETPLACE 

WEDNESDAY, SEPTEMBER 11, 2013 

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON COMMUNICATIONS AND TECHNOLOGY, COMMITTEE ON ENERGY AND COMMERCE, Washington, DC. 

The subcommittee met, pursuant to call, at 2:04 p.m., in room 

2123 of the Rayburn House Office Building, Hon. Greg Walden 

(chairman of the subcommittee) presiding. 

Members present: Representatives Walden, Latta, Shimkus, 

Terry, Blackburn, Scalise, Lance, Guthrie, Gardner, Kinzinger, 

Long, Ellmers, Barton, Eshoo, Doyle, Welch, Lujan, Dingell, 

Pallone, and Matheson. 

Staff present: Gary Andres, Staff Director; Ray Baum, Senior 

Policy Advisor/Director of Coalitions; Sean Bonyun, Communications Director; Matt Bravo, Professional Staff Member; Andy 

Duberstein, Deputy Press Secretary; Kelsey Guyselman, Counsel, 

Communications and Technology; Grace Koh, Counsel, Communications and Technology; Andrew Powaleny, Deputy Press Secretary; 

David Redl, Counsel, Communications and Technology; Charlotte 

Savercool, Legislative Coordinator; Tom Wilbur, Digital Media Advisor; Roger Sherman, Democratic Chief Counsel; Shawn Chang, 

Democratic Senior Counsel; Margaret McCarthy, Democratic Professional Staff Member; Kara van Stralen, Democratic Policy Analyst; and Patrick Donovan, Democratic FCC Detail. 

Mr. WALDEN. We will call the subcommittee to order in just a 

moment if we could take our seats and close the doors. They are 

expecting votes on the House Floor in about 10 or 15 minutes, so 

we are going to call the subcommittee to order and at least begin 

our opening statements so that hopefully we can get through as 

much of that as possible so that as soon as we get back from the 

votes, which will probably take, I don’t know, 45 minutes, an hour, 

then we can get to you all, who we invited here and appreciate 

your attendance. It is always most helpful. 

OPENING STATEMENT OF HON. GREG WALDEN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF OREGON 

So I want to thank our witnesses for joining us and sharing their 

experience on innovative in the video marketplace. 

You know, the Telecommunications Act in 1996 is old enough to 

get a driver’s license, the Cable Act is old enough to drink alcohol 

legally, and the Communications Act of 1934 has been eligible for 

Social Security for a long time. While age is an asset to a fine WilVerDate Aug 31 2005 13:21 Apr 16, 2014 Jkt 037690 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 F:\113-81~1\113-81~1 WAYNE
2 

lamette Valley pinot noir, in a technology statute, age can portend 

irrelevancy. In the on-demand world of the internet and mobility, 

the statutes that govern the video marketplace are blissfully ignorant of the changes that have taken place around them. 

Today, we will examine the legal regimes governing how video 

content is regulated from creation through distribution and finally 

to consumption, asking one simple question: in a world where video 

technology is rapidly changing, are the laws keeping pace and are 

they fostering a free market? 

The video marketplace has changed significantly in the last 40 

years. From the network news era of the 1970s to the dominance 

of cable in the ’80s and the rise of the direct broadcast satellite industry in the ’90s, each decade has seen a new video distribution 

competitor and a new attempt by Congress to manage the market. 

Today, as a result of competition, at least 35 percent of American 

households have a choice of subscribing to either of the two satellite DBS providers, their local cable company, or the local telephone company for video services. Broadband is nearly ubiquitous, 

allowing consumers to access Netflix, Amazon, and Hulu. Tablet 

and smartphone apps produced by content creators allow baseball 

enthusiasts to watch live games or movie fanatics to stream the 

newest releases. And there is more innovation coming. New entrants like Intel and Google and Sony expect not only to enter the 

video distribution marketplace but to transform the way people 

watch television. 

In this diverse and evolving marketplace, one thing remains true: 

you should be compensated for your content, network investments, 

or intellectual property. If you lay fiber, you should receive fair 

compensation in the marketplace for your investment. If you create 

content—movies, TV shows, or apps—you should receive fair compensation in the marketplace. And if you create smartphones, tablets, dongles, screens, or the software that runs on them, you 

should receive fair compensation in the marketplace. 

Given these technological changes and the multitude of options 

available to American consumers, our laws should reflect the operation of the free market in a competitive environment. Instead, we 

have a satellite law that finds its origins in ensuring access to content for a fledgling industry, a cable law that was passed when 

cable controlled over 90 percent of the video market, and broadcast 

rules that ignore the rise of alternatives to over-the-air reception. 

We can and should be engaged in a lively discussion—and I 

think we will be based on the testimony you all have—of how to 

unshackle the free market, how to remove the government from the 

business of manipulating the marketplace. 

These are complex issues, and they are of great importance to 

consumers and to the industries, and everything should be on the 

table for discussion. We will hear from representatives of the content community, the major distribution networks, and from a representative from the public interest perspective to get a clearer picture of how our laws impact the video distribution business, affect 

consumers and how they could be changed to better reflect marketplace realities. 

I want to thank our witnesses for being here. We are looking forward to hearing ideas on how we can improve the video marketVerDate Aug 31 2005 13:21 Apr 16, 2014 Jkt 037690 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 F:\113-81~1\113-81~1 WAYNE
3 

place by getting government more out of the way. This early stage 

of the process is a good time for us to take a larger look at the 

video marketplace; it takes time and process to develop good policy 

and even more to build consensus. Yet the deadline for reauthorizing STELA looms large, and we must continue to make progress 

there. 

With that in mind, I expect to circulate a discussion draft on 

these issues no later than the first quarter of next year. I am looking forward to continuing to engage with my colleagues and the 

many industries represented here today on these important issues. 

[The prepared statement of Mr. Walden follows:] 

PREPARED STATEMENT OF HON. GREG WALDEN

I thank our witnesses for joining us and sharing their expertise on the innovative 

video marketplace. The Telecommunications Act of 1996 is old enough to get its 

driver’s license, the Cable Act is old enough to drink alcohol legally, and the Communications Act of 1934 has long been eligible for Social Security. While age is an 

asset to a fine Willamette Valley Pinot Noir, in a technology statute age can portend 

irrelevancy. In the ondemand world of the Internet and mobility, the statutes that 

govern the video marketplace are blissfully ignorant of the changes that have taken 

place around them. Today, we’ll examine the legal regimes governing how video content is regulated from creation through distribution and finally to consumption asking one simple question: in a world where video technology is rapidly changing, are 

the laws keeping pace and fostering a free market? 

The video marketplace has changed significantly in the last 40 years. From the 

network news era in the 1970s, to the dominance of cable in the 1980s and the rise 

of the direct broadcast satellite industry in the 1990s, each decade has seen a new 

video distribution competitor and a new attempt by Congress to manage the market. 

Today, as a result of competition at least 35 percent of American households have 

a choice of subscribing to either of the two satellite DBS providers, their local cable 

company, or the local telephone company for video services. Broadband is nearly 

ubiquitous, allowing consumers to access Netflix, Amazon, and Hulu. Tablet and 

smartphone apps produced by content creators allow baseball enthusiasts to watch 

live games or movie fanatics to stream the newest releases. And there is more innovation coming. New entrants like Intel, Google, and Sony expect not only to enter 

the video distribution market but to transform the way people watch TV. 

In this diverse and evolving marketplace, one thing remains true: you should be 

compensated for your content, network investments or intellectual property. If you 

lay fiber, you should receive fair compensation in the marketplace for your investment. If you create content—movies, TV shows, or apps—you should receive fair 

compensation in the marketplace. If you create smartphones, tablets, dongles, 

screens, or the software that runs on them, you should receive fair compensation 

in the marketplace. 

Given these technological changes and the multitude of options available to American consumers, our laws should reflect the operation of the free market in a competitive environment. Instead, we have a satellite law that finds its origins in ensuring access to content for a fledgling industry, a cable law that was passed when 

cable controlled over 90 percent of the video market, and broadcast rules that ignore 

the rise of alternatives to over-the-air reception. We can and should be engaged in 

a lively discussion of how to unshackle the free market and remove the government 

from the business of manipulating the video marketplace. 

These are complex issues of great importance to consumers and industry and everything should be on the table for discussion. We’ll hear from representatives of 

the content community, the major distribution networks, and from a representative 

from the public interest perspective to get a clearer picture of how our laws impact 

the video distribution business, affect consumers and how they could be changed to 

better reflect marketplace realities. I want to thank our witnesses for being here; 

we are looking forward to hearing ideas on how we can improve the video marketplace by getting the government out of the way. 

This early stage of the process is a good time for us to take a larger look at the 

video marketplace; it takes time and process to develop good policy and even more 

to build consensus. Yet, the deadline for reauthorizing STELA looms large, and we 

must continue to make progress. With that in mind, I expect to circulate a discussion draft on these issues no later than the first quarter of next year. I am looking 

4 

forward to continuing to engage with my colleagues and the many industries represented here today on these important issues. 

Mr. WALDEN. And with that, I would yield to the vice chair of 

the committee, Mr. Latta. 

OPENING STATEMENT OF HON. ROBERT E. LATTA, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF OHIO 

Mr. LATTA. Well, thank you, Mr. Chairman. And I also want to 

thank our distinguished panel of witnesses for being with us to testify today. And today offers us the opportunity to continue a 

thoughtful and productive policy process by examining an important issue that affects all of our constituents. 

The video marketplace continues to evolve faster than most consumers, let alone government, can keep up with. However, many 

of the existing provisions in the Communications Act either no 

longer apply to the existing marketplace or are in need of serious 

updating. I look forward to a thorough discussion among our subcommittee members and the stakeholders as we grapple with the 

issues in the ever-evolving video marketplace, as well as the most 

appropriate legislative vehicles to move any proposed changes. 

I look forward to hearing from you all today, and with that, Mr. 

Chairman, I yield back. 

Mr. WALDEN. I thank the gentleman. I now turn to my friend 

and colleague from California, Ms. Eshoo, for an opening statement. 

OPENING STATEMENT OF HON. ANNA G. ESHOO, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA 

Ms. ESHOO. Thank you, Mr. Chairman. And good afternoon to 

you, all the members of our subcommittee, and most especially welcome to all of our witnesses. Thank you for being here today to 

help enlighten us along this path. 

You know, despite the title of today’s hearing, innovation and 

regulation, I don’t believe, have to be in conflict. I don’t think it is 

an either/or. I think we have to have a very adult discussion about 

where we are today, where we need to go, understanding that what 

was written in the past served us well for a long time. But obviously, we need an update. 

A vibrant video marketplace is one with competition, consumer 

choice, and basic protections to ensure the consumers have access 

to a competitive set-top box marketplace and aren’t caught in the 

middle of a retransmission consent dispute they have no control 

over. 

Time Warner Cable and CBS reached a resolution—we all know 

this, thank God—earlier this month that returned programming to 

more than 3 million consumers after 32 days of blackout. I applaud 

both companies for reaching an agreement, but unfortunately, this 

is not the first time such a dispute has occurred and it certainly, 

I don’t think, will be the last. Since 2005, there have been 70—that 

is 7–0—disputes involving 392 stations in 297 markets for a total 

of 3,853 days of retransmission blackouts. Now, if someone out 

there wants to start defending this, I think it would be really interesting because I just don’t think that it is defensible. 

5 

Some will say that legislating in this area is akin to picking sides 

or interferes with a retransmission consent mechanism that is 

working just fine. I don’t think it is working just fine; I think it 

is broken myself. The reality is is that the data paints a very different picture. The discussion draft I released earlier this week is 

not a full rewrite of the law but instead represents a series of ideas 

intended to spur constructive and actionable debate on ways to improve the video marketplace for video content creators, pay-TV providers, and most importantly, consumers. They are picking up the 

tab. They are the customers. It is in everybody’s interest I think. 

Specifically, my discussion draft would give the FCC explicit statutory authority to prevent broadcast television blackouts; ensure 

greater choice in cable programming by allowing consumers to decide whether or not to subscribe to the broadcast stations electing 

retransmission consent; prohibit a television broadcast station engaging in a retransmission consent negotiation from making their 

own or affiliated cable programming a condition for receiving 

broadcast programming; instruct the FCC to determine whether 

the blocking of a television broadcast station owned or affiliated online content during a retransmission consent negotiation constitutes a failure to negotiate in good faith; and five, require the 

FCC to study the programming costs for regional and national 

sports networks in the top 20 regional sports market. 

Now, this discussion draft doesn’t purport to have all the answers, but as we embark on our third STELA-related hearing this 

year, I think we need to have a substantive dialogue about potential solutions to a constantly evolving video marketplace. 

I want to thank the witnesses in advance for the testimony that 

you are going to give and for the feedback I hope that you will give 

this discussion draft that I just raised. 

And I would also like unanimous consent, Mr. Chairman, to 

place into the record a letter to you and to myself from TiVo related to this hearing and their views on some of the issues that 

they feel strongly about. And I don’t see—— 

Mr. WALDEN. Without objection. 

[The information follows:] 

6 


87023.001

September 10,2013 

The Honorable Greg Walden 

Chairman 

Subcommittee on Communications and Technology 

2182 Raybum Building 

Washington, DC 20515 

The Honorable Anna Eshoo 

Ranking Member 

Subcommittee on Communications and Technology 

241 Cannon Building 

Washington, DC 20515 

Dear Chairman Walden and Ranking Member Eshoo: 

I understand the Subcommittee on Communications and Technology has scheduled a hearing for 

September 11, 2013 to hear from witnesses on innovation versus regulation in the video marketplace. 

Afthough TiVo has not been invited to testify at the hearing, we are a leading innovator in the video 

device space and are very concemed that the hearing presents Members with a false choice: either 

regulation or innovation. I think it is important for us to share our views wtth you on the crttical role that 

the FCC has played to facilitate a competitive set-top box industry as directed by you and your 

Congressional colleagues in the 1996 Telecommunications Act, since these efforts are currently under 

attack. 

In 1996 Congresswoman Eshoo, along with Congressmen Ed Markey (D-MA) and Tom Bliley (R-VA), 

proposed language that would do for video devices what the FCC's Carterfone decision did for 

telephones; give consumers, who do not have much choice among network providers, more choice in 

selecting the devices they use to connect to the network. 

To implement this section, Section 629 of the 1996 Act, the FCC urged cable operators to reach 

agreement with the consumer electronics industry. Cable operators came forward wah a standard 

CableCARD interface for national access by competttive entrant devices but did not promise to rely on 

this technology in their own devices. The FCC accepted this offer provided that cable operators (1) 

make CableCARDs available by July 1, 2000, and (2) rely on the CableCARD interface in their own 

newly fielded devices by January 1, 2005. The FCC determined that only by requiring 'common 

reliance" by retail devices and operator-leased devices on the same security technology would retail 

devices receive the support necessary to attain the goals of Section 629. The first CableCARD-reliant 

products - televisions with CabieCARD slots - came to market in 2003 - 2004 but in the absence of 

common reliance received poor or nonexistent support from cable operators (documented in FCC and 

court decisions). That lack of support finally led the FCC to implement common reliance (also known 

as the "integration ban") as of July 1, 2007. By this time, while CableCARD televisions were 

disappearing from the market due to lack of cable operator support, the emergence of High Definition 

• Street • 

• 
7 


87023.002

Page 2 

Television and the impending digital transition encouraged TNo and others to begin selling HD 

CableCARD DVRs. 

However, retail CableCARD devices were still being disadvantaged by cable operators. This prompted 

the FCC in 2010 to strengthen its CableCARD regulations to deal directly with cable operators' evasion 

of CableCARD requirements, by providing for consumer self-installation of CableCARDs, access to 

switched digital programming, and ending economic discrimination against competitive products. While 

CableCARD success has been hobbled by the cable industry's lack of support and refusal to allow 

retail devices to have access to two-way services like Video On Demand, CableCARD is a fully 

realized solution being used by over 600,000 consumers and growing. 

In the name of eliminating unnecessary and burdensome regulation, the cable industry is proposing 

now to eliminate the FCC's integration ban. They are circulating legislation that would end common 

reliance and allow operators to lock out competHive devices, by - as they did before the "integration 

ban" became effective - offering superior access to programming and functions to their own devices, 

and inferior and faulty access to competHive devices. This can include not only renewed discrimination 

against existing CableCARD-reliant devices, but also unequal implementation of new, IP-based 

technologies. The proposed legislation would remove from the FCC a critical tool to redress such 

discrimination against competition and implement a successor solution to CableCARD. 

Until common reliance became the rule and cable operators began relying on CableCARDs 

themselves, the technology defied Moore's Law - it remained generationally frozen and needlessly 

expensive, while similar technologies became cheaper, faster, and more reliable. Only common 

reliance has brought the cost down and brought a moderate level of support for retail devices. An end 

to common reliance would freeze this progress on CableCARDs, allow cable operators to exclude 

CableCARDs from future product plans, and eliminate any incentive for the industry to help develop a 

successor solution for retail devices. 

Despite the challenges, TNo has been able to provide consumers with a choice of set-top boxes rather 

than having to rely on an operator-supplied box. As a company whose business depends on providing 

consumers with superior set-top boxes than their cable-provided options, TNo has furthered the goals 

of Section 629 by being a leeder in innovation in video devices. For example, TNo was the first 

company to introduce the Digital Video Recorder as well as the first to make services like Amazon 

video rentals available on the television. TNo also pioneered the ability to transfer cable television 

shows from a DVR to computers and mobile devices, and the integration of traditional television and 

over-the-top content into a seamless integrated user interface. TNo's latest set-top box, called 

Roamio, has been heralded as "the Holy Grail of Set-Top Boxes" (Wall Street Joumal), "the best TV 

viewing experience that money can buy" (VentureBeat), "the ultimate cable TV viewing experience" 

(Mashable) and "a big step up for cable TV subscribers" (TechHive). 

Outside of video device industry, the explosion in innovation around communications devices is 

staggering. Today consumers can choose from a vast array of mobile and computing devices: smart 

phones, computers, lap tops, tablets, e-book readers, netbooks and other devices that easily connect 

to the wireless communications networks and the internet. This increased competition has led to lower 

prices, innovation and, lots of choice which has benefilted consumers. 

Admittedly, set-top boxes represent an exception to this otherwise thriving marketplace of devices, 

because of the impediments discussed above. Still, the benefits of retail competition and greater 

consumer choice are clear. Congress should not undermine the limited choice consumers have today 

and remove tools the FCC has to increase consumer choice in the future until the consumer choice 

envisioned by Section 629 is fully realized. 

Thank you for your continued support of consumers and innovative technology companies. 
8 


87023.003

Page 3 

Sincerely, 

Matthew Zinn 

Senior Vice President, General Counsel and 

Chief Privacy Officer 

TiVo Inc. 

2160 Gold Street 

San Jose, CA 95002 
9 

Ms. ESHOO. I would like to place Mr. Dingell’s statement in the 

record. I ask unanimous consent. 

Mr. WALDEN. Without objection. 

[The prepared statement of Mr. Dingell follows:] 

10 


87023.004

Statement of 

Representative John D. Dingell 

Committee on Energy and Commerce 

Subcommittee on Communications and Technology 

Hearing on "Innovation Versus Regulation in the Video Marketplace" 

September 11, 2013 

Thank you, Mr. Chairman. 

To the consternation of our witnesses, I'm sure, I have no "yes" or "no" questions to ask this 

afternoon. Instead, I'd like to use my time to make a few observations. 

First, I note that this is the third "future of video" hearing the Subcommittee has held this 

Congress. I applaud the Chairman's oversight efforts in this matter but remind my colleagues 

that we have to do some legislating as well. The Satellite Television Extension and Localism 

Act (STELA) must be reauthorized by the end of next year, and I urge the Chairman to proceed 

with that important work without delay. Previous reauthorizations have required time and 

careful consideration, and we would do well to consider legislative text sooner rather than later. 

To that end, I commend the Chairman for his announcement that the Committee will soon 

consider a bill. 

Second, if the Subcommittee chooses to move forward with legislation to overhaul regulation of 

the video marketplace, I suggest that it do so very cautiously. Regulation, perhaps regarded by 

some as government intervention, can sometimes playa constructive role in prompting private 

sector innovation and promoting consumer choice. The trick, however, is ensuring that such 

regulation doesn't incent bad behavior or allow regulated entities to game the system. I am 

concerned about reports I have read in the press which state some parties have used the hope of 

government intervention to accomplish this. If that be so, consumer choice, competition, and 

innovation may suffer. With all of this in mind, I remain ready, willing, and able to work with 

my colleagues to write a bill that fairly balances the needs of consumers, content producers, and 

video distributors. 

Thank you for your courtesy, Mr. Chairman. I yield back the balance of my time. 
11 

Ms. ESHOO. And I have 17 seconds left if any of my colleagues 

would like to use it. All right. With that, I will yield back the balance my time. 

Mr. WALDEN. The gentlelady yields back. And I ask unanimous 

consent to enter into the record a graphic and statement from the 

Motion Picture Association of America detailing the economic impact of video content and the rise in online options for consumers. 

Without objection. 

[The information follows:] 

12 


87023.005

THE RISE OF HIGH-QUALITY ONLINE SERVICES FOR FUll-LENGTH FILM AND TELEVISION 

Today's connected consumers demahd tont~r\t everywhere: 

at the theater, on TV, and using r:~mputers, tablets, ~m~ J!lobfle 

devices. The film and teleVision community is constantly 

innovating to deliver the wo~ld's best content where and how 

our audience wants it-- thanks io part to copyright laws that 

incentlvlze the development of high-quality viewing platforms. 

Thefe are n6w over,~,OO uniqu~ online services around the 

world ~envering full length films and TV shows, 95 qf which 

are- avaHabftHnJhe ~l1ited States, MPAA's:Wbereto~a,tch,Org 

provides a listjng of these pJatfr;trms, and.makes it easy to 

MOTION PICTURE ASSOCIATION OF AMERICA ~ noltPro ASSOOIAU OF ItA,IHIt WWWMPAAQRG' WWWWHERETOWATCHORG' "MPAA ~ MO TURE ON AMER 
13 


87023.006

National GDP Revised to Reflect The 

Economic Activity Generated By Film and 

Television 

by Senator Chris Dodd 07/31/2013 09:03 (UTC-08:00) Pacific Time (US & Canada) 

This morning, the Department of Commerce said that the United States' Gross Domestic Product 

(GDP) is bigger than we thought -about 3% bigger. And we have R&D and a wide range of 

creative works including movies, like Disney's Iron Man, and television shows, like HBO's 

Game o/Thrones, to thank for it. 

Starting today, the Bureau of Economic Analysis (BEA) is changing the method it uses to 

calculate GDP to better reflect the economic contributions that come from businesses investing 

in research and development and the creation of copyrighted works like films and television 

series. Put simply, this means that the national GDP now more accurately reflects the economic 

activity generated by creative works. 

Originally announced back in March, this "comprehensive review" is among those carried out by 

the Bureau every five years or so in order to better quantify the GDP, and the latest change 

reflects the realities of an economy that is dependent on people investing in ideas and developing 

new intellectual property, along with tangible goods. 

The BEA has revised the calculations for the GDP all the way back to 1929, showing that it has 

actually been about 3% higher than previously reported. According to these new numbers, 

research and development and entertainment added $471 billion to the revised $16.2 trillion 

overall economy through the end of2012. The investment in films, television shows, literature 

and music produced by the entertainment industry was approximately $74 billion in 2012, and 

$75.3 billion in Q2 of2013. 

For years, the BEA treated the money that was spent creating new entertainment works as 

current expenses -- or costs of business. Therefore the film and television industry was captured 
14 


87023.007

in the GDP only downstream based on revenue generated by film and television products, and 

did not include the impact on the economy based on their investment. 

The change reflects that in economic terms, film and television works are an intangible asset, not 

an expense. Long after they're first developed, these creations continue to retain their value and 

deliver residual benefits. Films and TV shows, for instance, are licensed and sold to different 

markets for years - even decades - after their original release. It goes without saying that when 

productions decide to film a movie or television show in a local community, they invest a great 

deal of money there when they create production facilities, employ local workers as members of 

the cast and crew, and rely on local small businesses over the course of production - now the 

impact of that production investment is being reflected in the national economic calculations as 

well. 

These artistic originals will be getting the recognition they deserve as long term investments that 

contribute to the strength of the U.S. economy. Today, we live in a world and in a country where 

researchers, technology developers, and creative artists are vital to the economy. While these 

changes in BEA's formula will not change the economic growth the nation has experienced, they 

will give us a much more accurate picture of the world we live in today. And they will more 

accurately reflect the important role that the American film and television industry has, and will 

continue to play, in strengthening our nation's economy. 

This piece was originally posted on HuffingtonPost.Com and can be read in its originaljormat 

here. 

Categories: Innovation, Job Production 

Tags: Bureau of Economic Analysis, Chamber of Commerce, GDP, MPAA 
15 

Mr. WALDEN. I now turn to Mrs. Blackburn, the vice chair of the 

full committee, for 5 minutes. And we have a couple other Members who would like time on that as well, if possible. 

OPENING STATEMENT OF HON. MARSHA BLACKBURN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TENNESSEE 

Mrs. BLACKBURN. That is correct. And I thank you, Mr. Chairman. I thank all of you for being here to visit with us today, and 

I kind of like the titling of this hearing, ‘‘Innovation Versus Regulation.’’ 

And I have to tell you what I hear from so many of your product 

consumers in Tennessee, my constituent, is they feel like that innovation sometimes is harder to get to because of cost and because 

of regulation, especially when you are looking at some of the archaic video regulations that are stifling them from getting the content that they would like to have access to at fair market prices. 

Innovation isn’t happening as rapidly as we would like because 

we don’t always have a free marketplace if you will in all of those 

areas. That is because the video marketplace is saddled with a 20- 

year-old law that unfairly treats competing video distributors with 

different rules. At the last video hearing, one member called the 

video marketplace a ‘‘vast web of regulations.’’ That is correct. Another colleagues said, ‘‘the video market is rapidly changing. Today, 

the government intervenes in various ways.’’ That is also correct. 

Our ranking member correctly said ‘‘much has changed since the 

’92 Cable Act.’’ Very true. And that ‘‘we have a lot of work to do 

beyond STELA,’’ which is also very true. I think you are going to 

see quite a bit of an agreement on these issues and I think the 

chairman is very wise to start these hearings and to continue 

through this process. As we look at the authorization of STELA, we 

are not waiting until we get to the end of 5 years to begin the 

work. 

So thank you and we appreciate that you are here with us. And 

at this time I yield to Mr. Barton 1 minute. 

OPENING STATEMENT OF HON. JOE BARTON, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS 

Mr. BARTON. I thank the gentlelady. I thought the chairman’s 

opening statement was excellent. I think Ms. Eshoo and Mrs. 

Blackburn have enhanced it. I do think it is time to do a complete 

review of our various telecommunications laws and regulations. By 

definition, regulation stifles innovation and I think by definition we 

can all assume that the more innovation we have in the telecommunication marketplace, the better off the country will be. So 

I hope these hearings, Mr. Chairman, lead to concrete legislative 

action in this Congress. I especially want to take a look today on 

some questions about the way retransmission consent has been 

used most recently. 

And with that, I yield to whomever I am supposed to yield to. 

Mrs. BLACKBURN. You yield back to me. 

Mr. BARTON. I yield back to you. 

Mrs. BLACKBURN. And I yield at this time a minute to Mr. 

Scalise. 

16 

OPENING STATEMENT OF HON. STEVE SCALISE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF LOUISIANA 

Mr. SCALISE. I thank the gentlelady from Tennessee for yielding. 

Mr. Chairman, I want to thank you for the process-driven approach to reviewing the decades-old video marketplace regulations, 

and I am particularly pleased to hear that you will soon circulate 

draft legislation that addresses these issues. I applaud you for successfully moving this subcommittee beyond an initial informationgathering and educational phase on these very technical and complex issues onto a strong position upon which the subcommittee 

can act in the coming months. 

I also want to commend Ranking Member Eshoo for recently putting her own reform ideas on the table with the release of the 

Video Choice Act. While I am not in agreement with every provision of her bill and have taken a different approach, I view it as 

thoughtful and am encouraged by her strong interest in tackling 

these issues. 

I think we should all keep in mind that when these current video 

laws were written, this was the modern-day version of the 

smartphone, so clearly the laws are tremendously outdated that 

deal with this important issue that we are addressing today, and 

it is time to have this modernization. 

The only way we can act in the best interest of consumers is in 

a way that prevents the government from picking winners and losers and it is when we start getting serious about a free-market solution. I am pleased that is where these hearings and conversations 

are headed, and I will look forward to continuing the close dialogue 

with industry stakeholders and my colleagues on this subcommittee. 

So again, Mr. Chairman, I thank you for the hearing and I am 

looking forward to hearing our panel. And I yield back to the 

gentlelady from Tennessee. 

Mrs. BLACKBURN. I thank the gentleman for yielding back and I 

thank him for the appropriate prop that he brought to the committee. And, Mr. Chairman, I yield back the balance of our time. 

Mr. WALDEN. I am just amazed that he uses that. Actually, with 

Scalise I am not amazed. Oh, just kidding. 

We are going to go to Mr. Welch now for 5 minutes. He is going 

to control Mr. Waxman’s time. And we have 7 minutes left before 

the vote, but 404 Members have not voted. 

OPENING STATEMENT OF HON. PETER WELCH, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF VERMONT 

Mr. WELCH. Well, thank you very much. A couple things: one, 

the comments are about the fact that the technology has so outpaced the regulation or the law. We all know that we have to make 

some significant changes and ask some basic questions. 

Mr. Chairman, thank you for introducing or you are going to introduce the draft discussion. And, Madam Ranking Member, thank 

you for putting something on the table that is going to get the discussion going. 

The concern I have is one that has been identified by everyone 

here, namely, we have got to get the law right; we have got to get 

17 

the regulations right. And right means there has got to be a lot of 

space for innovation. It means that there have to be rules of the 

road that are discernible and fair. But it also means we have to 

have a business model where the various players—the content providers, the broadcasters, distributors—can pay their bills and make 

a reasonable return. 

But my concern, too, is that we have got to look out for the consumers. It is really getting out of hand. In the past 17 years the 

cost of cable and satellite TV has increased three times the rate of 

inflation. And, you know, this is a big deal for all of the people we 

represent, especially in rural areas. And, you know, the consumers 

need their access to the content in whatever manner they get it in 

their homes. And it is a big deal for them. And you know that. But 

they have no power whatsoever to affect what the situation is or 

what they are going to be charged. 

So if there is some business model out there where executives 

can literally pay a couple hundred million dollars to somebody who 

can’t get to first base because they can pass it on to the consumers 

that all of us represent, that is not working. So having the basic 

questions here that have been put on the table, I think that really 

makes a lot of sense. 

The thing I hear from Vermonters, they are really getting 

squeezed on the cost of cable and satellite. You know, we are not 

going to have a proposal that is a panacea, but what we do have 

to do is have some approach where, as I mentioned, it is balanced 

because we have to have business models that work. We have to 

have rules and regulations that don’t stifle innovation. But at the 

end of the day, we have got to do something to give some reasonable, fair treatment to consumers who have absolutely no ability to 

affect what some of these big deals and big negotiations are. 

So I commend the leadership on our committee for putting these 

issues on the table and hope to have our committee be successful 

in doing things that restore balance with laws that are way out of 

date. 

I have some time and I would be glad to yield it to either of my 

colleagues. 

Mr. WALDEN. Mr. Lujan. 

OPENING STATEMENT OF HON. BEN RAY LUJAN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW MEXICO 

Mr. LUJAN. Mr. Chairman, thank you so much. And I also appreciate the fact that everyone has gotten together to encourage a 

broader conversation in this space. 

And I think the one thing that I have been talking about in my 

office with some of my team members, and this was a result of 

watching Monday night football, the first channel that I put it on 

was on standard definition, and there were a lot of pixels and 

blocks moving around the television. And I quickly realized that 

there was a high-definition channel that we could change to, and 

so once I moved there, everything was clear. And when I thought 

my eyes were going, I realized that they weren’t. 

But the question that I have as we talk about retransmission 

fees associated with standard definition or low definition, weak defVerDate Aug 31 2005 13:21 Apr 16, 2014 Jkt 037690 PO 00000 Frm 00021 Fmt 6633 Sfmt 6633 F:\113-81~1\113-81~1 WAYNE
18 

inition, whatever we want to call it, versus high-definition is the 

complexities associated with what is required to get that feed to 

the home to be able to use a technology, but also the rates associated with those packages. And quite honestly, if we are signing up 

for one package or another, well, why are we getting the two channels as opposed to the one? 

And so I think that this is a question that I have just from a cost 

perspective, from a spectrum utilization perspective, from a space 

perspective with where we are transforming and where we are 

going from an innovative perspective. And I would just like to pursue a little bit more and learn a little bit more. So I appreciate the 

time very much and I yield back. 

Mr. WELCH. I yield back. Thank you. 

Mr. WALDEN. Everyone has yielded back. We are going to go into 

recess now. We will return after the votes as soon as possible, and 

then we really look forward to hearing your comments, your testimony and taking our questions. 

So with that, the committee will stand in recess. 

[Recess.] 

Mr. WALDEN. I call this subcommittee hearing back to order. I 

thank you all for your patience as we had the vote on the floor. 

And I think at this point we have been through opening statements on both sides, and it is time to go to our distinguished panel 

of witnesses. 

And we will start with Sandra Aistars, the Executive Director of 

the Copyright Alliance. And I would just counsel you, pull that 

microphone pretty close, make sure the button is lit on green, and 

you should be good to go. 

STATEMENTS OF SANDRA M. AISTARS, EXECUTIVE DIRECTOR, 

COPYRIGHT ALLIANCE; R. STANTON DODGE, EXECUTIVE 

VICE PRESIDENT AND GENERAL COUNSEL, DISH NETWORK, 

LLC; EDWARD L. MUNSON, JR., VICE PRESIDENT AND GENERAL MANAGER, KPHO–TV, ON BEHALF OF THE NATIONAL 

ASSOCIATION OF BROADCASTERS; DAVE ROZZELLE, EXECUTIVE VICE PRESIDENT, SUDDENLINK COMMUNICATIONS; 

JAMES CAMPBELL, VICE PRESIDENT OF REGULATORY AND 

LEGISLATIVE AFFAIRS, MIDWEST REGION, CENTURYLINK, 

INC.; AND JOHN BERGMAYER, SENIOR STAFF ATTORNEY, 

PUBLIC KNOWLEDGE 

STATEMENT OF SANDRA M. AISTARS 

Ms. AISTARS. Great. Thank you. Chairman Walden, Ranking 

Member Eshoo, and members of the subcommittee, thank you for 

the opportunity to testify today about the exciting innovation that 

is occurring in the video marketplace. 

Innovation and the creation and distribution of video programming is happening throughout our membership and all across the 

spectrum of creators. From major motion picture companies to 

indie filmmakers, audiences have never had as many options for 

watching movies, television shows, and original web-based programs as a result. 

But creating audiovisual works with high production values is an 

expensive proposition. The work is labor- and talent-intensive and 

19 

it can carry commensurately large costs. Independent filmmakers, 

for instance, routinely spend thousands, hundreds of thousands, or 

even millions of dollars to create their works. 

One of our members, the mother-daughter filmmaker duo of Gail 

Mooney and Erin Kelly spent 3 years making a film about individuals who are making a positive difference in the world. After 6 

months of preproduction work, it took 99 days, travel to 6 continents and 17 countries, and then 30 flights, 14 vaccinations, 8 

visas, 2,900 gigabytes of storage, 150 hours of footage, and 5,000 

still image captures followed by a year of postproduction and another year of marketing and distribution to produce and distribute 

the film. And this was done as a do-it-yourself project. 

The bottom line is that all creators make big investments in 

their works and encouraging them to keep creating will require ensuring that they have flexibility in how they distribute their works. 

Happily, because creators are embracing new modes of distribution, 

audiences have more choices than ever before for viewing films and 

television programs. Services such as Netflix, Hulu, VUDU, HBO 

GO, Crackle, MUBI, Amazon, EpixHD; devices such as Apple TV 

and Roku; and technologies such as UltraViolet enable consumers 

to watch what they want when they want and where they want. 

Five years ago, video streaming was still fairly rough in terms 

of quality and reliability, but today, viewers are enjoying a growing 

number of high-definition streaming services, including scores of 

video-on-demand and TV-everywhere models delivered by cable and 

satellite, and more households than ever have access to this variety 

of programming through the internet. These developments show 

that the video marketplace is evolving daily and at an ever-increasing pace to the benefit of audiences. 

A couple of words about copyrights since I am a copyright lawyer, copyright law recognizes that ensuring appropriate rights to 

authors drives innovation and benefits society. Ensuring the authors right to determine when and how to license the distribution 

of his or her works is key to these benefits. These principles have 

been confirmed over and over again by Supreme Court decisions, 

and as Justice Sandra Day O’Connor eloquently wrote, ‘‘the Framers intended copyright itself to be the engine of free expression by 

establishing a marketable right to the use of one’s expression. 

Copyright supplies the economic incentive to create and to disseminate ideas.’’ 

Compulsory licenses are a departure from normal copyright principles. They are appropriate only in narrow circumstances to address market failure and we restrict their use to such cases because they abrogate the rights of property owners and force them 

to license their works to government-favored entities at rates sometimes set by the government. 

Economists and policy experts alike criticize compulsory licensing 

on three basic grounds: first, because the supposed cost savings 

that compulsory licenses deliver in the short-term are usually more 

than offset by the inefficiencies that they can cause over time; second, because they limit the diversity of services that would ordinarily develop via marketplace licensing; and third, because the 

rates and restrictions quickly become outdated and are difficult to 

20 

change so they are subject to legislative lock-in and result in price 

stagnation. 

Accordingly, my message to you is that, given the creative and 

compelling works and the new and innovative distribution models 

that exist today, there is no need to impose new compulsory licenses in the video marketplace or to renew STELA. 

And as a closing note, I would just like to mention positively 

some of the collaborative initiatives that are currently happening 

across industry lines to ensure that marketplace for use services is 

vibrant and safe. There are numerous efforts that are ongoing with 

internet service providers, with advertisers, with payment processors to educate consumers about the diversity of programming 

options available to them and to protect them from illegal sites and 

activities online. These efforts are just the start. We need to do 

more. But I would like to commend the efforts like the copyright 

alert system as examples of how our mutual goal to provide compelling legal services to consumers is being advanced through cooperation, and I would urge the subcommittee to take an interest 

in these efforts and encourage the success of these initiatives. 

Thank you. 

[The prepared statement of Ms. Aistars follows:] 

21 


87023.008

copyright alliance 

Testimony of Sandra M. Aistars, Executive Director, Copyright Alliance 

Before the Committee on Energy and Commerce 

Subcommittee on Communications and Technology 

Innovation Versus Regulation in the Video Marketplace 

September 11, 2013 

Chairman Walden, Ranking Member Eshoo, Members of the Subcommittee, thank 

you for the opportunity to testifY today about the exciting innovation occurring in the video 

marketplace. 

The Copyright Alliance is a non-profit, public interest and educational organization 

of artists, creators, and innovators of all types. Our members include artist membership 

organizations and associations, unions, companies and guilds, representing millions of 

creative individuals. We also collaborate with and speak for thousands of independent 

artists and creators and small businesses who are part of our One Voi©e grassroots group. 

Innovation in the video marketplace. and the costs of producing high quality works 

Innovation in the creation and distribution of video programming is happening 

throughout our membership and all across the spectrum of creators - from major motion 

picture companies and television show creators, to young, indie filmmakers, 

documentarians and web-based artists and programmers working on their own. 

As a result, audiences have never had as many options for watching movies, 

television shows and original web-based programs. 
22 


87023.009

Creating audiovisual works with high production values is an expensive proposition 

whether you are an independent documentarian, a major motion picture studio, or a 

television production company. Writing, directing, producing, acting in, staging, filming, 

and editing such works is labor and talent intensive, and can carry commensurately large 

costs. Independent filmmakers routinely invest hundreds of thousands or millions of 

dollars whether they are creating documentaries, animated works or live action films. 

Two of our grassroots members, mother/daughter filmmaking duo Gail Mooney and 

Erin Kelly, spent three years making a film documenting the stories of eleven individuals on 

six continents who are working to make a positive difference in the world. The 

documentary, Opening Our Eyes, seeks to create awareness about the power of the 

individual and inspire others to do what they can to improve the world. After six months 

of pre-production work, it took 99 days, travel to six continents and seventeen countries, 

and thirty flights, fourteen vaccinations, eight visas, 2900 gigabytes of storage, 150 hours of 

footage, and 5000 still image captures, followed by a year of post production, and another 

year of marketing and promotion to produce and distribute the film. Gail and Erin are 

currently using web 2.0 technology and social media to screen their film around the world 

and are pursuing video on demand distribution via Vimeo and VHX. 

On the other end of the spectrum, Hollywood movie studios routinely invest 

hundreds of millions of dollars creating, distributing and marketing blockbuster films to 

entertain us. And creating original episodic programming is likewise expensive and talent 

Intensive. Netflix reportedly spent $100 million dollars to create its original series House of 

Cards.1 HBO spends an average of$6 million an episode to make Game ofThrones.2 Creators 

1 Steven Rosenbaum. Netflix's Risky Strategy For 'House a/Cards', Forbes (Feb. 5, 2013). 

http://www.forbes.com/sjtes/steyenrosenbaumI2013/02l05/netflix~risky-stratedy-for-house-of-cards/. 

2 Leslie Gornstein, Holy Flaming Warships! How Expensive is Game of Thrones, Anyway? E Online (May 28, 2012). 

http://www.eonline.com/news/31B306/holy-flamjng-warships-h ow-expensive-js-game-of-thron~ 

2 
23 


87023.010

large and small take big financial risks in developing their works. Encouraging them to 

keep creating will require respecting their choices in how they distribute their works. 

Innovation in modes ofdistribution 

Happily, because creators are pursuing diverse modes of distribution, audiences 

have more choices than ever before for viewing films and television programs. Services 

such as Netflix, Hulu, VUDU, HBOGO, Crackle, MUBI, Amazon, and EpixHD; devices such as 

AppleTV and Roku; and technologies such as UltraViolet enable consumers to watch what 

they want, when they want, where they want. The creative community has embraced all of 

these options, and is continually creating more opportunities for audiences. 

Five years ago, video streaming was still fairly rough in terms of quality and 

reliability, but today viewers are enjoying a growing number of high definition streaming 

services including: 

o NBC Sports Live Extra, which allows free online live viewing of selected sports 

events in HD on multiple devices. The service includes several exclusive camera 

angles that viewers can switch between to enjoy sporting events in ways not 

possible even when viewing them live. 

o Vimeo On Demand, which allows filmmakers to charge for access to Videos. 

Demonstrating how the video marketplace is evolving on all levels, Vimeo 

recently began offering advances to filmmakers in exchange for temporary 

exclusive streaming rights to their works. 

o You Tube -- in addition to its free videos, YouTube launched paid subscription 

channels in May, and currently offers over 50 channels with fees starting at 

$0.99/month. 

3 
24 


87023.011

o Cable and satellite companies and networks have collaborated to launch a 

variety of video on demand services, including TV Everywhere services for 

delivering online, on-demand television programs and movies to cable 

subscribers via a variety of devices. 

o Stageit is a service that allows creators to broadcast live, interactive shows with 

monetization opportunities. Although the service is primarily geared toward 

musicians, as a video platform it has application to other types of works. 

o And the rising popularity ofWebisodes -- short episodes, outtakes character 

explorations or other additional content of television programs and films 

developed specifically for the internet - shows that not just the services but also 

the programming available to audiences is evolving and changing. 

Today more households than ever have access to this variety of programming. 

Almost 42 million homes-more than 35 percent of TV-households-have a TV connected 

to the Internet directly or through a game console, online set-top box, or Blu-ray player, 

according to estimates cited in the FCC's 2013 video competition report. Using these 

technologies, more than 400 legitimate streaming services worldwide are offering movies 

and TV shows, including programming produced specifically for online distribution. This 

includes nearly 90 services in the United States. (To see a current list visit 

www.WhereToWatch.org.) 

Creators, and non profit entities like the Copyright Alliance, are also developing 

their own new platforms through which independent filmmakers can screen their work, 

find resources, and reach distributors interested in their films. One such project is the 

NewFilmmakers series. The NewFilmmakers series was created in 1998 by NYU Film 

4 
25 


87023.012

Students in order to show their work and promote themselves in the New York film 

community. 

To create opportunities for recent film school graduates, NewFilmmakers screens a 

wide range of films including animation, documentaries, shorts, and features in both live 

and on-line screenings. Many are films and videos overlooked by traditional film festivals. 

NewFilmmakers NY screens every week at Anthology Film Archives on the Lower East 

Side. Films screened at Anthology are also screened on line at 

www.newfilmmakersonline.com. In addition, Newfilmmakersonline.com provides 

opportunities for young filmmakers to screen their films privately or publicly online, sell 

downloads, and connect with indie distributors. 

Building on the success of the NewFilmmakers series, the Copyright Alliance has 

partnered with NewFilmmakers to launch a further live and online screening venue and 

provide educational resources to an even younger generation of filmmakers via 

www.youngfilmmakers.com this fall. Applying the NewFilmmakers model, and expanding 

it to include further educational resources about creating, licensing, and protecting their 

work www.youngfilmmakers.com will empower the next generation of filmmakers age 14-

24 to learn, collaborate, create and share their work with audiences. 

These examples show that the technologies and business models underlying the 

video industry are evolving daily and at an ever-increasing pace. The creative community 

is innovating and experimenting with different ways of creating, funding, and delivering 

video to viewers. This experimentation is healthy and spurs the development of other 

delivery systems. We must allow artists to create, entrepreneurs to innovate, and markets 

5 
26 


87023.013

to operate in this burgeoning environment without imposing the constraints of new 

compulsory licenses on them 

The economic contributions ofthe creative communit;y 

Allowing breathing space for creativity is good for the economy. The creative 

community is producing jobs and other important economic benefits locally and nationally. 

In 2011, the motion picture and television industry supported 1.9 million jobs; $104 billion 

in wages, with an average production salary of $84,000. These businesses also contributed 

$16.7 billion in sales, state income, and federal taxes; and exports of these works created a 

$12.2 billion trade surplus in the sector. Importantly, the motion picture and TV industry 

includes more than 108,000 businesses located in every state in the country. Many of these 

are small businesses -- 85 percent employ fewer than 10 people. Truly, innovation in the 

video marketplace knows no bounds. 

The Founders recognized that a creator's right to control the distribution of his or her work 

would spur creativit;y and innovation 

Article I, Section 8 of the Constitution grants Congress the authority "to Promote the 

Progress of Science and the useful Arts, by securing for limited Times to Authors and 

Inventors the exclusive Right to their respective Writings and Discoveries." As one of the 

few constitutionally enumerated powers of the Federal government, this grant of authority 

reflects the Founders' belief that copyright protection is a significant governmental 

interest, and that ensuring appropriate rights to authors would drive innovation and 

benefit society. Ensuring the author's right to control the distribution of his or her works is 

key to these societal benefits. 

In Federalist Paper 43, James Madison said of the Clause, "The utility of this power 

will scarcely be questioned. " And he asserted that "the public good fully coincides in both 

6 
27 


87023.014

cases with the claims of individuals." Early Supreme Court cases reinforce the belief that 

"[t]o promote the progress of the useful arts is the interest and policy of every enlightened 

government." 1 

Because, in Madison's words, "[t]he public good fully coincides with the claims of 

individuals," in ensuring authors' rights would be protected, the focus of copyright law has 

properly been first on the author, but the ultimate effect is a benefit to society at large. 

"The economic philosophy behind the clause empowering Congress to grant patents and 

copyrights is the conviction that encouragement of individual effort by personal gain is the 

best way to advance public welfare through the talents of authors and inventors in 'Science 

and the useful Arts: Sacrificial days devoted to such creative activities deserve rewards 

commensurate with the services rendered."2 

In Twentieth Century Music Corp. v Aiken, the Supreme Court reiterated this goal,3 

"The immediate effect of our copyright law is to secure a fair return for an "author's 

creative labor. But the ultimate aim is by this incentive to stimulate artistic creativity for 

the general public good." 

It is axiomatic that to benefit society, copyright law must have a dual purpose: to 

create a framework that encourages both creation and dissemination/commercialization of 

works. As the Court explained in Golan v. Holder, "Nothing in the text of the Copyright 

Clause confines the "Progress of Science" exclusively to "incentives for creation." Evidence 

from the founding, moreover suggests that inducing dissemination - as opposed to creation 

- was viewed as an appropriate means to promote science. Until 1976, in fact, Congress 

1 Grant v Raymand 31 US 218 (1832). 

'MgzervStein. 347 US 201,219 (1954). 

'422 U.S. 151, 156 (1975). 

7 
28 


87023.015

made "federal copyright contingent on publication [,] [thereby] providing incentive not 

primarily for creation, but for dissemination. [Later Supreme Court] decisions 

correspondingly recognize that "copyright supplies the economic incentive to create and 

disseminate ideas." 4 

As Justice Sandra Day O'Connor eloquently wrote "In our haste to disseminate news, 

it should not be forgotten the Framers intended copyright itself to be the engine of free 

expression. By establishing a marketable right to the use of one's expression, copyright 

supplies the economic incentive to create and disseminate ideas."s 

Since the dissemination of works properly requires the consent of the author, the 

history and development of copyright law reflects both economic and other societal goals. 

A creator's control over the use of his or her work - the right to determine how and when 

to license it - drives innovation and creativity. In fact, international law elevates this right 

to a human right.6 

Compulsory licenses 

There is no justification for expanding the existing compulsory license regime. To 

the contrary, Congress should consider sunsetting it consistent with the public interest. 

Compulsory licenses are an extraordinary departure from normal copyright principles 

which ensure that creators have the right to distribute their works how they see fit. They 

are appropriate only in narrow circumstances to address market failure. International 

'Golan v Holder S6SUS_(2012j 

s Harper & Row v Nation Enterprises. 471 US at 557-558 (1985) 

6 See UN Declaration of Human Rights, Article 27: 

(1) Everyone has the right freely to participate in the cultural life of the community, to enjoy the arts and to share in sCientific 

advancement and Its benefits. 

(2) Everyone has the right to the protection of the mora! and material interests resulting from any sCientific, literary or artistic 

production of which he is the author. 

8 
29 


87023.016

treaties restrict their use to such cases because they abrogate the rights of property owners 

and force them to license their works to government favored entities at rates set by the 

government. Economists and policy experts criticize them on the grounds that (1) the 

supposed cost savings such licenses are intended to deliver in the short term are usually 

more than offset by the inefficiencies that they cause over time; (2) they limit the diversity 

of services that would ordinarily develop via marketplace licensing; and (3) because the 

rates and restrictions quickly become outdated and are difficult to change, they are subject 

to "legislative lock-in" and result in price stagnation. This latter point about legislative lockin is amply demonstrated with respect to the renewal of the Satelite Television Extension 

and Localism Act ("STELA"). 

Accordingly, my message to you is that given the creative and compelling works and 

the new and innovative distribution models that exist today, there is no need to regulate in 

this sector by imposing new compulsory licenses or renewing STELA. Indeed, many of my 

members, to a greater or lesser extent, believe that the existing cable and satellite 

compulsory licenses are an anachronism. As a result we see no present justification for 

expanding the compulsory licenses provided in the Copyright Act, or for renewing STELA. 

9 
30 


87023.017

Testimony of Sandra M. Aistars. Executive Director. Copyright Alliance 

Before the Committee on Energy and Commerce 

Subcommittee on Communications and Technology 

Innovation Versus Regulation in the Video Marketplace 

September 11. 2013 

Summary of Testimony 

The Copyright Alliance is a non-profit. public interest and educational organization 

of artists. creators, and innovators of all types. Our members include artist 

membership organizations and associations, unions, companies and guilds, 

representing millions of creative individuals. We also collaborate with and speak for 

thousands of independent artists and creators and small businesses who are part of 

our One Voi©e grassroots group. 

Our testimony focuses on three topics 

• the investments being made by talented men and women across the country 

in order to produce creative works with high production values 

the innovation occurring in the video marketplace; and 

legal guideposts for the Subcommittee to consider from a copyright law 

perspective 

Creating audiovisual works with high production values is an expensive proposition 

whether you are an independent documentarian, a major motion picture studio, or a 

television production company. The work is labor and talent intensive, and can 

carry commensurately large costs. Creators large and small take big financial risks 

in developing their works. Encouraging them to keep creating will require 

respecting their choices in how they distribute their works. 

Happily, because creators are pursuing diverse modes of distribution, audiences 

have more choices than ever before for viewing films and television programs. 

Services such as Netflix, Hulu, VUDU, HBOGO, Crackle, MUBI, Amazon, and EpixHD; 

devices such as AppJeTV and Roku; and technologies such as UltraViolet enable 

consumers to watch what they want, when they want, where they want. 

Copyright law recognizes that ensuring appropriate rights to authors drives 

innovation and benefits society. Ensuring the author's right to control the 

distribution of his or her works is key to these societal benefits. 

Compulsory licenses are an extraordinary departure from normal copyright 

principles which ensure that creators have the right to distribute their works how 

they see fit. They are appropriate only in narrow circumstances to address market 

failure. 

Given the creative and compelling works and the new and innovative distribution 

models that exist today, there is no need to impose new compulsory licenses in the 

video marketplace or to renew STELA. 
31 

Mr. WALDEN. We thank you for your testimony. And now we will 

go to R. Stanton Dodge, Executive Vice President and General 

Counsel of the DISH Network, LLC. 

Mr. Dodge, good to have you back before our committee. We look 

forward to your testimony. 

STATEMENT OF R. STANTON DODGE 

Mr. DODGE. It is nice to be here. Chairman Walden, Ranking 

Member Eshoo, and members of the subcommittee, and appreciate 

the opportunity to testify today. 

My name is Stanton Dodge and I am general counsel of DISH 

Network the Nation’s third-largest paid TV provider and the only 

one to offer local television service at all 210 local markets. 

Since this is not the first hearing on the subject, I would like to 

cut right to the chase. The retransmission consent process is broken and in need of targeted reform. In the past few years, we have 

seen an escalating number of blackouts, and these blackouts are 

lasting longer than in the past and impacting millions more subscribers. So not only are takedowns occurring more frequently, they 

are also increasing in magnitude. The recent headlines about the 

CBS/Time Warner Cable dispute serve as a stark reminder. 

In short, the retransmission consent problem has reached a crescendo. It is perhaps the most destructive and outdated remnant 

of the 1992 Cable Act and does not match up with the vibrant, 

ever-changing, competitive landscape in today’s video marketplace. 

Also of increasing concern, some broadcasters are coordinating 

their negotiations with each other and colluding on the rates that 

they demand from video distributors like DISH. The American Television Alliance, known as the ATVA, whose membership encompasses cable, satellite, and Telco providers, independent programmers, and public interest groups and of which DISH is a member, 

is unified in calling for targeted changes to the outdated retransmission consent rules as part of the STELA reauthorization. 

We and many other members of ATVA have voiced support for 

proposals such as interim carriage, and this solution would temporarily permit a distant signal to be imported during a retransmission consent dispute. That measure would alleviate the problem 

of service disruptions and prevent the use of consumers as pawns. 

And the broadcaster whose signal is imported will be compensated 

under the already-established distant signal royalty rate. If the 

broadcaster’s local content is as valuable to consumers as they assert, then the imported distant network is an imperfect substitute 

and both parties will continue to have sufficient incentives to reach 

an agreement. The imported distant network signal simply fills the 

void for network programming. 

Members of the ATVA have also expressed interest in a discussion of standalone broadcast station offerings, which would give 

consumers the choice of whether to pay separately to receive a particular local broadcast station. And some in ATVA support the deregulatory approach embodied in Congressman Scalise’s legislation 

from the 112th Congress. When he released his bill, ATVA and 

DISH lauded Mr. Scalise for his leadership in kick-starting the 

much-needed retrans reform debate. We continue to encourage Mr. 

Scalise’s reform efforts. 

32 

And today, we applaud Ranking Member Eshoo for circulating 

the Video CHOICE Act this past Monday. Critically, the discussion 

draft proposes concrete legislative ideas to give consumers greater 

choice over their programming, tackles the growing problem of 

funding cable channels with network channels, and empowers the 

FCC with significant authority to curtail blackouts. 

And we were pleased with Chairman Walden’s announcement 

last night that he expects to circulate a discussion draft on issues 

impacting the video marketplace no later than the first quarter of 

next year. We look forward to working with Chairman Walden, 

Ranking Member Eshoo, Congressman Scalise, and the entire subcommittee to ensure that meaningful legislation is passed this Congress. 

As one can see, there are many ways to address the broken retransmission consent system, but without immediate action from 

Congress, it is likely that the blackout problem will continue to escalate, millions more screens will go dark, prices will increase, and 

consumers will suffer. The time to act is now. 

Thank you and I look forward to answering your questions. 

[The prepared statement of Mr. Dodge follows:] 

33 


87023.018

d1sh 

Testimony of 

R. Stanton Dodge 

Executive Vice President and General Counsel of DISH Network L.L.C. 

on 

"Innovation Versus Regulation in the Video Marketplace" 

before the 

House of Representatives 

Committee on Energy and Commerce 

Subcommittee on Communications and Technology 

September 11,2013 
34 


87023.019

Chairman Upton, Ranking Member Waxman, Chairman Walden, Ranking Member 

Eshoo, and Members of the Subcommittee, I appreciate the opportunity to testify today. My 

name is Stanton Dodge, and I arn the General Counsel of DISH Network, the nation's third 

largest pay-TV provider and the only provider oflocal television service in all 210 of this 

nation's local TV markets. 

The broken retransmission consent regime is in dire need of comprehensive reform. In 

the past few years we have seen an escalating number of blackouts arising from impasses in 

negotiations between the broadcasters and their distributors. And, these blackouts are lasting 

longer than in the past, and impacting millions more subscribers. The recent headlines about the 

CBS service interruption during its dispute with Time Warner Cable serve as a stark reminder. 

The retransmission consent problem has reached a crescendo. It is the most severe crisis since 

Congress decided to give broadcasters a retransmission consent right in the 1992 Cable Act. 

This is the most destructive and outdated remnant of the 1992 Act and does not match up with 

the vibrant, ever-changing, competitive landscape in the modem video marketplace. 

The American Television Alliance ("ATV A"), whose membership encompasses cable 

and satellite providers, independent programmers, and public interest groups, and of which DISH 

is a member, is unified in calling for targeted fixes of these outdated retransmission consent rules 

as part of the STELA re-authorization. 

We and many other members of A TVA have voiced support for proposals such as interim 

carriage authority, which would temporarily permit a distant signal to be imported during a 

retransmission consent dispute. That measure would alleviate the problem of service disruptions 
35 


87023.020

and prevent the use of consumers as pawns. And, the broadcaster whose signal is imported will 

be compensated under the already established distant signal royalty rate. If the broadcaster's 

local content is as valuable to consumers as they assert, then the imported distant network is a 

poor substitute, and both parties would continue to have every incentive to reach an agreement. 

The imported distant signal simply fills the void for the network programming. 

Others in ATV A have expressed interest in a discussion of standalone broadcast station 

offerings, which would give consumers the choice of whether to pay separately to receive a 

particular local broadcast station. And some in ATV A support the deregulatory approach 

embodied in Rep. Scalise's legislation from the 112th Congress. ATV A lauded Rep. Scalise for 

his leadership in starting the necessary debate about the need for comprehensive reform. 

Today, we applaud Ranking Member Eshoo for introducing the Video CHOICE Act. 

Critically, the discussion draft proposes concrete legislative ideas to give consumers greater 

choice ovcr their programming, tackles the growing problem of bundling of cablc channels with 

network channels, and empowers the FCC with significant authority to curtail blackouts. We 

look forward to working with Ranking Member Eshoo and the Subcommittee to ensure that 

meaningful legislation is passed this Congress. 

As one can see, there are many ways to address the broken retransmission consent 

system. Without immediate action by Congress, it is likely that the blackout problem will 

continue to escalate, millions more screens will go dark every year, and consumers will be forced 

to pay more and more for their cable and satellite service as a result. The time to act is now. 

2 
36 


87023.021

This afternoon, I will briefly review the origins and purpose ofthe retransmission consent 

system, and then outline one solution that can be implemented to avoid consumer 

disenfranchisement and abuse of the 1992 retransmission consent right. 

But first, let me say a few words about DISH. DISH employs over 25,000 people across 

the country and is a leader in innovation, having rolled out advanced place shifting and DVR 

functionality that provides our customers with the ability to view their content where, when, and 

how they want it. To stay relevant, we must continue to adapt to our customers' evolving 

preferences, and we believe that the only way to do that is to embrace innovation and change as a 

company. And our laws, which set the framework for a competitive video marketplace, must do 

the same. 

The Broken Retransmission Consent Regime Leaves Consumers in the Dark - Literally 

In 1992, Your Regional Cable Operator Was the Only Game in Town. The broadcasters' 

retransmission consent right did not always exist. Congress created it and gave it to the 

broadcasters in the 1992 Cable Act. Before that time, distributors could simply retransmit local 

stations under the cable statutory license of Section Ill. 

Back then, we lived in a different world. Most markets were served by only a single 

cable company. Satellite wasn't an option, unless you wanted to install a 3-meter dish in your 

backyard. The Intemet was in its infancy. If we had a mobile device, it was probably the size of 

a brick. All these years of progress later, with increased competitive forces now at play in the 

video marketplace, it is difficult to look at the laws on the books and tell that much has changed. 

Except for its extension to the satellite arena, the retransmission consent system remains largely 

the same two-plus decades later. 

3 
37 


87023.022

Today, Networks Leverage Their Monopolies to Play Distributors Against Each Other. 

In most places today, multiple distributors using a traditional distribution model (the cable 

company, two satellite providers, and often a teleo) compete for customers. This is not to 

mention over-the-top providers such as Netflix, Amazon, and Hulu, which are potential or 

present competitors, too. The mUltiplicity of distributors has a significant implication under the 

current retransmission consent regime. Network stations play providers against one another. 

Instead of a broadcaster and a single regional cable operator engaging in a relatively fair fight 

and coming to terms on a reasonable retransmission fee, networks threaten to pull their 

programming, effectively (and sometimes affirmatively) pushing consumers onto other 

providers' systems providers that may have given in to the same unreasonable demands of the 

broadcaster. In contrast to the cable and satellite providers, each broadcaster effectively owns a 

monopoly in its given market. No other station in the market can offer the same network 

programming by virtue of the network system of exclusive franchises. Consequently, the 

broadcasters have the luxury of threatening to withhold their programming altogether in order to 

extract higher and higher retransmission consent fees. The result: broadcasters leverage their 

government-protected exclusive network franchises by means of their government-created 

retransmission consent right. 

The problem is exacerbated by the increasing consolidation we have seen in the 

broadcasting industry. In the last four months alone, acquisitions have preoccupied the industry, 

with the Sinclair Group seeking to increase its holdings from just over 100 stations to almost 

150; Gannett proposing to acquire Belo Corporation to bring Gannett's holdings oflocal 

broadcast stations to 43; Tribune acquiring Local TV Holdings to bring its total station 

ownership to 42; and Media General and New Young Broadcasting announcing their intention to 

4 
38 


87023.023

merge and combine ownership of their 30 broadcast station affiliates. This consolidation further 

imbalances the market, as multiple markets are presented to carriers with take-it-or-Ieave-it 

propositions for extraordinary rates. We are seeing increased fee demands of between three and 

six hundred percent when compared to just three years ago, when Congress last acted and passed 

STELA. 

There are also serious antitrust issues that arise when broadcasters enter into 

arrangements to jointly negotiate retransmission consent deals. For example, in 2012, DISH was 

forced to black out three Big-4 stations in Casper, Wyoming and two Big-4 stations in Cheyenne, 

Wyoming. Although the five stations were ostensibly owned by three different entities, DISH 

was required to negotiate with a single appointed representative for all five stations. After 

negotiations broke down, the blackout lasted for 4 months. The consolidation of so much local 

broadcast programming under one negotiator gives the broadcasters inordinate additional 

leverage, precipitating and prolonging the blackouts for DISH subscribers. 

Consumers Are Getting Left in the Dark. The result: consumers are being left in the 

dark-literally. To gain leverage during retransmission consent negotiations, broadcasters 

increasingly pull their signals, resulting in blackouts of major television networks. Cable, 

satellite, and telco subscribers are deprived of key network programming, along with important 

local safety, emergency, weather, and news information, precisely what the broadcasters claim is 

their public interest charge. And the problem is worse than ever. 

These blackouts are affecting more consumers in more markets than ever before. The 

proof is in the numbers. In 2010, there were 12 instances where a broadcast signal was blacked 

out in a local TV market. In 2011, there were 51. In 2012, the number soared to almost 100 

blackouts affecting millions consumers. And the pace has yet to level off. In 2013, we're on 

5 
39 


87023.024

track for 120 blackouts. Like most snowballing crises, individual incidents are increasing in 

severity. In this case, the blackouts are increasing in length. The longest blackout lasted only 24 

days in 2010. In 2011, there were 16 blackouts lasting over 24 days. Last year, there were 30 

blackouts that lasted over 24 days, two of which lasted 121 days. And the CBS blackout lasted 

over four weeks, affecting more than 3 million consumers in some of the nation's largest 

markets. During the blackouts, CBS even barred Time Warner Cable's Internet customers, some 

of whom had third-party video providers such as DISH, from accessing full episodes of CBS 

programming on the Internet. Like many blackouts, the dispute coincided with a marquee 

event-in this instance, the anticipated start of the NFL season. 

In the past, subscribers' access to the World Series and the Oscars has been threatened by 

broadcasters' brinksmanship. Ultimately, the losers in these one-sided contests are the 

consumers who get their programming pulled from them by the broadcasters and then see their 

bills on the rise as a result of ever-increasing broadcaster price demands. Some broadcasters 

have floated the idea of becoming a cable channel, thus stopping the broadcast of their channels 

over the air. If the broadcasters choose to do that, they should give back all of their free 

government-granted broadcast spectrum, must carry rights, and other public subsidies. 

Congress Can Fix the Problem. Among other things, Congress can restore balance to the 

negotiating table by temporarily allowing cable and satellite carriers to substitute a distant 

network signal from a non-local market during an impasse in retransmission consent negotiations 

with a local market affiliate of that same network. This approach has broad support from across 

the industry and public interest groups. 

Here is how the proposal would work: If a broadcaster blacks out, for example, the local 

Denver NBC station, the cable or satellite provider would be able to temporarily offer 

6 
40 


87023.025

subscribers an out-of-market station, such as the Cheyenne NBC station. The replacement 

station will not be a perfect substitute for the blacked-out local station, since consumers won't 

have their local content, but at least people will be able to receive network programming. And, 

the broadcaster whose signal is imported will be compensated under the already established 

distant signal royalty rate. 

Additionally, this solution will introduce some competition into the marketplace-just as 

pay-TV providers face competition from one another that mitigates against dropping broadcast 

programming. Here the broadcaster would face some degree of competition from a network 

affiliate in another market. The local broadcaster might think twice before pulling its signal from 

cable or satellite subscribers. Consumers will benefit. 

Today's Laws Should Reflect Today's Marketplaee. A Marketplace in whieh DISH is Prepared 

to Compete 

The video industry is a place where the marvels of yesterday have become commonplace 

today. The needs and desires of consumers are evolving to keep pace with the options that new 

technology makes available to them. Our laws should also evolve to create a framework that 

facilitates the functions of the free market. This framework would help providers to give 

American consumers what they want: the content that they want, when they want it, and how 

they want it. Consumers want to watch their programming of choice on their television sets, on 

their phones, and on their tablets. They also want to surf the web or make a phone call-no 

matter where they are. When we look at the marketplace for video, we need to be able to 

provide all of those options to every one of our customers, and we need to do it anywhere, 

anytime, on any device. 

Our company is moving to meet this need. By rolling out technological innovations like 

the Hopper with Sling, our customers can use a smartphone or tablet in a controlled and private 

7 
41 


87023.026

manner to enjoy the video content for which they have already paid. Our new PrimeTime 

Anytime and AutoHop functionality take the DVR to a new level. Consumers can, at their 

option, enable these features to gain the ability to more easily view their preferred programming 

when they want, while skipping what they don't want to see. 

These are some of the ways in which we have responded to our customers' changing 

needs. But we have further to go. In the past, we haven't shrunk from "betting the company," so 

to speak, in order to stay competitive. We went from selling big dishes to launching our own 

small-dish DBS business. To give customers what they want, including mobile video, voice, and 

data, we are taking a risk again. Recognizing the evolution in video, DISH is on its way to 

becoming a wireless service provider. We acquired satellite spectrum and, after almost two 

years, secured FCC approval to use that spectrum for terrestrial mobile broadband services. We 

now want to compete against the established players by offering video, voice, and data inside 

and outside the home, from a single platform. 

DISH is driven to provide consumers with all that they want, including the choice in 

services and providers that they seek. If we are successful, we will fuel billions of dollars in 

investment and create tens of thousands of new jobs throughout the United States. But just as 

businesses must foster change in a rapidly evolving video marketplace to keep pace with what 

consumers want, government should work to ensure its regulations mirror today's competitive 

realities, consumer expectations, and advances in technology. 

Thank you. I look forward to answering any questions you may have. 

8 
42 

Mr. WALDEN. Thank you, Mr. Dodge. We appreciate your comments and testimony, as always. 

We will now go to Mr. Edward L. Munson, Jr., Vice President 

and General Manager, KPHO Television. 

Mr. Munson, we are delighted to have you here. We look forward 

to your comments. 

STATEMENT OF EDWARD L. MUNSON, JR. 

Mr. MUNSON. Good afternoon. I am honored to be here, sir. 

My name is Edward Munson. I am the vice president and general manager of KPHO–TV in Phoenix, Arizona. KPHO is owned 

by the Meredith Corporation. We have 13 stations across the country in places like Portland, Oregon; Nashville, Tennessee; and Flint 

and Saginaw, Michigan. I am here today representing the National 

Association of Broadcasters. 

The topic of this hearing, ‘‘Innovation Versus Regulation in the 

Video Marketplace,’’ touches on two concepts that are part and parcel to being a local TV broadcaster. TV stations exist in a highly 

regulated environment, more so than the other witnesses on this 

panel. In fact, broadcasters must comply with regulations not applicable to any other distribution platform. 

For instance, TV stations must abide by decency rules and children’s programming requirements. We must give Federal candidates reasonable access to air campaign advertisements, and we 

must offer those spots at the lowest charge to any of our commercial advertisers. We must maintain main studios within certain geographic limits and with specific staffing obligations, submit numerous quarterly, annual, and biannual reports to the FCC, and 

compile quarterly lists of station programming. 

We proudly embrace many of these responsibilities but some regulations place broadcasting at a competitive disadvantage to the 

other video providers on this panel. For example, decades-old ownership restrictions reflect a time when broadcasting was the only 

game in town. It makes no sense to hamstring broadcasters with 

outdated limitations when our direct competitors are not restricted 

in any way. 

Another example is the online public file regulation which requires local TV stations to place sensitive pricing information online when our direct competitors can see it, but these direct competitors don’t have that obligation. These types of regulations, fundamental fairness requires regulatory parity for the benefit of competition and consumers. 

Based on our fundamental obligation to serve the public interest, 

some in the pay TV industry are arguing that a programming dispute means broadcasters are somehow not serving their local communities. In the rare event that a broadcaster has a dispute with 

one pay-TV company in a market, consumers have multiple other 

options to get their video programming. We understand that many 

of you are concerned about the impact these disputes have had on 

your constituents, and we share that concern. This is why it is important to remind this committee that no broadcaster has ever 

stopped broadcasting because of a dispute with a pay-TV provider. 

We are never off the air or blacked out. Our signals are always 

being broadcast and they are always free. 

43 

Over my career, I have personally been involved in many successful carriage negotiations with companies like CenturyLink, 

Suddenlink, and Mediacom. My experience, like the experience of 

nearly the entire broadcast community, is that deals get done all 

the time. Of course you don’t hear about the ones that go smoothly; 

you hear about the handful that don’t. And there is no doubt that 

the Time Warner/CBS dispute was unfortunate. But it was predictable. The dispute seems almost orchestrated out of the DC lobbying 

playbook: create a crisis; then run to Congress to fix your crisis in 

your favor. 

The pay TV industry will tell you carriage impasses have dramatically increased, that the retrans system is broken and needs 

to be fixed. Honestly, this is a bit disingenuous. In a few instances 

where agreements have not been reached in the last 2 years, there 

is the distinct and disturbing pattern: 89 percent of the disputes 

have involved only three pay-TV companies: Time Warner Cable, 

DISH, and DIRECTV, nearly 9 out of 10 disputes. That suggests 

to me there is not a problem with the process; there is a problem 

with the players. And we shouldn’t be rewarding bad behavior. 

It is not a coincidence that these are the very same companies 

pressing Congress most aggressively for government intervention. 

These pay-TV companies have ratcheted up their efforts for government involvement in retransmission consent negotiations because, 

despite having very healthy margins and soaring stock prices, they 

are looking to Congress to help control their programming costs. 

But pricing decisions are best left to the marketplace. 

Similarly, the government should have no role in deciding when, 

how, or where an owner of video content distributes that content. 

These carriage agreements are increasingly about the digital rights 

for our popular programming. We want to make sure the consumers using new and innovative platforms can access our content, 

which, in turn, fosters more competition in the video marketplace. 

In conclusion, television broadcasters provided the most-watched 

media out there by a wide margin. We are not running to Congress 

to ask for preferential treatment in our negotiations or for any legislative changes to benefit our side. We want to negotiate freely in 

the market for the value of our content. We only ask that Congress 

not tip the scales in favor of one industry. 

Thank you and I look forward to your questions. 

[The prepared statement of Mr. Munson follows:] 

44 


87023.027

Hearing on 

"Innovation Versus Regulation in 

the Video Marketplace" 

United States House of Representatives 

Committee on Energy & Commerce 

Subcommittee on 

Communications and Technology 

September 11,2013 

Statement of Edward L. Munson, Jr. 

On behalf of the 

National Association of Broadcasters 
45 


87023.028

Good morning Chairman Walden, Ranking Member Eshoo and members of the 

Subcommittee. My name is Ed Munson and I am the Vice President and General 

Manager of KPHO·TV in Phoenix, Arizona. KPHO is owned by the Meredith 

Corporation, which owns 13 television stations in 10 markets. I am testifying today on 

behalf of the National Association of Broadcasters. 

The title of this hearing, "Innovation Versus Regulation in the Video Marketplace," 

touches on two concepts that are part and parcel to being a local broadcaster. 

Broadcasting is a heavily regulated industry. It is, in fact, by far the most regulated 

industry on this panel. These regulations stem from what some have characterized as a 

"social contract" between the government and the broadcasting industry: broadcasters 

use licensed spectrum to serve the public interest and offer their service free to 

American consumers. Broadcasting is also an innovative industry. We helped drive the 

digital video revolution, are building mobile platforms and are pushing our content out 

wherever we can, but to maintain service, our content must be protected. 

In my comments here today, I want to talk about both of those conceptsregulation and innovation - and how they shape the broadcast industry. But I'd like to 

start with where we should start - how broadcasters have served and continue to serve 

the public interest. What does serving the public interest mean? 

Serving the public interest means investing in the weather detection systems and 

providing around the clock updates as natural disasters threaten communities. This is 

what broadcasters in Oklahoma did last May during that state's destructive tornados. 

Broadcasters in helicopters tracked the tornadoes up and down city streets so residents 

would know to take cover. And broadcasters all across the West have informed 
46 


87023.029

communities of the real time threats to homes and communities by the devastating 

wildfires that can change direction in an instant and destroy lives and property. 

Broadcasters in the Midwest are there when rivers flood, and broadcasters along the 

eastern seaboard are there to help people find safe ground when hurricanes are 

threatening. 

And while informing and serving the public is what differentiates us from other 

entities that provide video programming, what also differentiates us are the regulatory 

burdens under which we operate. While we gladly and proudly embrace many of these 

responsibilities, some regulations can place broadcasting at a competitive disadvantage 

with respect to the other video providers on this panel. In fact, broadcasters must 

comply with many regulations that are not applicable to any other distribution platform. 

For example, only broadcasters are subject to potential fine for airing arguably 

"indecent" material. This regulatory imbalance and the potential fines, which can be very 

Significant, have the effect of chilling broadcast speech (including coverage of live news 

events) and even limiting content options. Some in the creative community develop 

programming only for less regulated outlets, such as pay television. 

In addition, ownership limitations clearly can put broadcasting at a competitive 

disadvantage. Decades-old ownership restrictions reflect a time when broadcasting was 

the only game in town. This hearing and my fellow witnesses are testimony to the fact 

that times have changed dramatically. It is irrational to hamstring broadcasters with 

outdated limitations when our direct competitors are not restricted in the same way. In 

this regard, it is notable that even though Congress required the FCC to adopt 

horizontal and vertical ownership limits on cable operators, there are in fact no such 

2 
47 


87023.030

limits. We also observe that the top ten pay-TV providers control 91.5 percent of the 

multichannel video programming distribution market, up from 67.4 percent in 2002, and 

are even further concentrated regionally and locally as well. 

Other rules - like the new online public file requirement - suggest regulators still 

see broadcasters in isolation of their competition. That rule, among other things, 

requires local broadcast television stations to place sensitive pricing information online 

when our direct competitors, including local cable system operators, are not so required 

Again, there is no reason why local broadcasters alone should be burdened with these 

requirements. For structural or administrative regulations like these, fundamental 

fairness requires regulatory parity. Otherwise, the government is artificially altering the 

marketplace to the detriment of competition and, ultimately, all consumers. 

Local broadcasters, like Meredith accept, of course, that we are part of a special 

service. Certain programming requirements show how we differ from our competition. 

For example, every full-power television broadcaster is required to air three hours of 

core children's educational programming each week per channel (Le., including 

multicast channels). Broadcasters are also required to give candidates for federal office 

"reasonable access" to air advertisements on their channels during campaigns. And 

they are required to offer those spots at the lowest rate - not the average rate - they 

charge their commercial advertisers. In comparison, while cable and satellite operators 

may have some obligations, non-broadcast networks and over-the-top video providers, 

like Netflix, have no similar programming requirements. 

The list of mandated obligations is lengthy. For example, broadcasters must 

maintain main studios within certain geographic limits and with specific staffing 

3 
48 


87023.031

obligations; submit numerous quarterly, annual and biennial reports to the FCC; and 

compile quarterly lists of stations' programs providing the most significant treatment of 

issues of importance to their communities. But, I am not here to identify all these 

requirements. While many broadcasters and NAB have argued that some of these 

regulations in their current form are outdated or unnecessarily burdensome compared to 

their public benefit, as a general matter, we embrace the fact that broadcasting is a 

different kind of service than the others represented on this panel. 

Broadcasting is still the fundamental foundation of video distribution in the United 

States. Cable operators built their businesses on the backs of broadcasters and for 

years have raised their subscription prices well beyond the rate of inflation. And at the 

end of the day, for families that would rather pay for food than CNN, local broadcast 

stations provide a high-quality news and entertainment alternative at the ultimate 

bargain price -- free. It is remarkable in our hyper-competitive market that anyone can 

still access the best NFL games, local news and the Tonight Show every week for free 

just by putting a metal stick on your roof. In fact, consumers can now receive more free 

channels than ever before. Broadcasters' investment in multicasting has allowed a 

proliferation of channels, including those providing foreign language programming and 

new networks focused on serving African-American viewers, such as Bounce TV. Many 

of these newer multicast channels are not even carried on pay services. This is what 

broadcasting provides, and will continue to provide for many years to come. 

While our core mission has not changed, broadcasters know that they must 

evolve their service to meet the changing demands of the marketplace. As the most 

efficient delivery mechanism for video programming, broadcasters are intent on using 

4 
49 


87023.032

the airwaves in a multitude of ways to give viewers the programming they want both 

now and into the future. To meet the demand for mobile video, for example, 

broadcasters continue to roll out Mobile DTV, which delivers local full-motion digital 

broadcasts on multiple mobile devices without using additional spectrum. And because 

Mobile DTV relies on the existing broadcast infrastructure, we can offer this service 

without running up consumer cell phone bills or exhausting the data caps that wireless 

companies are imposing on their customers. 

To help deliver mobile television to the masses, Meredith is part of a joint venture 

known as Mobile Content Venture (MCV), which also includes Fox, NBC, ION and Pearl 

Mobile DTV. In addition to Meredith, the Pearl member companies include: Belo 

Corporation, Cox Media Group, E.W. Scripps General, Inc., Gannett Broadcasting, 

Hearst, Media General, Post-Newsweek Stations, Inc. and Raycom Media. MCV and its 

participants provide content to portable devices using broadcast spectrum including live 

local and national news, sports and entertainment programming. 

In addition to Mobile DTV, NAB member companies are working to deliver 

broadcast programming in new and innovative ways. Meredith's local broadcast 

stations' websites deliver news to the tune of 58 million page views and nearly 5 million 

unique visitors every month. ABC recently launched a Watch ABC application that will 

enable broadcasters to deliver local ABC-owned stations on mobile and Wi-Fi networks. 

NAB and CBS have invested in a company called Sync Back whose technology allows 

broadcasters to stream local channels to viewers based upon a viewer's geographic 

location. Broadcasters are also creating new relationships with over-the-top video 

providers like Netflix, Amazon Prime and Roku to give consumers even more options for 

5 
50 


87023.033

consuming our content. And we are exploring and investing in technological innovations 

such as 3D, 4K and Ultra High Definition transmissions. As the FCC initiates the 

incentive auction process and the subsequent repacking of broadcast stations, it is 

imperative that the Commission do nothing that will jeopardize the one industry on this 

panel that brings these innovative and essential services to consumers - free of charge. 

Broadcasters recognize that consumers want the flexibility to use any device to 

watch video programming, and we want our programming to be everywhere the 

consumer wants it. To achieve this goal, content producers need assurances that their 

programming will only be used with their consent. Regardless of whether broadcasters 

are providing content to cable and satellite companies or to new over-the-top 

competitors, the retransmission consent regime appropriately allows broadcasters to 

negotiate in the free market for the value of the broadcast signal. As Congress noted in 

1992, "broadcasters must be allowed to control the use of their signals by anyone 

engaged in retransmission by whatever means: 

While we have recently seen a high profile negotiation that took a month to 

resolve, I want to reinforce that by no means does this suggest the retransmission 

consent system needs revision. To the contrary, thousands of deals have been 

completed over the last two years with no programming interruption. However, some of 

those calling for Congressional intervention in retransmission consent are correct on 

one point - a clear and disturbing pattern is emerging. In the last two years, three payTV companies have been involved in nearly nine out of every 10 retransmission dispute. 

Those companies are Time Warner Cable, DISH and DirecTV. It is not a coincidence 

that these are the companies pressing Congress and the FCC most aggressively to tip 

6 
51 


87023.034

the marketplace for broadcast signals in their favor. Their tactics are straight out of the 

"How to Win in Washington" playbook - create a "crisis," yell loudly aboullhe crisis and 

then ask Congress to fix the crisis in your favor. 

Congress should resist this cynical ploy by cable and satellite companies and 

refuse to intervene in a free marketplace. These pay-TV companies have ratcheted up 

their efforts for government involvement in retransmission consent negotiations 

because, despite having very healthy margins and soaring stock prices, they are looking 

to Congress to reduce their costs (and thereby increase their revenues). The 

government should have no role in setting prices or telling a content owner how to 

distribute their content. Yet that is precisely what many in the pay-TV industry are 

asking Congress to do from proposed standstill requirements to allowing the importation 

of distant signals. Those companies that invest billions of dollars in the creation of 

quality, popular conlent should hold the ultimate decision as to how, when and where 

that content is distributed. Broadcasters strongly believe that matters of price and value 

are best left to the marketplace - especially when viewers would not benefit from 

government interference in retransmission consent compensation negotiations. After all, 

if government interference reduced the fees that cable and satellite providers pay to 

local stations, there is no assurance - absent binding requirements such as regulation 

of the rates that pay-TV operators charge to consumers - that any savings would be 

passed on to viewers. 

There is no doubt that disputes wilh pay television providers, rare as they are, 

are unfortunate and have an impact on all parties involved. Broadcasters lose 

advertising revenue, cable and satellite companies lose viewers, and most importantly, 

7 
52 


87023.035

viewers subscribing to a pay-TV service lose access to the most popular shows on 

television. We understand that many of you are concerned about the impact these 

disputes can have on your constituents. We share that concern, and want to remind this 

Committee that no broadcaster has ever stopped broadcasting because of a dispute 

with a pay television provider. Our signals are always on, always there and always free. 

If the concern is to protect pay TV subscribers, the remedy is to allow those subscribers 

to have ready choice by, for example, limiting pay TV operators' early termination fees 

or allowing for consumer refunds in the rare event that disputes arise. 

Broadcast television remains the most popular programming in the country and it 

is a fundamental part of the future video ecosystem. Broadcasters take seriously the 

responsibility we have to inform, alert and entertain our viewers. We intend to continue 

delivering our programming in each and every way any viewer might want to access 

that programming. 

8 
53 

Mr. WALDEN. Mr. Munson, thank you for your testimony. And we 

will get to those very soon. 

We will now go to David Rozzelle, Executive Vice President, 

Suddenlink Communications. 

Mr. Rozzelle, thank you for being here. We look forward to your 

testimony, sir. 

Mr. ROZZELLE. Thank you, Mr. Chairman. 

Mr. WALDEN. And again, please pull the microphone close and 

turn it on. Just push the button right there. 

Mr. ROZZELLE. Thank you, Mr. Chairman. Good afternoon, Chairman Walden, Ranking Member Eshoo. 

Mr. WALDEN. Is it pushed on? 

Mr. ROZZELLE. It is. I have a green light. 

Mr. WALDEN. There we go. You have to be pretty close to it. 

STATEMENT OF DAVE ROZZELLE 

Mr. ROZZELLE. OK. Thank you. My name is Dave Rozzelle and 

I am an executive vice president with Suddenlink Communications, 

the leading provider of cable video services and broadband internet 

access to approximately 1.4 million households in second-tier cities, 

small towns, and rural communities. Thank you for inviting me to 

testify today. 

Speaking first: Innovation. As a company, Suddenlink is a prime 

example of innovation in the cable industry. We have increased the 

number of HD channels we offer, we deliver video content to new 

screens like iPads, computers, and game consoles, and we have a 

partnership with TiVo to distribute their DVRs directly to our customers. Our broadband service delivers residential customer data 

speeds in excess of 100 megabits per second in many of the communities that we serve, including some very small rural communities. 

From the consumer standpoint, the state of video has never been 

stronger. Consumers today have many sources for video content. In 

virtually all locations they can subscribe to cable television, 

DIRECTV, or DISH and get 100 or more HD channels and the ability to record and watch at their convenience on the DVR. In some 

markets, they can also choose service from AT&T U-verse, Verizon 

FiOS, CenturyLink’s Prism TV, or Google Fiber. They can watch 

online video from a myriad of sources, including Netflix, Amazon, 

iTunes, and Apple TV, to name just a few. 

Also, consumers can access video on an increasingly wider range 

of devices. Cable TV everywhere lets consumers watch video on 

their laptops, tablets, and smartphones. Sprint offers its cellular 

subscribers access to popular programs from networks like Comedy 

Central, Style, Discovery Channel, and more. 

The path to continued growth for cable is to enhance and expand 

its customer’s use and enjoyment of our networks. Cable is investing billions annually to ensure that this potential can be realized, 

and as a result, other providers of content, services, or devices in 

the online video ecosystem can flourish. Our partnership with TiVo 

is an example of such efforts. 

In contrast to this dynamic growth change and innovative nature 

of the video marketplace I just described, our Nation’s communication laws have remained largely the same. Video distributors are 

subject to a range of different statutory and regulatory regimes. 

54 

While some regulatory differences are grounded in distinctions that 

warrant particular treatment, others echo outdated notions of market power. Twenty years ago, cable served 98 percent of all multichannel video households. Today, cable serves 56 percent. Many of 

the regulations adopted in the early years of cable video service linger and are no longer justified. 

Two areas ripe for reform are retransmission consent and the socalled navigation device integration ban. When the retransmission 

consent regime was first enacted, broadcast stations could only 

reach viewers off air or through cable systems. Today, the multiple 

MVPD environment has substantially increased the leverage that 

broadcasters can exert in retransmission consent negotiations by 

playing one video provider off another. Their leverage is exacerbated because broadcasters still control marquee events and because the network affiliation structure guarantees that in almost 

all circumstances only one provider will be available to local viewers. 

In retransmission consent disputes consumers bear the brunt of 

this imbalance. The number of RTC-related shutdowns increased 

from 12 in 2010 to 51 in 2011 to 91 in 2012. Policymakers need 

to take a fresh look at retransmission consent in today’s marketplace. 

Similarly, whatever justification there was for the integration 

ban has long since been superseded by market developments. Cable 

operators are required by FCC rules to use a separate security 

module and set-top boxes they lease to customers instead of being 

able to integrate the security and channel-changing function of 

those boxes. This integration ban, which applies only to cable, has 

cost operators/consumers more than $1 billion since it went into effect in 2007 and wastes hundreds of millions of kilowatt hours per 

year. It imposes a material unnecessary cost on cable video services 

when programming costs increases have stressed many household 

video budgets in recent years. 

How should legislative change be affected? While the targeted 

changes I just mentioned would improve the consumer video experience, the basic framework of the Act can remain in place. Congresswoman Eshoo’s draft bill is an excellent example. 

Thank you again for the opportunity to appear today and I welcome any questions that you may have. 

[The prepared statement of Mr. Rozzelle follows:] 

55 


87023.036

TESTIMONY OF DAVE ROZZELLE 

EXECUTIVE VICE PRESIDENT 

SUDDENLINK COMMUNICATIONS 

on 

INNOVATION IN THE VIDEO MARKETPLACE 

before the 

Subcommittee on Communications and Technology 

Energy and Commerce Committee 

UNITED STATES HOUSE OF REPRESENTATIVES 

WASHINGTON, D.C. 

September 11, 2013 
56 


87023.037

Good morning Mr. Chairman and Members of the Subcommittee. My name is Dave 

Rozzelle, and I am an Executive Vice President with Suddenlink Communications. Thank 

you for inviting me today to testifY on innovation in the video marketplace. We welcome this 

important hearing. 

Suddenlink is a leading provider of cable video services, broadband Internet access, 

wireless home networking, wire line phone, online video, and home security services to 

approximately 1.4 million households in second tier cities, small towns and rural communities 

primarily located in Texas, West Virginia, Louisiana, Arkansas, North Carolina, Oklahoma, 

Missouri and Arizona. Suddenlink is purely a distributor of video services to its customers; it 

does not produce video programming. 

Cable Always Has Been an Innovative Force in Video 

From its beginning, cable has driven innovation and transformation in the video business. 

Cable was founded to make broadcasting better - extending broadcast television reception to 

suburban and rural areas outside the reach of over-the-air signals. Later, we made programming 

better - breaking the lock of the three-channel universe by investing billions in original content 

that appeals to specialized audiences as well as the mass market, and building award-winning 

iconic brands like ESPN, HBO, CNBC, C-SPAN, History and Discovery. We were first to 

unshackle consumers from "appointment TV" with video on demand and the wide deployment 

of DVRs. 

Suddenlink has expanded the video services it provides to its customers in a number of 

ways. The number of channels we deliver is far greater than the number we delivered just a 

couple of years ago. The number of high definition (HD) channels we deliver has grown even 

faster. We deliver some of our video content to new screens, like iPads, computers and game 

consoles. We offer a wide variety of set top devices and we have partnered with TiVo to 
57 


87023.038

distribute their DVRs directly to our customers. Some of our customers use their TiVo devices 

to access Internet video. 

When the cable industry turned to areas other than video, the results were similarly 

innovative. In 1996, Congress wanted telephone competition and cable delivered it. Today, one 

in three households that have wireline phone service receive it from a cable operator. 

And then there is broadband. Where high-speed data service was once the purview only 

of businesses, cable operators brought broadband Internet service to residential subscribers. To 

do this, the industry borrowed heavily and took enormous risk by ripping out its one-way analog 

network and replacing it with a higher capacity, two-way digital platform that made broadband 

possible. Cable broadband speeds have increased at a 50 percent annual ratel! since being 

introduced in 1996 and are projected to continue on that arc for the foreseeable future. In the 

case of Suddenlink, we deliver residential customers data speeds in excess of 100 Mbps in many 

of our service areas, including some very small rural communities. Our business class service is 

also incredibly robust and more importantly, scalable, which allows us to provide gigabit speeds 

and beyond at the business customer's request. 

Today's Golden Age of Video 

From the consumer's standpoint, the state of video has never been stronger. Consumers 

today enjoy (l) more content; (2) higher quality programs; (3) more variety and diversity in 

video content; (4) more sources for video content; (5) a greatly enhanced capacity to select, 

manipulate and record video content; and (6) the ability to access video on an increasingly wider 

range of devices. 

II ARRIS Group Inc. 2012 Investor & Analyst Conference. Aug. 8, 2012, slide 29, available at 

http://phx.corporate-ir.netl 

Extemal.File?item=UGFyZW50SUQ9NDc2MTUwfENoa WxkSUQ9NT A4NTk3tFRScGU9MQ=&t= I. 

2 
58 


87023.039

Public policy always has been concerned about diversity of viewpoints and niche 

programs for smaller yet passionate audiences. The cable model brought that ambition to 

fruition. The cable dial runs the gamut - from compelling scripted dramas, situation comedies, 

educational content and kids programming to sports, cooking shows, and news and public affairs. 

If you are itching to watch video, the number of sources you can tum to has grown 

exponentially as different providers compete for your business. You may subscribe to cable 

television and get 100 or more HD channels, the latest premium content and live events, video on 

demand and the ability to record and watch at your convenience on a DVR. You can get a very 

similar experience from DIRECTV and Dish. In many markets, you can also choose service 

from AT&T V-verse, Verizon FiOS, or CenturyLink's Prism TV. And Google Fiber is 

expanding to more cities. 

Cable also is working to bring better video experiences to consumers wherever and 

whenever they want, offering, for example, applications that allow subscribers to watch their 

cable service on their iPads. Cable's "TV Everywhere" initiative makes it possible for cable 

customers to watch video content they have already paid for on their laptops, tablets, 

smartphones and other portable devices - no matter where they are. And many cable networks 

allow viewers to access their programming outside the viewers' multichannel video 

programming distributor ("MVPD") subscription. Sprint, for example, offers its mobile 

subscribers access to a wide variety of popular full-length video programs from networks like 

MTV, Nickelodeon, Comedy Central, Style, Discovery Channel and many more. 

If that were not exciting enough, Internet-delivered video has ushered in an even greater 

explosion of choice. By one estimate, real-time video streaming represents 65.2 percent of 

3 
59 


87023.040

downstream Internet traffic in North America during prime time evening hours.2f The U.S. 

online video market attracts an average of 75 million viewers every day and streams nearly 40 

billion videos per monthY Revenue from video content delivered over the Internet to televisions 

"is expected to grow from $2 billion in 2009 to over $17 billion in 2014.,,41 The largest 

subscription video provider in the country today is Netflix - not Comcast, Time Warner Cable, 

DIRECTV or any other MVPD. 

If market failure is characterized by a lack of new entry, there is clearly no failure in the 

video marketplace. Companies that stream content are proliferating: Netflix, Hulu, Amazon, 

iTunes, CinemaNow, network websites, HBOGo, Apple TV, and user-generated or special 

interest sites like Y ouTube, Vimeo, and TED.com are a few. In fact, YouTube recently 

announced a subscription video service.51 Some of these services offer multichannel 

programming like an MVPD; others specialize in entertainment programming, movies, or ondemand content. And many more offerings are anticipated from the likes ofIntel and Sony. 

Moreover, web video is not limited to a PC screen any more. Analysis of data from 

Nielsen suggests that 65 percent ofNetflix streaming is viewed on television setsY Computers 

can connect to big screen televisions; content can be beamed to sets using functions like Apple 

Airplay; box companies like Roku, TiVo and Boxee can deliver web video to the TV set; and 

manufacturers like Samsung are making the flat panel TV web-enabled, with apps incorporated 

for accessing video content. One study estimates that at least 44 percent of U.S. households have 

21 Global Internet Phenomena Spotlight2H 2012 North America, FixedAccess, SANDVINE INCORPORATED, Nov. 

6,2012. 

31 US Digital Future in Focus, COMSCORE (Feb. 2012). 

41 U.S. Dep't of Justice, Competitive Impact Statement, United States v. Comeast Corp., No.1: 11-<:\'·00106 (DD.C. 

Jan. 18, 20 11), available at http://www.iustice.gov/atr/casesl1266100/266158.htm. 

51 New Wt.rys to Support Great Content on YouTube, YOUTuBE (May 9,2013), http://youtube· 

global.blogspot.com!. 

61 NCTA analysis of data from The Cross-Plalform Report, Quarter 2, 20 !2·US, NIELSEN (Nov 2012). 

4 
60 


87023.041

a television set connected to the Internet, through an Internet-ready TV, game console, 

standalone Blu-Ray player or smart set-top box connected to their home network? Smartphones 

and iPads have proliferated as compelling devices for consuming video content and enjoying 

second-screen experiences. Of note, when measured together, the share of all hours spent 

watching streaming video on tablets and mobile phones increased 100 percent in 2012.8/ 

For some consumers, online video offerings are good enough to cut or shave the cord. 

According to one report, "3.74 million (3.7%) US TV subscribers cut their TV subscriptions 

between 2008-12 to rely solely on" online video and over-the-air for their video entertainment.9

/ 

For many consumers, online video has developed as a supplement to their broadly diverse 

MVPD service. It enables them to add even more of a particular type of video content - whether 

it be movies or music - to the live events and new programming available from the MVPD. 

There are still millions of new customers subscribing to cable service for the first time - or 

returning to it - because of the HD, on-demand, multi-screen and other advanced video offerings 

our industry makes available. 

As always, the cable industry is responding to changes in technology and in the 

marketplace in order to stay ahead of the curve and provide leading-edge services to its 

subscribers. The opportunities presented by broadband are great. While there are some 

challenges, we continue to see great potential in our networks. As an industry, we are investing 

billions annually to ensure that this potential can be realized by keeping pace with the dynamic 

marketplace and consumers' changing needs and interests. As a company, Suddenlinkjust 

71 Over Half of Adults Watch Video on Non-TV Devices Weekly, LEICH1MAN REsEARCH GROUP, INC. (May 

2,2013), available at http://www.leichtmanresearch.com/press/050213release.html. 

8/ Global Video Index, 2012 Year in Review, OOYLA, available at 

http://go.ooyala.com/rs/OOY ALAlimages/Ooyala-Global-Video-Index-Q4-20 12.pdf. 

91 The BailIe for the AmericanCouch Potato: Online & Traditional TV and Movie Distribution, The Convergence 

Consulting Group Ltd. (Apr. 2013), available at http://convergenceonline.comidownloadslUSNewContent2013.pdf. 

5 
61 


87023.042

completed a $350 million upgrade of our network, over and above the normal capital 

expenditures we make to keep our network running smoothly and reliably. 

Cable's business incentives in today's marketplace are fully aligned with the interests of 

consumers. The path to continued growth for cable is to enhance and expand its customers' use 

and enjoyment of the broadband platform we offer. If consumers want to access video content 

via their laptop, their Xbox, their iPad, or their mobile device, it's our job to make that possible 

for them. If they want to obtain video content from Netflix, Amazon, Hulu, YouTube, Apple or 

any other online provider, it's our business to make that possible as well and we are. Given the 

robust nature of its networks, cable stands to benefit from the increasing demand for Internet 

video. Suddenlink believes it will remain the Internet access service of choice for the residential 

homes we pass for the same reason. So while cable operators are developing new services and 

features that enable their subscribers to access video online and on-the-go, they are also ensuring 

that other providers of content, services or devices in the online video ecosystem can flourish. 

Our partnership with TiVo is an example of such efforts. 

Differences in Video Regulation 

As innovative sources for video content and distribution have emerged and developed, 

our nation's communications laws have remained largely the same. As a result, participants in 

the video marketplace are subject to a range of different statutory and regulatory regimes 

depending on the distribution technology they use. What requirements attach to delivery ofthe 

very same program depends on whether it is offered by a broadcaster, cable operator, other 

MVPD, or online video distributor. Indecency rules also vary depending on whether a program 

is being shown on a broadcast channel, basic cable, or pay-per-view. 

Some of the regulatory differences are grounded in distinctions that warrant particular 

treatment. Broadcasters, for example, receive free and exclusive use of the public airwaves, and 

6 
62 


87023.043

in return must use this public resource to serve the public interest. Cable operators, as users of 

communities' local rights-of-way, have obligations to ensure that installation and operation of 

their facilities does not cause property owners uncompensated damages. 

Other regulatory disparities, however, echo outdated notions of market power. Twenty 

years ago, cable was effectively the sole provider of multichannel video programming service in 

the country, serving 98 percent of all multichannel households. Today, incumbent cable's share 

of the multichannel marketplace stands at 56 percent and 4 of the 8 largest MVPDs in the 

country are non-cable. 

And twenty years ago, of course, there was no Internet and no broadband connections 

capable of delivering high definition video to America's households. 

Despite the array of new competition, choice and service offerings for consumers, cable 

operators continue to be subject to requirements that are based on aging snapshots of the video 

marketplace. There are rate regulation rules designed to serve as a proxy for market-based 

pricing, even though most American households have a choice of at least three MVPDs and 

millions may opt to forego multichannel subscriptions altogether in favor of Internet-delivered 

video. 

There are program access rules designed to nurture facilities-based competition to cable. 

But cable's main MVPD competitors -DirecTV, DlSHNetwork, AT&T and Verizon-are all 

some of the largest communications services providers in the nation. These companies hardly 

need the government's help to remain viable competitors to cable. 

There are also content carriage obligations, such as leased access, the usefulness of which 

has been obviated by the Internet. 

7 
63 


87023.044

In light of the fundamental changes that have occurred in the marketplace over the last 20 

years, we applaud Chairman Walden and this Subcommittee for starting the dialog on the 

appropriate regulatory framework for video services. 

What is the Role for Policymakers? 

A natural question for this Committee is what type of regulatory framework will best 

promote consumer choice. There are clearly many provisions in today's communication laws 

that are outdated and unnecessary. Two areas ripe for reform are retransmission consent and the 

so-called navigation device "integration ban" that applies to cable operators alone among video 

competitors. When the retransmission consent regime was first enacted, for example, broadcast 

stations could reach viewers only through cable systems or over-the-air broadcasting, and it was 

feared that absent a fair retransmission consent system, over-the-air broadcasters could be forced 

into extinction. Changes in the video marketplace since 1992 also have skewed retransmission 

consent negotiations. While those changes have included the development of programming 

sources that compete with broadcasters, broadcasters still control marquee events. The 

combination of those events and the availability ofDBS and teleos as alternatives to cable has 

substantially increased the leverage that broadcasters can exert over MVPDs in retransmission 

consent negotiations. Consumers bear the brunt of this imbalance: the number of retransmission 

consent-related shutdowns increased from 12 in 2010 to 51 in 2011 to 91 in 2012. And we are at 

80 in 2013 - and still counting. 

Clearly there is something amiss, and policymakers need to take a fresh look at 

retransmission consent in today's marketplace. As a starting point, the cable industry has urged 

the FCC to bar two or more broadcasters in a local market from using Local Marketing 

Agreements ("LMAs") or other arrangements to jointly negotiate retransmission consent 

agreements with cable operators and other MVPDs. The FCC's network nonduplication rules 

8 
64 


87023.045

give the local network affiliate a monopoly on the delivery of network service in its area, and 

often prevent a cable system from reaching agreement with another network affiliate to replace 

programming lost in a retransmission consent "blackout." Another step would be the repeal of 

the "must-buy" requirement in the Cable Act, which requires cable operators to include 

retransmission consent stations on the basic tier that all customers must purchase. 

Similarly, whatever justification there was for the "integration ban" has long since been 

superseded by marketplace developments. Cable operators are required to provide security 

modules to consumers who buy set top boxes at retail so they can connect and use those boxes to 

receive cable service but on top of their obligation to support retail devices, operators are also 

required by FCC rule to use a separate security module in the boxes they lease, instead of being 

able to integrate the security and channel changing functions in those boxes. This integration 

ban -which applies only to cable operators -has cost operators and consumers more than $1 

billion since it went into effect in 2007 and wastes hundreds of millions of kilowatt hours per 

year. As mentioned earlier, Suddenlink's partnership with TiVo is a stand-alone success and is 

evidence that third party deployment of set top devices is not dependent upon whether 

Sudden link deploys traditional cable set top devices without CableCARDs. 

There is no doubt that the transformation underway in the video marketplace will not be 

problem-free. It will be chaotic at times as consumer expectations and demands outpace changes 

in the underlying marketplace. As market participants seek to realign their business strategies 

with the new reality, many questions oflaw and policy may arise. In this dynamic market, it is 

difficult to know what type of statutory or regulatory changes will promote rather than hinder 

competition and investment. Indeed, the breadth of the challenge could present high hurdles to 

consensus and to prudent lawmaking. For these reasons, it is better to exercise caution rather 

than rush to rewrite laws that will, in any event, be obsolete almost as soon as they are enacted. 

9 
65 


87023.046

As the new marketplace evolves, there may be limited, targeted changes to the Act that 

are appropriate to address specific issues that arise - and the FCC should have the tools it needs 

to adjust its rules as the market changes - but the basic framework of the Act can remain in place 

throughout this transition period, without causing any delay or hindrance to the exciting changes 

that are occurring in the video marketplace. The time may come when adjustments to the current 

law can no longer suffice, but that time is not now. 

Thank you again for the opportunity to appear today. Sudden link and the cable industry 

are proud of the products and services we offer customers today and we are excited about the 

dynamic future before us. We look forward to being a key player in this vibrant marketplace. 

10 
66 

Mr. WALDEN. And we thank you for your testimony and we look 

forward to the questions and answers. 

We will go now to Mr. James Campbell, Vice President of Regulatory and Legislative Affairs, Midwest Region, CenturyLink, Inc. 

Mr. Campbell, thanks for being with us. 

STATEMENT OF JAMES CAMPBELL 

Mr. CAMPBELL. Thank you, Chairman Walden, Ranking Member 

Eshoo, members of the subcommittee, a special hello to Representative Gardner from my home State. Thank you for giving 

CenturyLink the opportunity to testify before you today as a relatively new entrant in the video market. 

Obviously, content is going to be a big topic today, but I just 

want to assure you that CenturyLink does not seek to avoid paying 

for its content but rather to create an environment where we go 

back to true market-based negotiations. And we actually have two 

parties that are sitting at the table with some risk and giving 

something and taking something. 

But we have a little background. CenturyLink is the third-largest telecommunications company in the United States. We offer 

voice, video, and data to over 14 million subscribers in 37 States. 

We offer the same service to businesses in all 50 States and some 

select international communities. And recently, with our purchase 

of Savvis, we are one of the largest cloud computing and data 

hosting companies in the world combined with our cybersecurity solutions that we offer to the Federal Government and multiple State 

and local governments. So we are a true global player. 

With that, we just recently got involved in the competitive video 

business in the last 5 years where we have launched our Prism TV 

in multiple markets, including Colorado Springs, central North 

Carolina, and most recently in Omaha where we launched a gig 

service. It is a competitive service and it truly brings a choice to 

the market. 

Consumers benefit from this choice. They get better quality service; they get more innovation, more investment, and ultimately 

lower rates. Unfortunately, the cost to broadcast content is threatening consumers’ ability to receive just any of those benefits. 

So the regulatory regime we are looking at was creating an environment when the Federal policymakers were concerned that 

broadcasters were going to be subject to market abuse by the incumbent cable providers when they had virtually all of the market. 

Now, today, what was the shield is now used as the sword. So as 

we face negotiations for retransmission consent, it becomes difficult 

for us to negotiate, and these rules are used against us in a myriad 

of ways, including the fact that national content can be forced down 

our throat along with the local content through tie-in arrangements. We have virtually no other option to get content in these 

markets. And the FCC’s interpretation of the good faith standard 

has rendered it meaningless, essentially giving further de facto 

power to the broadcasters. So that the scales that Mr. Munson 

spoke about our already in the favor of one party over another, and 

we are simply asking that they be returned to level. 

In addition, the regulatory regime does not reflect the explosive 

competitive nature of the video market and the explosion of comVerDate Aug 31 2005 13:21 Apr 16, 2014 Jkt 037690 PO 00000 Frm 00070 Fmt 6633 Sfmt 6633 F:\113-81~1\113-81~1 WAYNE
67 

petitive providers over a myriad of networks and methods. The current rules not only pose problems for large providers but also more 

so for small providers like CenturyLink. Every customer we obtain 

currently has a relationship with someone else. We have to win 

them over. 

And for us to sit and face these types of terms and conditions 

from broadcasters, I know Mr. Munson said that thousands of 

these retransmission consent negotiations go smoothly, including 

with CenturyLink. I doubt there was a lot of horse-trading and 

haggling in that negotiation. We essentially have to take what we 

get. 

Ultimately, the fees that are being charged are providing windfalls for the corporate broadcasters and not the local stations. 

Retrans was designed to promote localism and, you know, ensure 

that there was a safety net for local stations. Now, we have to buy 

these local stations along with multiple other channels, and we 

have no choice but to take it because these are products and content that our subscribers need. SNL Kagan projects that by 2018 

$6.1 billion will be gained in re-trans fees over 2.4 billion from 

2012. That is a 250 percent increase over just two retransmission 

cycles. And this is all at the expense of consumers that live and 

work in your districts. 

Congress has an opportunity with STELA to reform and return 

this negotiation process into a true market scenario. We agree with 

DISH that the carriage of distance signals, if there is an impasse, 

would be one way to do that. You would essentially return some 

leverage back to the providers so when we sit down at the table, 

we both want something. Right now, it is not the case. The reasons 

Congress conferred the regulatory advantage to the broadcasters no 

longer exist. 

CenturyLink favors a deregulatory approach. Again, distant signals can come in for two reasons: again, it returns the balance of 

the negotiations to both sides of the table equally, and more importantly, it doesn’t punish consumers while two providers try and 

work out a deal. 

To close, at the end of the day, this is not about winners and losers; it is about protecting consumers from the regulatory problems 

that exist today. 

Again, we thank you for the opportunity to be here. We look forward to working with this committee and Congress to come up 

with a solution that is consumer-oriented. Thank you. 

[The prepared statement of Mr. Campbell follows:] 

68 


87023.047

~",~ 

~.4~~ 

CenturyLinkTM 

Testimony of 

James Campbell 

Regional Vice President, Pnblic Policy 

CentnryLink 

before the 

Subcommittee on Communications and Technology, 

Committee on Energy and Commerce 

United States House of Representatives 

September 11,2013 
69 


87023.048

Mr. Chairman, Ranking Member Eshoo, and members of the Subcommittee, thank you 

for the opportunity to testify this morning before the Subcommittee regarding Innovation Versus 

Regulation in the Video Marketplace. My name is Jim Campbell, Regional Vice President 

Public Policy for CenturyLink. As a relatively new entrant in the video market, we hope to bring 

a unique perspective to the debate about the challenges of obtaining essential broadcast content 

at reasonable rates under the existing statutory framework. 

On the issue of access to content, which for many who are following this proceeding 

today is a key topic, CenturyLink like others, does not seek to avoid paying reasonable rates for 

its broadcast content. Rather, we seek fair retransmission consent rules that will not be 

leveraged against consumers and competitive new entrants. This can be achieved by modernizing 

the existing regulatory structure to allow newer entrants like CenturyLink to carry national 

programming from an alternative market during negotiation breakdowns. 

CenturyLink background and entry into the video market 

By way of background, CenturyLink is the third largest telecommunications company in 

the United States, offering advanced communications services to over 14 million homes. 

CenturyLink serves numerous federal, state and local government agencies as well as businesses 

in all 50 states and select international markets. Our services include voice, broadband, video 

entertainment and data services. In addition, we provide fiber backhaul and managed 

cybersercurity solutions. We offer cloud computing on a global basis as a result of our 

acquisition of Savvis, Inc., one of the largest cloud computing and hosting companies in the 

2 
70 


87023.049

world. Today Century Link is a global communications company that provides a variety of 

advanced services including our more recent entry into the video services market. 

Over the past five years, CenturyLink has significantly ramped up its entry into the 

competitive video market, launching its fully digital IPTV service in twelve markets, including 

Las Vegas, Phoenix, Orlando, Colorado Springs, Omaha, Tallahassee and central North 

Carolina. The service delivers high-quality video content, a broad range of on-demand content, 

and advanced technology and interactive features over a managed two-way IP network, bringing 

an additional competitive video option to over 1.5 million homes. In fact, we are generally the 

only facilities-based competitor to the local cable provider in markets we enter. Our company's 

unique and expansive network footprint provides great potential for our video product to reach a 

variety of rural and urban markets of all sizes. 

Consumers benefit from robust competition. Better service, investment, innovation, and 

lower prices always result when one or more providers compete for customers. That is true in 

the video market as well. Unfortunately, while we have seen some slowdown in cable price 

increases from the incumbent operator in the markets where CenturyLink has launched our 

competitive service, true competitive pricing has not yet been realized. 

Additionally, federal and state policymakers recognize that broadband deployment and 

cable competition are related and that broadband speeds and adoption increase significantly 

when it is offered along with video services, which is a benefit to consumers. Ninety percent of 

our new TV customers also purchase high speed Internet, which resonates well for those who 

prefer over-the-top streaming video alternatives. From a pure consumer choice standpoint, at 

least 50 percent of our new IPTV customers are new customers to CenturyLink. 

3 
71 


87023.050

In our IPTV markets, CenturyLink offers broadband speeds ranging from 25 to 40 

megabits per second, and in Omaha, where we have launched full gigabit service, those 

customers are enjoying our video product using incredible speeds over our gigabit network. 

The 1992 Cable Act, retransmission consent and changed circumstances 

The underlying federal rules that govern cable, satellite and IPTV providers' efforts to 

obtain broadcast content were largely motivated by Congress' concern in 1992 that local 

broadcasting was at risk from potential market power abuses by incumbent cable companies who 

dominated the marketplace at that time. As a result, federal policymakers have deliberately 

enhanced the broadcasters' position vis-a-vis pay television providers with several key 

accommodations: 

• Under the must-carry rules, any local broadcaster can demand that its local feed be 

featured in the cable television provider's line-up, even if there is minimal demand 

from viewers. 

• Under the FCC rules, a pay television provider that seeks to provide its customers 

with the content found on local broadcast stations (and that has not already been 

compelled to carry those stations under the must-carry rules) effectively has no other 

option for obtaining such content. 

• Congress added a requirement that retransmission consent negotiations be conducted 

in good faith as part of prior revisions to the satellite compulsory license act. 

However, the FCC's interpretation and application of that requirement has all but 

rendered it meaningless, adding significant de facto power to the broadcaster position 

4 
72 


87023.051

under the rules, even as consumers have been subjected to signal blackouts with 

increasing frequency in recent years. 

• Ironically, although threatening blackouts on the eve of marquee events like the Super 

Bowl or the Oscars is a standard tactic for broadcasters, it is actually unlawful under 

FCC rules for pay television providers to deny viewers access to a signal during 

"sweeps week," when the pressure is greatest on broadcasters to show good ratings to 

their advertising clients. 

These accommodations were added to the considerable benefit of no-cost spectrum 

granted by the federal government decades ago to broadcasters, and continually renewed to this 

day. Unfortunately, the changes made by the 1992 Act did not anticipate the explosion of video 

competition with traditional cable providers from Direct Broadcast Satellite, other MVPDs, and 

over the top video providers. DirecTV, DISH, Verizon FiOS, AT&T U-Verse, CenturyLink 

PRISMTM TV, and more recently, Netflix, Google and Amazon are now all entering markets 

with the goal of providing consumers alternatives to large incumbent providers. 

Twenty-one years later, incumbent cable companies no longer have a monopoly in the 

video market. Reconciliation of present rules with market realities is needed immediately. 

While CenturyLink believes that content owners should be reasonably compensated for their 

content, under the current law, retransmission consent fees are providing windfall profits for the 

major broadcast networks and owners of multiple broadcast stations rather than a safety net for 

local stations. These excessive fees eventually hit the wallets of consumers in your districts. 

5 
73 


87023.052

Customers of new entrants become victims of competitive choice 

While customers of larger cable and satellite companies are subject to blackouts with 

increasing frequency, tied carriage and non-negotiable rates create additional competitive hurdles 

for alternative providers. On the one hand, because CenturyLink is a relatively new video option 

in most of the markets we serve, we can ill-afford even a small number of subscriber defections 

should we lose the right to carry a local station. Yet, given the massive capital investments we 

have made in order to provide consumers with a competitive alternative, we also cannot simply 

give in to whatever the broadcasters demand - including not only exorbitant rates, but also the 

tied carriage of additional broadcast and non-broadcast services that are of limited interest to our 

customers. 

While the loss of a signal severely harms a new entrant and its customers, it poses little 

risk to the broadcaster given its ability to continue to make its programming available to other 

video programming distributors as well as to transmit it for free over the air and the Internet. 

And the harm does not end there. Broadcasters often take further advantage of their leverage 

over new entrants by imposing even more onerous terms than those demanded of incumbent 

providers. 

In addition to the direct adverse impact that outdated retransmission consent rules have 

on the consumers who end up bearing the cost of the broadcasters' demands, they also threaten 

the consumer benefits of local facilities-based video provider choice such as innovative service 

and product offerings, differentiated programming, pricing options, and broader deployment of 

high speed broadband. 

6 
74 


87023.053

The impact on consumers 

The recent retransmission consent dispute between Time Warner Cable and CBS has 

brought into sharp focus the fact that the current retransmission consent regime leaves consumers 

vulnerable to service disruptions and offers no protection against escalating prices. 

And, in fact, it is well established that the cost to MVPDs of obtaining broadcast 

programming has been and continues to increase exponentially and consumers are feeling the 

impact through increased prices. SNL Kagan projects retransmission fees paid to broadcasters 

by video providers could reach a total of $6.1 billion by 2018, up from the $2.4 billion estimated 

in 2012. During its last round of retransmission negotiations, as mentioned above, CenturyLink 

experienced this sharp increase in the cost for broadcast content. 

In turn, these 

high content costs have Cable Marketplace 

resulted in higher video 

Consumer Price Index Average bpanded 1M" table prke 

service prices. For 

instance, according to 

the FCC report on 

Cable Industry Prices '''''' 

released on June 7, 

2013, the average 

monthly price of 

7 
75 


87023.054

expanded basic servicel for all communities surveyed increased by 4.8% over the 12 months 

ending January 1, 2012, to $61.63, compared to an annual increase of 2.9% in the Consumer 

Price Index (CPI). Further, the price of expanded basic service has increased at a compound 

average annual growth rate of 6.1 % over the same period while the CPI compound annual 

growth rate over the same period was only 2.4%. These increases are simply not sustainable for 

MVPDs or consumers. 

The solution: Modernize the Cable Act to restore a level-negotiating table during 

retransmission consent negotiations 

Congress has an opportunity, as part of the reauthorization of the Satellite Television 

Extension and Reauthorization Act of 2010, to restore balance to the retransmission consent 

marketplace. 

The significant regulatory advantages that Congress has conferred on the broadcast 

industry for various reasons, and under various circumstances that no longer exist, are not 

benefitting consumers. The current model clearly needs to be modified. The issue of 

negotiations and related timing should be addressed immediately. Under the existing legislative 

regime, local broadcast stations have the right to pull the plug on any video provider when 

retransmission negotiations hit a standstill, blacking out all nationally distributed programming 

(CBS, ABC, NBC, FOX,). Moreover, they are bolstered by a regulatory regime that erects 

barriers that effectively prevent providers from obtaining that programming from a station in 

another media market. Congress needs to amend the current legislative framework to restore a 

more level negotiating table. 

1 The average monthly price of expanded basic service is the combined price of basic service and 

the most subscribed cable programming service tier excluding taxes, fees and equipment charges. 

8 
76 


87023.055

CenturyLink favors a deregulatory approach under which the 1992 Cable Act would be 

amended to allow providers the right to carry national programming from an adjacent or alternate 

market during a broadcast retransmission consent negotiation breakdown. Consumers should not 

be punished as a result of provider negotiations. 

We also support other measures, such as Congressman Scalise's Next Generation 

Television Marketplace Act, and we commend Ranking Member Eshoo for her leadership in 

circulating a discussion draft of The Video Choice Act. Both are essential elements in a process 

that Congress must begin soon. 

Final thoughts 

At the end of the day, this is not about winners and losers. It is about consumers and the 

future of a truly competitive marketplace. At the current rate of change, the real harm is 

occurring now for consumers who are required to pay for increases in real dollars. At some 

point, the model breaks. Local broadcasters are effectively using outdated rules to inhibit 

consumers from receiving the benefits of program choice and a truly viable, competitive 

marketplace. Congress can playa significant pro-consumer role by modernizing current 

retransmission statutes and establishing meaningful guidelines for negotiations and access to 

adjacent content to prevent blackouts. 

Thank you for the opportunity to testify today. We look forward to working with 

members of the Committee to accomplish legislative reform in the evolving video marketplace. 

We are confident that rapid and meaningful reform will encourage new entrants like 

CenturyLink to continue to expand our investments in broadband and digital video services and 

allow us to provide American consumers with the benefits of innovation and competition. 

9 
77 

Mr. WALDEN. Mr. Campbell, thank you for your testimony. We 

will now go to our final witness this afternoon from Public Knowledge, the Senior Staff Attorney, John Bergmayer. 

Mr. Bergmayer, thank you for being here and we look forward 

to your testimony. 

STATEMENT OF JOHN BERGMAYER 

Mr. BERGMAYER. Good morning, Chairman Walden, Ranking 

Member Eshoo, and members of the subcommittee. Thank you for 

the opportunity to participate in today’s hearing. 

Today, I am going to talk about two things: First, I have a few 

remarks on current video issues; then, I will present a few ideas 

that will make the video marketplace more competitive and affordable. 

For years, Public Knowledge has met with both sides of the aisle 

on video reform issues and we frequently find that we agree with 

several proposals coming from Members of Congress who come 

from very different political backgrounds. While there are some 

real differences of opinion on how to proceed, there is a widespread 

recognition that current rules and the market structure they enable are not serving the viewer as well as they should. We are in 

a window where reform is possible only if members of this committee come together to find common ground. 

The month-long blackout the kept CBS programming, both 

broadcast and cable, from appearing on the lineups of Time Warner 

Cable subscribers has focused the attention of some policymakers. 

Ranking Member Eshoo’s draft Video CHOICE bill puts forward a 

number of creative ideas that could move the video marketplace in 

a good direction. Under the provisions of this discussion draft, not 

only would viewers be protected from the effects of corporate contract disputes that blackout channels, they would get more choice 

on what channels they subscribe to and could see their monthly 

fees go down. 

Another approach, the Television Consumer Freedom Act is 

being promoted by Senators McCain and Blumenthal. This bill proceeds from the observation that programmers, broadcasters, and 

cable companies all receive a number of special protections from 

the government. It asks that they provide viewers with more choice 

in exchange. 

We have also been encouraged by efforts by Representative 

Scalise in previous Congresses to look for outdated video regulations that merit elimination in order to remove unnecessary protections for video incumbents. 

We should not overlook an important part of viewer choice. That 

is choice in the devices that people can use to access their cable 

programming. Cable set-top boxes often have high rental fees and 

lack the innovation found in other areas of consumer electronics. 

This is why Congress passed Section 629 of the Communications 

Act. Congress and the FCC should continue to enforce the current 

cable card implementation of that statute while moving to a more 

modern implementation that fixes some of the shortcomings. 

Congress must reauthorize STELA. Satellite has been a success 

story where action by Congress and the FCC insured that a new 

distribution technology could access content and reach viewers. It 

78 

should be a lesson for policymakers about the importance of fostering new modes of video competition. The success of STELA 

points to the best long-term approach for improving the video marketplace. That is to promote competition from new providers. 

The internet is changing the video marketplace just as it 

changed the market for other media. However, dominant players in 

video have control over the content online competitors need for 

their service and the pipes they need to reach viewers. New technology will play a large part of video delivery but the market may 

not reach its full competitive potential. Consumers will still suffer 

from a lack of choice and independent content producers will struggle to reach viewers. 

But there is a solution at hand. Congress should make sure that 

its pro-competition video policies are technology-neutral. If it does 

this while protecting internet openness, it can ensure that videos 

have more choices. 

Like satellite, online video is a success story but it can be much 

more than it is now. It is not driving down cable prices. For most 

users, it is a supplement to cable, not a replacement. Congress and 

the FCC can help online video develop into a full competitor in 

three easy ways: First, they can clear away some of outdated rules 

that slow down the evolution of the video marketplace; second, they 

can extend the successful policies that protect providers from anticompetitive conduct to certain online providers; and third, they can 

protect internet openness and prevent discriminatory billing practices that hold back online video. This will increase competition, 

meaning lower prices, better services, and more flexibility and control for consumers. 

To be sure, many of the regulations that permeate the video marketplace can be repealed today. These rules include the Sports 

Blackout Rule and prohibitions on distant signal importation. Some 

other rules like the Compulsory Copyright License are outdated but 

must be reformed cautiously. Measures that are designed to mitigate the market power of certain large video providers should not 

be repealed until effective competition develops. Examples of these 

kinds of roles included the Program Access and Program Carriage 

Rules. 

In some respects, they should be extended. For example, online 

video providers that wish to voluntarily operate as multichannel 

video programming distributors should be able to do so. This would 

ensure that consumers had more choices for high-value content 

than they do today. It would eliminate the incentives that keep certain content from being licensed widely. 

Finally, Congress can help ensure the internet remains open to 

creators of all sizes by working to prevent the anti-competitive use 

of data caps and other open internet violations. 

My brief oral testimony can only touch on a few issues. My written testimony contains more detailed analysis and recommendations. 

Thank you for inviting me to speak and I look forward to your 

questions. 

[The statement of Mr. Bergmayer follows:] 

79 


87023.056

111111111 1.1 Public Knowledge 

Testimony of John Bergmayer 

Senior Staff Attorney 

Public Knowledge 

Before the 

Committee on Energy and Commerce 

Subcommittee on Communications and Technology 

Hearing On: 

"Innovation Versus Regulation in the Video Marketplace" 

Washington, DC 

September 11,2013 
80 


87023.057

Testimony of John Bergmayer 

Senior Staff Attorney 

Public Knowledge 

Before the 

Committee on Energy and Commerce 

Subcommittee on Communications and Technology 

Hearing on: "Iunovation Versus Regulation in the Video Marketplace" 

September ll, 2013 

Good morning Chairman Walden, Ranking Member Eshoo, and members of the 

Subcommittee. Thank you for the opportunity to participate in today's hearing. My name is John 

Bergmayer, and I work for Public Knowledge, a non-profit public interest organization that seeks 

to ensure that the public benefits from a media ecosystem that is open, competitive and 

affordable. Today, I am going to recommend that the House consider re-aligning some of the 

rules that govern the video marketplace so that they better serve the public interest, allowing all 

creators to be fairly compensated while bringing down bills and increasing the choices available 

to viewers. 

RECENT DEVELOPMENTS 

The scope of this hearing is broad, and this testimony will touch on many broad themes. But 

it is appropriate to begin with comments on a few specific video-related issues that have gotten 

attention on the Hill recently. 

Legislation Unbundling the Cable Package 

For years, viewers have said they want more flexibility and choice with their cable packages. 

They want to save money, and have more control over what comes into their homes, without 

losing access to the programming they love. But the structure of the video market has kept this 

from happening. Large content companies require that their less-popular programming is 

bundled with their more well-known offerings. Broadeasters package their must-have signals 

together with their cable networks-and cable companies are actually forbidden by law from 

offering broadcast stations it la carte. Finally, cable companies and other MVPDs have 

historically not faced the kind of competitive pressure that would make them more responsive to 

changing customer needs. This has given them the ability to raise rates and pass along content 

fees to customers. 

As this testimony will demonstrate, Public Knowledge believes that the long-term solution to 

the problem of inflexible, expensive video packages is through competition-in particular, 

through policies aimed at ensuring online video distributors can access the same content as their 

established rivals, and reach customers with high-quality streams. 

2 
81 


87023.058

However, this approach will take many years to realize, and customers are hurting today. 

That is why it is exciting that Senators McCain and Blumenthal are promoting a bill that would 

bring immediate relief to consumers. The fact is, many players in the video marketplace-cable 

companies, broadcasters, and programmers-receive various govemment benefits. Over the 

years, members of Congress and representatives of the industries at this hearing today have 

proposed different ways of eliminating, modifying, or expanding some of them. The 

McCainIBlumenthal bill modestly proposes that, to qualify for these legal protections, companies 

need to offer viewers more choice, and the ability to more carefully tailor their video 

subscriptions-and not prevent such choice through restrictive contracts. Notably, the bill does 

not require that all viewers assemble their video subscriptions on a channel-by-channel basis. 

Bundles will still be available to viewers who want them-in fact, if the bill is passed, it is likely 

that there will be more bundles than ever before, at different price points, better reflecting the 

diversity of viewer interests. Thus, the critics of a la carte who view choice and convenient 

programming packages as in conflict are simply off base. The bill will simply ensure that the 

only people who pay for expensive programming are the people who actually want to watch it, 

and it will likely increase the diversity of programming that is available by allowing people to 

direct their monthly fees to the programming they want to see, instead of to programming they 

are forced to buy. Until recently, we had not seen such consumer-friendly legislation discussed in 

the House. But this Monday, Ranking Member Eshoo distributed a discussion draft of her Video 

CHOICE Act. Ranking Member Eshoo's discussion draft empowers the FCC to protect 

consumers ability to access content during these disputes, and, like the McCainIBlumenthal Bill 

provides greater choices for consumers in thcir pay-TV subscription packages. I encourage other 

members to work with her to move this draft towards introduction. 

The Implications o/the Time Warner Cable/CBS Blackout 

The month of August was frustrating for customers of Time Warner Cable, the secondlargest cable company in the United States. Unable to come to terms with CBS, TWC customers 

were not able to access popular CBS programming-broadcast content as well as cable channels 

like Showtime-on their cable subscriptions. While they were able to get some content over the 

air, CBS went as far as to block TWC broadband subscribers, including those that are not even 

cable customers, from accessing some CBS content online. I This month-long cable and Internet 

blackout was notable for its length, and for the sharp words exchanged between executives of the 

different companies. But unfortunately, it was not unprecedented. It was just the latest in a series 

of blackouts that have been increasingly disruptive to viewers. In 2010, during the 

FoxiCablevision dispute where cable and Internet viewers were also blacked out, Public 

I In this context it is worth noting that the most notable incidents where online content companies have blocked 

specific ISPs appear to be side effects of an increasingly dysfunctional video marketplace. Whether it is blackouts 

related to retransmission disputes, NBC restricting some its online Olympics coverage to customers of certain ISPs, 

the corporate red-tape that makes it so that some Apple TV apps only work for customers of certain MVPDs, or 

even "authentication" initiatives like TV Everywhere, this new kind of threat to Internet openness-which is, to be 

clear, distinct from "net neutralily"-is something policymakers should pay attention to. The best way to prevent 

online video from turning into a series of walled gardens tied to traditional cable would be for policymakers to 

address the root of the problem-an uncompetitive video marketplace that is being distorted by regulations that have 

not been updated to reflect today's business and technological realities. 

3 
82 


87023.059

Knowledge warned that it was a "sign of things to come."2 This prediction proved correct. To 

quote the American Cable Association, 

In 2012, millions of pay TV subscribers went without access to local broadcast signals from 

their cable or satellite TV provider because of 91 retransmission consent disputes, a 78% 

increase over blackouts experienced in 2011, and an even greater increase over the number of 

blackouts in 2010. In 2013, following the CBS-TWC blackout, subscribers of four different 

pay TV providers in 52 markets will have lost signals of75 separate TV stations.3 

Unless policymakers work to repair a retransmission consent system that is boosting broadcaster 

profits at the expense of viewers, blackouts like August's CBS-TWC blackout are still only the 

beginning. 

STELA 

Congress must reauthorize the Satellite Television Extension and Localism Act by the 

end of 20 14. This law ensures that satellite television companies can continue to retransmit local 

broadcast stations to their customers, and it is an important building block of video competition. 

Even as it considers various video reform proposals, Congress should not put off reauthorizing 

this important provision to the last minute. Satellite television has been a success story, where 

action by Congress and the FCC ensured that a new distribution technology could access content 

and reach viewers. It should be a lesson for policymakers about the importance of fostering new 

modes of video competition. Certainly, Congress should not put the video competition we have 

already achieved at risk by failing to ensure that satellite viewers can continue to access popular 

programming without interruption. 

Video Device Competition 

Policymakers should reject attempts, whether at the FCC or in Congress, to weaken the 

CableCARD system or to make it more difficult for the FCC to implement its successor. 

Congress passed Section 629 of the 1996 Telecommunications Act for good reasons that remain 

valid today, and the cable industry agreed to adopt CabieCARD to implement it. Just as 

consumers benefit from choice and flexibility in other areas-such as mobile phones-they 

should benefit from a competitive market in video devices that can access cable content. Too 

many people are still paying too much money to rent sub-par set-top boxes from their cable 

companies. This, not CableCARD, is what harms viewers and helps drive up monthly bills. If 

CableCARD is weakened, this problem will only be exacerbated, as more consumers lose the 

ability to get better equipment from other providers. 

While Public Knowledge continues to believe that a "home video gateway" approach is a 

better way to implement the goals of Section 629 today and in the future, the current 

2 Letter from Harold Feld, Public Knowledge, to Julius Genachowksi, Chainnan, FCC, Oct. 21, 2010, 

http;llpublicknowledge.orgiletter-fcc-implications-foxs-intemet-blocking. 

3 Letter from Matthew Polka, American Cable Association, to Mignon Clyburn, Chairwoman, FCC, Aug. 22, 2013, 

http://www.americancable.org/files/130822%20ACA%20TO%20FCC%20--

%20No%20More%20TV%20Blackouts.pdf. 

4 
83 


87023.060

CableCARD system benefits many viewers, and enables innovative, well-regarded products like 

the TiVo Roamio, and interesting upcoming devices like Samsung's Smart Media Player. It 

should stay in place until a better system is in place, and to the extent members can identify 

shortcomings with CableCARD, they should encourage the FCC to replace it with something 

better, rather than selectively removing its ability to make the current system work as well as 

possible. 

SUMMARY OF BROADER RECOMMENDATIONS 

There is widespread agreement that we are living in a golden age of television. Technology 

has increased people's choices so they can watch just the shows and movies they are interested 

in. Digital technology allows cable and satellite services to fit more channels in the same 

bandwidth. DVRs give people control over how they watch broadcast and cable programming, 

and online streaming services provide access to a large back catalog of movies and TV shows. 

Computers, smartphones, tablets, and connected devices are changing what it means to "watch 

TV." 

These new choices have allowed people to watch more specialized programming that fits 

their individual tastes. But while some pessimists have predicted that new technology would 

create a "filter bubble" that isolates people from each other and deprives them of common 

cultural reference points, this has not happened with video. Programs like House of Cards, Mad 

Men, Game of Thrones, Dancing with the Stars, NCIS, and (of course) live sports are still part of 

our cultural landscape. Even in this era of 500 channels, these kinds of programs still inspire 

discussions around the water cooler and on Twitter. 

But despite all of the great programming and groundbreaking devices, many Americans are 

locked into a television business model that limits competition and choice: the expensive bundle 

of channels. Most of the most popular programming is not available except through traditional 

subscription TV services, and these grow morc expensive year after year. Two years ago, the 

monthly fee for cable TV (not including broadband) hit $86 per month, and is projected to rise to 

$200 per month by 2020-that is, unless Congress does something about it.4 By contrast an 

online video-on-demand service like Netflix or Amazon Instant Video costs less than $10 per 

month. 

While cable and satellite companies have improved some of their offerings to match the 

convenience of what is available online, they have a long way to go, and do not come close to 

matching the value those services offer. This is because most Americans do not have a 

meaningful choice when it comes to selecting their video provider, so market forces have not 

been able to keep prices low. Often, if consumers want an affordable broadband and a video 

subscription that gives them access to must-see content, they can only turn to their local cable 

company. This is a legacy of a time when subscription video service required a specialized 

network, and simple economics did not allow for much competition. But this is no longer the 

case; the technology exists to allow people to have as many choices of video provider as they 

have of email providers, or of restaurants. While there may be a continuing place for specialized 

4 NDP Group, Pay-TV bills continue to increase by 6 percent, year-aver-year, as consumer-spending power remains 

flat, Apr. 10, 2012, hltps:llwww.npd.comlwps/portallnpdlus/news/press-releases/pr_120410. 

5 
84 


87023.061

technology or networks to deliver live programming, in a largely on-demand world there should 

be many more video providers than we currently see. 

The ongoing dominance of the MVPD model is made possible largely by an outdated 

regulatory structure created by broadcast, MVPD, and content incumbents to gain competitive 

advantages and to cement their place in the video ecosystem. Moreover, most people get their 

broadband through Internet service providers that also are video distributors, and who have the 

motivation and the means to discriminate against online video services. It is time for Congress 

and the FCC to revamp the rules of the video industry to promote the public interest. A video 

marketplace that served the public interest would give viewers more choice of providers and the 

ability to watch any programming whenever they want on the device of their choosing. At the 

same time it would ensure that creators and distributors could continue to get paid a fair price. A 

video marketplace that served the public interest would align the interests of viewers, creators, 

and distributors, not set one against the other. 

The House and other policymakers can achieve this ambitious goal in three ways. First, they 

can clear away or update some of the outdated rules that slow down the evolution of the video 

marketplace. For example, protectionist policies like the sports blackout rules should be 

repealed, and the dysfunctional retransmission consent system should be updated. Second, they 

can extend the succcssful policies that protect smallcr video competitors. For example, if a large 

cable system would be prohibited by law from acting anti-compctitively toward a satellite 

provider, there is no reason why it should be able to take the same actions against an online 

video provider. Third, they can protect Internet openness and prevent discriminatory billing 

practices that hold back online video. In addition to supporting the FCC's Open Internet rules, 

House Members and other policymakers should examine whether discriminatory data caps hold 

back online video competition. By doing this they will increase competition, which will mean 

lower prices, better services, and more flexibility and control for consumers. 

HISTORICAL CONTEXT 

For nearly a century the federal government has shaped the development of electronic media. 

In the 1920s the Federal Radio Commission brought order to the chaotic and experimental 

landscape that characterized early broadcasting. In doing so it set the conditions that allowed 

radio and then television broadcasting to develop into what it was in its heyday, and what it is 

today. In the 1960s and 1970s the FCC took steps to protect broadcasting from the disorganized 

and innovative early cable industry.5 By doing this it made sure that cable became an adjunct to 

rather than a replacement for established broadcasting.6 

5 See United States v. Southwestern Cable Co., 392 US 157 (1968). This case, in addition to being an important case 

setting out the bounds of FCC authority, contains a summary of the FCC's early efforts at cable regulation. In 1976, 

the House Subcommittee on Communications issued a staff report titled "Cable Television: Promise Versus 

Regulatory Performance" that stated that the FCC "has chosen to interpret its mandate from Congress as requiring 

primary concern for individual broadcasters rather than the needs of the audience being served." 94th Cong., 2d 

sess., 1976, Subcomm. Print. See also Office of Telecommunications Policy, Cable: Report to the President (1974) 

(OSTP Report), which contains an early history of the cable industry and attempts at cable regulation, as well as 

policy recommendations. 

6 The OSTP Report said that "cable is not merely an extension or improvement of broadcast television. It has the 

potential to become an important and entirely new communications medium, open while and available to all." OSTP 

6 
85 


87023.062

After Congress passed the Cable Act of 1984, the tables turned and cable became the 

monopoly. Cable operators controlled who did and didn't get on the new medium, using their 

power to require cable programmers, such as the fledgling CNN and Discovery, to provide "pay 

for play" equity interests to cable operators, or sign exclusive agreements prohibiting 

programmers like MTV from appearing on potential competitors such as Direct Broadcast 

Satellite (DBS). At the same time, cable operators received access to needed inputs such as pole 

attachment rights and broadcast programming. The lack of effective competition led to high 

prices and poor service, but the cable incumbents' control over "must have" programming made 

it impossible for any competing services to emerge. 

It was not until the 1992 Cable Ace that Congress embarked on an express policy of 

promoting competition in the television market. It realized that potential competitors needed 

access to the same content as large cable systems with market power. New requirements such as 

program access rules that gave competitors access to programming owned by the cable operators, 

and program carriage rules that prevented cable operators from demanding an equity share as a 

condition of carriage ("pay for play"), helped make it possible for new "multi-channel video 

programming distributors" (MVPDs) to compete with cable operators, as did changes to the law 

to make it easier for competitors to get access to broadcast programming. (The remainder of this 

testimony will use the term "MVPD" to refer to cable, satellite, and teleo video services such as 

U-Verse and FiOS generically.) 

These policies of promoting competition were somewhat successful but their promise was 

not entirely fulfilled.s They enabled some new competitors to operate but these new competitors 

did not change the fundamental shape of the market. They did not slow the increasing power of 

cable generally and a few largc cable companies in particular.9 And they did little or nothing to 

keep the market from consolidating in ways detrimental to consumers and independent content 

producers alike. To an extent, this result was brought about by the technology of the time. 

However, broadband now gives polieymakers the chance to promote true competition in video. 

The Intemet is beginning to change the video marketplace just as it changed the market for 

music, news, books, and other forms of media. Consumers have new options and incumbents are 

responding. But it is not a foregone conclusion that the Internet will fundamentally alter the 

Report at 13. But while cable did succeed in providing viewers with more content it fen short of this early promise, 

and the regulatory system that developed ensured that cable extended the reach of broadcasting instead of 

developing into a competitor to it. 

7 Cable Television Consumer Protection and Competition Act of 1992, Pub. L. No. 102-385, 106 Stat. 1460 (1992). 

8 See Annual Assessment of the Status of Competition in the Market for the Delivery of Video Programming, 

Fourteenth Report, MB Docket No. 07-269 (reI. Jul. 20, 2012), 

hltp:llhraunfoss.fcc.gov/edocs..IJublic/attachmatchlFCC-12-8IAl.pdf. See also Comments of Public Knowledge in 

Annual Assessment of the Status of Competition in the Market for the Delivery of Video Programming, MB Docket 

No. 07-269 (June 8, 2011), available at http://www.publicknowledge.orgifiles/docs/PK_Comments_MVPDCompetition-Report. pdf. 

9 For example, Adelphia's cable assets were sold to Time Warner Cable and Comcas!. See Adelphia Sold to Time 

Warner, Comcast, BUFFALO BUSINESS FIRST (Apr. 21, 2005), 

http://www.bizjournals.eomlbuffalo/stories/2005/04118/daily37.html?page=all. Comeas!'s cable assets and NBC 

Universal have been combined in a joint venture that is controlled by, and 51 % owned by Comcas!. See General 

Electric, New NBCU, http://www.ge.com/newnbcu. 

7 
86 


87023.063

video marketplace. Because they are missing so much of the most popular programming, and 

because fast broadband is not yet sufficiently deployed, online video providers are more 

complements to, than replacements for, an MVPD subscription. While Netflix and Amazon have 

proved fatal to most video rental shops, they do not directly compete with MVPDs, which have 

shown themselves to be considerably more robust. 

This is because cable and media incumbents have control both over the content their nascent 

online competitors need for their service (either through direct ownership, or through contracts 

that limit online distribution), and over the pipes they must use to reach consumers. As a result 

much high-value programming is not available online, and online video providers have to 

contend with artificially low bandwidth caps and other discriminatory practices that keep them 

from reaching their full potential. 

Thus while it is inevitable that IP technologies and the Internet will play an ever-larger role 

in video delivery, it remains an open question whether consumers or incumbent MVPDs will 

benefit most from this technological transition. Consumers will still suffer from a lack of choice 

and independent content producers will still struggle to reach viewers if existing incumbents in 

the content and MVPD industries continue to thwart disruptive change and control the transition 

for their own benefit. Congress should once again take the necessary steps to ensure that 

incumbents cannot throttle (literally as well as figuratively) the legions of potential competitors 

trying to reach willing consumers. 

MVPDs and content companies are operating in their own self-interest under a framework 

that Congress and the FCC designed. Congress can address some of the challenges the future 

development of the video marketplace faces by pruning away the needless overgrowth of older 

rules, like syndicated exclusivity, the sports blackout rule and the network non-duplication rule, 

that exist only to protect the business model of local broadcasters and other incumbents. Some 

other rules, like retransmission consent and the compulsory copyright license, are outdated, but 

part of an interwoven fabric of regulatory and business expectations. They should be reformed, 

but cautiously. 

At the same time, measures that are designed to mitigate the market power of certain large 

video providers should not be repealed until effective competition develops. In some respects 

they should be extended. For example, online video providers that wish to voluntarily operate as 

MVPDs should be able to do so, as this would enable them to access ccrtain valuable content and 

protect them against anti-competitive actions by incumbents. 10 This would ensure that consumcrs 

had more choices for high-value content than they do today and would eliminate the incentives 

that keep certain content from being licensed widely. 

Finally, the fact that the largest residential broadband Internet service providers (ISPs) are 

also MVPDs invested in the existing video distribution models raises concerns. These 

ISPIMVPD combinations can impose a variety of policies that prevent genuinely disruptive 

competition. For example, the ability to control how much data subscribers may access through 

10 See Comments of Public Knowledge in Interpretation of the Terms "Multichannel Video Programming 

Distributor" and "Channel" as Raised in Pending Program Access Proceeding, MB Docket No. 12-83 (filed May 14, 

2012) (Sky Angel Comments), available at http://www.publicknowledge.org/interpretation-mvpd. 

8 
87 


87023.064

data caps, the ability to privilege some content over others through prioritization or exemption 

from data caps, and the ability to control what devices can connect to the network, give cable 

operators (and other broadband providers like FiOS) the ability to pick winners and losers just as 

cable operators did from 1984 to 1992. 

DETAILED ANALYSIS AND RECOMMENDATIONS 

The video marketplace is unique, not only because of its complicated business and regulatory 

structures, but because some cable incumbents are better placed to counter the challenge the 

Internet poses to their business models in varied ways. The structure and practices of large media 

companies, copyright policy, and even spectrum policy can directly affect the video marketplace. 

Threats to Internet Openness 

For a long time it looked as though ISPs would continue doing what Comcast did when it 

started degrading BitTorrent traffic-picking and choosing which Internet protocols and services 

got preferential or discriminatory treatment. But recently ISPs have found that it is more 

effective to discriminate via billing practices. Some ISPs have set their bandwidth caps so low as 

to make it financially unattractive to switch over entirely to online video, as this would put 

viewers over their caps and perhaps subject them to overage charges. I I At the same time, at least 

one ISP exempts its own video services that are delivered over the same infrastructure from its 

caps.12 To top it off, some ISPs cannot even accurately measure their subscribers' usage.13 These 

practices disadvantage services like N etflix and Amazon Instant Video and relegate most online 

video to the role of a supplement to, rather than replacement for, traditional MVPD services. 

To counter this, Congress needs to stand behind the FCC's attempts to protect Internet 

openness,14 and it needs to find out more about why wireless and wire line providers set data caps 

at the levels they do. IS At the same time these protections need to be strengthened, their 

loopholes need to be closed, and they need to take into account the fact that discrimination can 

11 ANDREW ODLYZKO, BILL ST. ARNAUD, ERIK STALLMAN, & MICHAEL WEINBERG, KNow YOUR LIMITS: 

CONSIDERING THE ROLE OF DATA CAPS AND USAGE BASED BILLING IN INTERNET ACCESS SERVICE 48 (Public 

Knowledge 2012) ("Comcasl's own estimate for the amount of data required to replace its pay-television offering 

with an over the top competitor is 288 GB per month. In light of this, it may come as no surprise that Comcast's data 

cap is set at 250 GB per month."). Comcast has since raised its cap, but it is worth observing that the 288 GB per 

month figure is based on an unknown mix of standard and high-definition content; presumably, a higher percentage 

of high-definition video would lead to a higher figure. See Mark Israel and Michael L. Katz, The ComcastlNBCU 

Transaction and Online Video Distribution, Submitted by Comcast Corporation, MB Docket No. 10-56 (May 4, 

2010) at 33, available at http://apps.fcc.gov/ecfs/documentlvicw?id=7020448237. 

12 Michael Weinberg, Comeast Exempts Itself From Its Data Cap, Violates (at least the) Spirit of Net Neutrality, 

PUBLIC KNOWLEDGE (March 26, 2012), http://www.publicknowledge.orglbloglcomcast-exempts-itself-its-data-capviolates~. 

13 Stacey Higginbotham, More Bad News About Broadband Caps: Many Meters Are Inaccurate, GIGAOM (Feb. 7, 

2013), http://gigaom.coml20 13/02/07/morc-bad-news-about-broadband-caps-many-meters-are-inaccurate. 

14 Preserving the Open Internet, Report & Order, GN Docket No. 09-191, FCC 10-201, (reI. Dec. 23, 2010), 

available at http://fjallfoss.fcc.gov/edocsJlublic/attachmatchlFCC-10-20 I A I.pdf. 

15 For example, Representative Anna G. Eshoo, Ranking Member ofthe Communications and Technology 

Subcommittee ofthe House Energy and Commerce Committee, has recently asked the GAO to investigate data 

caps. Letter from Representative Anna G. Eshoo to The Honorable Gene L. Dodaro, Comptroller General of the 

U.S. Government Accountability Office (May 9, 2013). 

9 
88 


87023.065

happen through billing, as well as through Internet "fast lanes" that prioritize one service's traffic 

over another's, and other forms of technological discrimination. 

Restrictions on the Availability of Content and Rising Content Costs 

The current regulatory system is based around the relationship of broadcasters and MVPDs,16 

and this system makes it easy for incumbents to share content with each other while keeping it 

out of the hands of potential new competitors. 17 And while it's unlawful for incumbent providers 

to behave anti-competitively towards each other, they are free to keep their content away from 

online services, and to use exclusionary contracts and "most favored nation" clauses to limit the 

online distribution of independent programming. 18 

As a result, while a lot of very good video programming is available online, the most popular 

programming is not. 19 Most popular broadcast and cable channels are not available online. Many 

popular shows are not available online at all or are only made available after a "windowing" 

period. Some programs are put online reasonably promptly, but are only viewable in 

inconvenient ways. Some of the best online content is only available to viewers who also have 

cable subscriptions, through TV Everywhere and similar efforts. Live loeal sports are generally 

not available online at all. Thus, while online services make it easy to watch great 

documentaries, classic movies, and old sitcoms, the kinds of culturally-current programming that 

people talk about at the office and online are often not available without a cable or satellite 

subscription. 

This problem would be largely abated if online providers like Sky Angel and iveo were 

permitted to operate as MVPDs, like they want to.2 The rules that protect MVPDs from anticompetitive conduct would then protect them as well as incumbents. At the same time, the FCC 

should find that the current rules that prohibit incumbents from behaving anti-competitively 

toward each other also prohibit them from taking anti-competitive acts against online video 

16 47 U,S,C, § 325; 47 c'F,R. § 76,64. 

1747 U.S,C. § 548 provides that, 

It shall be unlawful for a cable operator, a satellite cable programming vendor in which a cable operator has 

an attributable interest, or a satellite broadcast programming vendor to engage in unfair methods of 

competition or unfair or deceptive acts or practices, the purpose or effect of which is to hinder significantly 

or to prevent any multichannel video programming distributor from providing satellite cable programming 

or satellite broadcast programming to subscribers or consumers. 

These baseline statutory requirements still apply even though the Commission has recently modified its program 

access rules. See Revision ofthe Commission's Program Access Rules, Report & Order, MB Docket 12-86 (reI. 

Oct. 5, 2012), http://hraunfoss,fcc,gov/edocs-Ilublic/attachmatchlFCC-12-123A Lpdf. 

18 Jon Brodkin, DO} Probing Big Cable Over Online Video Competition, ARS TECHNICA, (June 13, 2012), 

http://arstechnica,com/tech-policy/2012/06/doj-probing-big-cable-over-online-video-competition (noting that "[tlhe 

DOJ is also investigating contracts programmers sign to be distributed on cable systems, which include 'mostfavored nation clauses' that may favor cable companies over online video distributors,") 

19 See Carlos Kirjner, Internet TV (or Why It Is So Hard to Go Over the Top), Bernstein Research (June 15,2012). 

20 See Ryan Lawler, Court Rules lvi, tv Not a Cable System, Issues Injunction, GIGAOM (Feb. 22, 2011), 

http://gigaom,coml2011/02/22/ivitv-injunction, 

21 See Public Knowledge Sky Angel Comments. 

10 
89 


87023.066

providers, including those that choose not to operate as MVPDs.22 But even short of that, ifmore 

content were available from online services that might choose to operate as MVPDs, the 

incentive to keep content offline would evaporate to the benefit of the entire video marketplace. 

The current pay TV MVPD model is very lucrative for some creators and distributors 

because it forces viewers to pay for large bundles of cable channels even if they only want to 

watch a few. 23 In fact, evcry cable subscriber has to pay for broadcast channels, even though they 

are available over the air for frce. This is why some studies have shown that current monthly 

cable bills are approaching $90 per month,24 and the FCC has shown that cable rates continue to 

rise at a faster rate than inflation.25 If these practices were to be lessened, not only would bills 

shrink, but also more content might become available to new online providers. 

But it is important to understand exactly what causes these problems. Input costs---the fees 

MVPDs pay to content companies-certainly contribute. Rising fees paid by MVPDs to content 

companies are one ofthe main drivers of rising cable bills.26 MVPDs are often forced to pay for, 

and pass along to their consumers, less-popular chaunels in exchange for access to the popular 

ones. Sports fees are a huge portion of viewers' bills. Derek Thompson has calculated that "if 

you pay $90 a month for cable, you are paying about $76 a year (about 7 percent of the total cost 

22 As Public Knowledge has argued, 

The [FCC] should use its authority over the video programming distribution market to protect online video 

distribution generally, by prohibiting MVPDs from behaving anti-competitively in ways that harm any 

video distributor, whether or not it is an MVPD. Section 628 of the Communications Act provides authority 

for this. This Section bans any actions "the purpose or effect of which is to hinder significantly or to 

prevent any multichannel video programming distributor from providing ... programming to subscribers or 

consumers." The close connection between the markets for MVPD and non-MVPD video distribution mean 

that anti-competitive actions taken against an non-MVPD would likely have a deleterious effect on the 

ability of a competitive MVPD to offer programming-for example, by increasing its costs, or inhibiting 

the ability of an MVPD to offer programming on demand or online. 

Sky Angel Comments at 24-25 (quoting 47 U.S.C. § 548). 

23 Peter Kafka, Hate Paying/or Cable? Here's Why, ALLTHINGSD, March 10,2010, 

http://allthingsd.com/20 I 00308Ihate-paying-for-cable-heres-the-reason-why. 

24 NDP Group, Pay-TV Bills Continue to Increase by 6 Percent, Year-Over-Year, As Consumer-Spending Power 

Remains Flat, Apr. 10, 2012, https:llwww.npd.comlwpslportallnpdluslnewslpress-releaseslpr_120410. 

25 The FCC measures the expanded basic tier, which is "the combined price of basic service and the most subscribed 

cable programming service tier excluding taxes, fees and equipment charges." Statistical Report on Average Rates 

for Basic Service, Cable Programming Service, and Equipment, MM Docket No. 92-266, Report on Cable Industry 

Prices ~ 2 (reI. Aug. 13, 2012), http://hraunfoss.fcc.govledocs.JlubliclattachmatchlDA-12-1322Al.pdf.This is not 

the same as the average or median cable bill, measures which reflect what subscribers actually pay. The Commission 

found that this specialized measure of rates "increased by 5.4 percent over the 12 months ending January 1,2011, to 

$57.46, compared to an increase of J.6 percent in the Consumer Price Index (CPI). The price of expanded basic 

service increased at a compound average annual growth rate of 6.1 percent during the period 1995-20 II. The CPI 

increased at a compound average annual growth rate of2.4 percent over the same period." Id. 

26 In fact, Cablevision has recently sued Viacom for bundling channels, "a practice that's led to rising cable bills and 

ballooning channel lineups. " Alex Sherman & Edmund Lee, Cablevision-Viacom Suit Aims to Shake Up $170B 

Industry, BLOOMBERG (Feb. 27, 2013), http://www.bloomberg.comlnews/2013-02-27/cablevision-viacom-suit-aimsto-shake-up-170b-industry.html. 

11 
90 


87023.067

of cable TV) just for the NFL."27 A typical MVPD subscriber might pay about $60 per year just 

for ESPN, whether or not she watches it.28 

Retransmission fees for broadcast networks keep rising-NBC expects to collect $200 

million in such fees this year, an increase of about 400% from 2012.29 What's more, 

retransmission agreements often require that MVPDs carry certain cable networks, limiting the 

ability of MVPDs to offer more flexible price plans. Content companies are able to do this 

because of media consolidation. The most popular programming is controlled by a handful of 

companies like Viacom and Disney. When they make offers, they are hard to refuse. Even the 

broadcast industry is consolidating as companies like Sinclair scoop up local broadcaster after 

local broadcaster, contributing to the ongoing problem of different local broadcasters 

coordinating their retransmission consent negotiations and driving up rates.30 

But content companies have grown accustomed to these practices for a good reason: in a 

concentrated market for video distribution, it is easier to pass along increased input costs. 31 

MVPDs have never liked having to pay more for content, but it has historically been the cost of 

doing business. They have traditionally resisted calls to move to an it la carte model. But bills 

have reached a point where a notable number of viewers (especially younger and more techsavvy ones) are "cutting the cord" (or never getting a cord to begin with) and doing without 

27 Derek Thompson, Mad About the Cost of TV? Blame Sports, THE ATLANTIC (Apr. 2, 2013), 

http://www.theatlantic.com!businessiarchive/2013/04/mad-about-the-cost-of-tv-blame-sports/274575. 

28 See Daniel Frankel, By the Numbers: The Spiraling Cost of Sports Programming, PAIDCONTENT (Apr. 8, 2012), 

http://paidcontent.orgJ2012/04/06lby-the-numbers-the-spiraling-cost-of-sports-programming. 

29 Steve Donohue, Comcast CFO: NBC Will Collect $200 Million in Retrans Fees in 2013, FlERCECABLE (Feb. 26, 

2013), http://www.fiercecable.comlstory/comcast-cfo-nbc-will-collect-200-million-retransmission-consent-fees2013/2013-02-26. 

30 Among other things, so-called "Joint Services Agreements" allow different broadcasters to collude on 

retransmission negotiations. As Public Knowledge argued earlier this year, 

Media pluralism does not only ensure that citizens have access to a diversity of viewpoints and sources of 

information; it creates a baseline level of competition between media companies that helps keep markets 

competitive and prices low for consumers. Because of the joint negotiations between ostensible 

competitors, television stations are better able to create a "united front" in demanding higher fees, which 

are ultimately passed along to consumers. If competing companies worked together on other aspects of 

their business-for example, in colluding to raise advertising rates-most observers would identity a plain 

violation of antitrust laws. But under current policies stations feel free to collaborate on this other important 

aspect of their business operations. This harms consumers and contributes to ever-rising subscription TV 

bills. 

Letter from John Bergmayer to Ms. Marlene H. Dortch, Secretary, Federal Communications Commission, in 

Promoting Diversification of Ownership in the Broadcasting, MB Docket No. 07-294; Review of the Commission's 

Broadcast Ownership Rules and Other Rules Adopted Pursuant to Section 202 of the Telecommunications Act of 

1996, MB Docket No. 09-182; and Amendment of the Commission 's Rules Related to Retransmission Consent, MB 

DocketNo.IO-7l (fiJedJan. 22, 2013). 

31 It is important to note that not all MVPDs have equal bargaining power with respect to content suppliers. A very 

large cable company with its own content interests like Comcast is in a different position than DISH, Cablevision, or 

a rural cable system. These smaller MVPDs may not be able to pass along increased prices to their customers, or 

internalize them through acquisitions. Also, larger MVPDs may be able to negotiate around certain non-price 

restrictions, such as limitations on the functionality of cable-supplied set-top boxes and other equipment, or the 

ability to make programming available on tablets or smartphones within the home. By contrast, smaller cable 

systems may not be able to overcome these kinds of restrictions. 

12 
91 


87023.068

MVPD subscriptions. Cable executives like Time Warner Cable CEO Glenn Britt have started 

talking about offering consumers more flexible packages and greater control over the bundles 

they subscribe to.32 This would be a positive development for consumers. It is an open question, 

however, whether a market that remains concentrated both on the content and distribution side 

can evolve to a lower cost model on its own. 

One quick way to fix this would be to scrap the rules that require that cable systems carry 

broadcast stations as part of their basic tier ("basic tier buy-through"}--customers should be able 

to choose what they pay for. Policymakers should also look very closely at the practice some 

media companies have of bundling their programming together and requiring that cable operators 

buy it all and put even less-popular channels on lower progrannning tiers. Bundles can make 

economic sense for buyers and sellers but they can be abused when there are imbalances in 

bargaining power or a lack of competitive alternatives. If MVPDs themselves had more 

flexibility in the programming they purchase, they might become more willing to offer that 

flexibility to viewers. At the same time, MVPDs should be encouraged to offer more flexible 

programming packages. Consumers do not object to "bundles" per se-popular online services 

like Spotify and Amazon Instant Video work on a bundled approach that is quickly surpassing 

the pay-per-download iTunes model. What they object to is expensive bundles that feel like a 

rip-off. They simply want to get good value for their monthly bill. For some consumers who only 

watch a few programs, this might mean channel-by-channel it la carte subscription, perhaps 

coupled with over-the-air TV and online services. For others, it might just mean better bundlesfor example, a cheaper sports-free programming package, or a kid-friendly package. 

One solution to the problem of rising input costs that would not be good for consumers is 

further consolidation, allowing distributers to internalize content costs and profits. The merger 

between Comcast and NBC Universal brought a large amount of programming under the control 

of a cable system that has an incentive to limit its distribution online. While it is true that both 

the Department of Justice and the FCC conditioned their transaction on Comcast's commitment 

to make certain programming available to online distributors and to deal with independent 

programmers fairly,33 such time-limited behavioral remedies are insufficient to overcome all the 

anti-competitive effects of mergers, joint ventures, and other structural changes that create 

incentives to limit distribution and innovation.34 Furthermore, without an agency that is willing 

to hold companies to the letter and spirit of their merger conditions, they can simply be ignored, 

requiring that affected parties undertake expensive legal proceedings to enforce them. Just this 

has happened with the Comeast merger, where Bloomberg has maintained sinee 2011 that 

32 Cecilia Kang, Time Warner Cable CEO Wants to Slim Cable Bundles, Eyes Aereo 's Technology, WASH. POST 

(May Z, ZOI3), http://www.washingtonpost.eom!business/teehnology/want-to-eut-the-eable-eord-time-warner-eablemay-help-you/ZOI3/05/02/f6b43b84-bZ7b-lleZ-baf7-Sbe2a9dc6f44_story.html. 

33 Applications of Comcast Corporation, General Electric Company and NBC Universal, Inc., for Consent to Assign 

Licenses and Transfer Control of Licenses, Memorandum Opinion & Order, 26 FCC Red. 4238 (ZO II); Final 

Judgment in United States v. Comeast, United States District Court for the District ofColwnbia, Case No. I:II-ev00106 (Sept. I, 20ll). 

34 Petition to Deny of Public Knowledge and Future of Music Coalition in WT Docket No. 11-65 (filed May 31, 

2011), at 62-70, available at http://www.publieknowledge.org/files/docs/pk jmc-att_ tmo-petition_to _ deny.pdf. 

13 
92 


87023.069

Comcast has not met its "neighborhooding" requirements, and Internet video provider Project 

Concord had alleged that Comcast was not meeting its online video requirements. 35 

Similarly, horizontal collaboration between different video distributors (such as the "TV 

Everywhere" authentication system) may seem to provide new options to some viewers in the 

short term, but only at the long-term cost of preventing the marketplace from evolving to a more 

competitive state. Likewise, arrangements between large content companies like ESPN where 

some content gets preferential treatment, such as an exemption from data caps, would not benefit 

either consumers or creators. 36 Large and small creators might find that they have to negotiate 

with many different ISPs just to reach viewers, and viewers might only have access to the 

programming of companies that have paid up. Smaller competitors might not be able to reach 

viewers at all. This would be counterproductive, anti-competitive, and a violation of Open 

Internet principles. 

Outdated Rules That Protect Incumbent Business Models 

Finally, there are some rules on the books today that seem designed to prop up legacy 

business models and have long outlived any functions they may once have served. Many of them 

can and should be repealed today. Examples of these include sports blackout rules, network nonduplication, and syndicated exclusivity provisions/7 and the previously mentioned basic tier 

buy-through rule that requires that all cable subscribers pay for free over-the-air television?8 

Some of these rules were passed to protect aspects of the video distribution system from 

disruption before Internet video was a possibility, and when it seemed that iflocal broadcasters 

lost revenue nothing could replace them. Exclusivity rules not only keep cable systems from 

carrying signals from "distant" markets but they prevent networks from distributing content on a 

non-exclusive basis. The world these rules were written for is gone now and they have outlived 

their purpose. Some local broadcasters never provided unique local programming, and the 

various public goals that they provide can be achieved more effectively through other means. 

Traditional models of video distribution are still valuable, and local broadcasters who serve their 

communities will continue to thrive after any regulatory reform. Viewers will still have access to 

local news, weather, and locally relevant programming because they demand it. Reforms should 

reward local broadcasters and other mcdia outlets for creating their own content rather than for 

distributing national programming. Simply put, the broadcasting industry no longer nceds 

extraordinary protection against changes in technology, business models, and viewer behavior. 

35 See Letter from Senator AI Franken to FCC Chairman Genachowski, FCC Commissioners, and Assistant Attorney 

General Varney, Aug. 4, 2011, 

http://www .franken.senate.gov/files/letter/ll 0804_ Letter_to _ DOJ _and ]CC _ Comcast_ conditions_and _Bloomberg. 

pdf. While there has been some activity on this matter at the FCC the dispute is ongoing. See John Eggerton, Parties 

Continue to Tussle over News Neighborhooding Condition in NBCU Deal, MULTICHANNEL NEWS (Oct. 1,2012), 

http://www.multichannel.comldistributionlbloomberg-comcast-trade-fcc-filings/139564. 

36 Anton Troianovski, ESPN Eyes Subsidizing Wireless-Data Plans, WALL ST. J. (May 9, 2013), 

http://online. wsj .comlarticle/SB I 000 1424127887324059704578473400083982568.htrnl. 

37 47 C.F.R. §§ 76.92(1), 76.106(a), 76.111, 76.120, and 76.127-130. 

38 47 U.S.c. § 543(7); 47 C.F.R. § 76.901 (a) ("The basic service tier shall, at a minimum, include all signals of 

domestic television broadcast stations provided to any subscriber"); 47 C.F.R. § 76.920 ("Every subscriber ofa 

cable system must subscribe to the basic tier in order to subscribe to any other tier of video programming or (0 

purchase any other video programming."). 

14 
93 


87023.070

Some other rules are outdated, but so interconnected with other rules and marketplace 

expectations that they need to be approached carefully. Among these are the compulsory 

copyright license,39 retransmission consent,40 and must-carry.41 The compulsory license cannot 

be reformed unless video providers are given assurance that they never have to stop carrying 

programming just because they do not know who to call for a license, and to make sure that they 

can cope with any potential holdout problems. It would make no sense to embark on a 

comprehensive reform of the laws governing video carriage in a way that replicated the problems 

that afflict the retransmission consent process today, while introducing new ones. 

Short of dealing with the compulsory license and retransmission consent together, several 

reforms could improve the current retransmission consent process. Many of the rules that have 

already been mentioned give an unfair advantage to broadcasters and drive up the rates they can 

charge. Some broadcasters have engaged in brinksmanship tactics that harm viewers, where they 

pull their signals from MVPDs right before high-profile events.42 These problems can at least be 

alleviated with meaningful "good faith" standards that discourage unfair negotiation tactics, and 

interim carriage requirements that minimize disruption to viewers.4J Finally, while the mustcarry system is used by many low-value broadcasters in ways that Congress never intended, 

public and non-commercial stations continue to serve a valuable role and policymakers should 

find ways to protect the good that they do. 

Still other rules serve a function and should be maintained, at least until effective competition 

develops. These include the program access, program carriage rules, as well as rules that 

promote choice in set-top boxes and other video devices. The program access rules prevent 

MVPDs from taking certain anti-competitive actions toward each other. Although the video 

market is not as competitive as it can be in the Internet age, the fact remains that the American 

video distribution market is more competitive than that of many other countries.44 The program 

access rules have contributed to that, and they should be extended to all services that wish to 

operate as MVPDs, even ones that are exclusively online. Similarly, the program carriage 

system, which protects independent programmers from the negative effects of bottleneck control 

by some MVPDs, still serves a role in ensuring that viewers can enjoy content from diverse 

sources. Finally, the FCC has not done enough to fulfill Congress's directive to promote set-top 

box competition-in fact, the FCC's Media Bureau has recently imperiled45 the Commission's 

CableCARD program which, though far from perfect, at least gives some cable subscribers more 

options when it comes to video devices. Until Internet-delivered video becomes a true 

39 17 U.S.C. §§ III, 119, 122. 

40 47 U.S.C. § 325; 47 C.F.R. § 76.64. 

4147 U.S.C. § 534; 47 C.F.R. § 76.55. 

42 Some of these incidents were cataloged in Amendment of the Commission's Rules Related to Retransmission 

Consent, Notice a/Proposed Rulemaking, 26 FCC Red. 2718,115 (2011). 

43 See Comments of Public Knowledge and New America Foundation in MB Docket No. 10-71 (filed May 27, 

2011), available at http://www.publicknowledge.orglfiles/docs/ll-05-27PK-NAF Jetrans_comments.pdf. 

44 For example, "Free-to-air television in Mexico is a stale duopoly in which 70% of viewers tune in to channels 

broadcast by Televisa, the biggest media company in the Spanish-speaking world. Televisa dominates pay-TV as 

well, with about 45% of Mexico's cable market and 60% of the satellite marke!." Let Mexico's Moguls Baltle, THE 

ECONOMIST (Feb. 4th, 2012), http://www.economist.cominodeI2l546028. 

45 Charter Communications had asked for a waiver of some of the Commission's rules, but the Bureau went far 

beyond what Charter asked for and decided, based on a misapplication of the recent EchoStar Satellite L.L.G. v. 

FCC decision, 704 F.3d 992 (D.C. Cir. 2013), to effectively eliminate most CableCARD requirements. 

15 
94 


87023.071

substitution, preserving the FCC's authority to promote set-top box choice will remain 

necessary.46 

Copyright and Spectrum Policy 

There are two other kinds of regulations that can hold back the development of online video. 

Policymakers who arc steeped in media issues do not always see them as "regulations" in the 

same sense as things like syndicated exclusivity. But copyright and spectrum laws are 

regulations nonetheless, and they have profound effects on the shape of the market. 

Copyright law should not be misused to hold back the evolution of the video marketplace. 

Broadcasters are suing DISH for making a DVR that is too sophisticated and easy to use. But it 

is not illegal to skip commercials or for users to take full advantage of their home recording 

rights. 47 And as the Second Circuit Court of Appeals recently found, Aereo's remote antenna is 

legal just as Cablevision's remote DVR is.48 Copyrights are limited monopolies granted by the 

government, and they come with a series of limitations and exceptions designed to protect users 

as well as creators. They should not be a weapon used to limit experimentation with business 

models and services. 

Nor should misplaced fears of piracy keep content offline. Some content industry executives 

have a view of technology and the Internet that can only be described as superstitious, and they 

think that if they give people access to content they will lose control of it. But recent history 

shows that many people only tum to piracy when content is not available online though other 

means. Indeed, Netflix has recently provided data that show that as its online service is adopted, 

unlawful file-sharing decreases.49 From the perspective of reducing copyright infringement, 

limiting online distribution is simply counterproductive. Creators will benefit most from an open 

marketplace that allows different services and voices to reach viewer's homes.5o 

46 For example, by implementing AIlVid or a similar technology-neutral solution. See AllVid, 

http://www .publicknowledge.orglissues/allvid. 

47 See Fox Broadcasting v. Dish, 2012 U.S. Dist. LEXIS 169112 (C.D. Cal. 2012) . 

• 8 WNET et 01. v. Aereo, No. 12-2786-cv (2d Cir. Apr. 1,2013), available at 

http://www.publicknowledge.orglfiles/aereo_decision_2d _ circuit.pdf 

49 See Netflix's Ted Sarandos Talks Arrested Development, 4K and Reviving Old Shows, STUFF, May 1,2013, 

http://www.stuff.tv/news/apps-and-games/news-nuggetlnetflixs-ted-sarandos-talks-arrested-development-4k-andreviving-old (quoting the Netflix Chief Content Officer as saying "when we launch in a territory the BitTorrent 

traffic drops as the Netflix traffic grows. "). It is true, as BitTorrent, Inc. states, that BitTorrent has many lawful uses 

and that BitTorrent, Inc. is not associated with copyright infringement. See BitTorrent Blog, Reports a/Our Death 

Have Been Greatly Exaggerated (May 6, 2013), http://blog.bittorrent.coml2013/05/06/reports-of-our-death-havebeen-greatly-exaggcrated. However, Sarandos appears to have been referring to all files that are exchanged using the 

BitTorrent protocol (which BitTorrent, Inc. does not control), not just the minority of those associated with 

BitTorrent, Inc. While BitTorrent is a general-purpose tool with lawful and unlawful uses, it is also true that many 

viewers use BitTorrent to unlawfully access content that is not otherwise available online. 

50 For this reason, trade and other agreements negotiated on behalf of the United States should not include provisions 

that could expand the scope of copyrights or copyright enforcement (as many trade agreements do, even though 

copyright law is already handled internationally by a series of treaties), create new kinds of intellectual property 

rights (as the proposed WIPO Broadcast Treaty would), or attempt to limit the online distribution of broadcast 

content. See John Bergmayer, The US-Colombia Free Trade Agreement: Policy Laundering in Action, PUBLIC 

KNOWLEDGE (Apr. 20, 2012), http://www.publicknowledge.orglblog/us-colombia-Iaundering (arguing that language 

in some free trade agreements could be read as limiting online video distribution). But see Comments of ABC, CBS, 

16 
95 


87023.072

A service like Aereo' s raises issues of spectrum policy as well as copyright. Broadcasters are 

given free use of the public's airwaves in exchange for certain public obligations, such as the 

obligation to provide free programming to the public. While it is true that Aereo does not pay 

retransmission fees like MVPDs do, it is also true that Aereo, unlike MVPDs, only provides 

people with access to thc free local signals they are already entitled to view. As Congress found 

in 1976, 

The Committee determined ... that there was no evidence that the retransmission of 'local' 

broadcast signals by a cable operator threatens the existing market for copyright program 

owners. Similarly, the retransmission of network programming, including network 

programming that is broadcast in 'distant' markets, does not injure the copyright owner. The 

copyright owner contracts with the network on the basis of his programming reaching all 

markets served by the network and is compensated accordingly.sl 

The majority of viewers do not watch over-the-air broadcasters directly, but only as those 

stations are carried by MVPDs. This leads some to question whether the allocation of spectrum 

to broadcasting makes sense at all.s2 Certainly, the broadcasters who have said they may no 

longer want to continue broadcasting should feel free to return their spectrum to the public so 

that it can be put to other uses.53 However, broadcast content is still important to many viewers 

and, driven to cut the cord because of rising MVPD subscription costs, a new feneration of 

viewers is becoming more familiar with rabbit ears and over-the-air viewing. 5 Aereo and 

services like it should be part of this. If Aereo ultimately wins the court challenges against it and 

Congress decides to revisit the law, it should consider creating a path where online video 

services can choose to operate as online MVPDs, which would increase the opportunity for 

content creators to get paid for their work and to reach new viewers. However, making an 

antenna rental service illegal would not benefit the public, would provide no benefit to creators, 

and would be contrary to the public purpose of broadcasting. 

CONCLUSION 

and NBC Television Affiliates in MB Docket No. 12-83 (filed June 13,2012), available at 

http://apps.fcc.gov/ecfs/documentlview?id~7021922660 (arguiug that it would be consistent with such agreements if 

online systems were categorized as MVPDs and subsequeutly followed standard retransmission consent procedures). 

51 Copyright Law Revision, House Report No. 94--1476 (1976). 

52 For example, Economist Thomas Hazlett has observed that "[Iloday, the social opportunity cost of using the TV 

Band for television broadcasting - 294 MHz of spectrum with excellent propagation characteristics for mobile voice 

and data networks, including 4G technologies is conservatively estimated to exceed $1 trillion (in present value)." 

Comment of Thomas Hazlett, in A National Broadband Plan for Our Future, GN Dckt. No. 09-51, Federal 

Communications Commission (filed Dec. 18.2009), available at 

http://mason.gmu.edul-thazlettipubsINBP]ublicNotice26 _ DTVBand.pdf. 

53 See John Bergmayer, As Broadcasters "Threaten" to Shut Down, They're Not Getting the Reaction They Were 

Looking For, PUBLIC KNOWLEDGE (Apr. 10,2013), http://publicknowledge.orginot-the-reaction. 

54 Christopher S. Stewart, Over-the-Air TV Catches Second Wind, Aided by the Web, WALL STREET JOURNAL (Feb. 

21, 2012), http://online.wsj.comiarticle/SBI 000 1424052970204059804577229451364593094.htrnl ("It's cool to 

have rabbit ears again. "). 

17 
96 


87023.073

As they have in the past, policymakers are starting to consider the implications of increasing 

change in the market for video distribution. History provides examples both of protectionist 

regulations that should be avoided today, and of pro-competitive measures that enable new 

entrants to reach viewers. But today is different in one way: Finally, the technology exists that 

could eliminate the physical, bottleneck control of video distribution that has existed in various 

forms for decades. 

If policymakers take some simple steps to facilitate the development of competitive online 

video now, later they can begin to disengage from regulations that were designed to counter the 

effects of this bottleneck control. However, if they fail to do this, it is likely that incumbents will 

be able to continue to shape the development of the video market and extend their current 

dominance indefinitely. While the Internet provides grounds for hoping that the future of video 

will be better for consumers, policymakers have a lot of work to do to help make that happen. 

18 
97 

Mr. WALDEN. Mr. Bergmayer, thank you for your testimony. 

I want to thank all the witnesses for your testimony. We will 

now move into the questions. 

And I want to pick up on some things you said, Mr. Bergmayer. 

And I have had some people say in the course of this dispute between CBS and Time Warner Cable when you talk in terms of the 

customers, do the customers deserve a refund in any portion from 

your perspective if they didn’t get the programming that originally 

was there and all that? 

Mr. BERGMAYER. Yes, sure. 

Mr. WALDEN. What’s your view on that? 

Mr. BERGMAYER. I think it goes without saying that consumers 

should receive compensation if they don’t receive the services that 

they pay for. And the details of what caused the dispute, that is 

not any of their concern or business. 

Mr. WALDEN. Right. 

Mr. BERGMAYER. However, I don’t think that will actually solve 

any of the underlying issues that lead to the blackouts to begin 

with. 

Mr. WALDEN. I understand that. Yes, but it is just something 

people have talked about, you know, because this one went so long. 

Mr. BERGMAYER. Yes, there is dispute. 

Mr. WALDEN. And let me ask about because we are all having 

this discussion about these rules and you heard my opening statement. I am qualified for Social Security so I mean, you know, old 

enough to get a drink legally. And so I want to talk about the ownership caps a bit because it strikes me and I would be curious to 

get your comments or any of you because broadcasters clearly have 

an ownership cap limitation of, what, 39 percent or something or 

TV does, overall audience. Satellite, you don’t have any limitation 

on markets you serve if I understand it, the two satellite providers. 

Are ownership caps something that have outlived their usefulness? 

Cable doesn’t really have that, right, so what are your views on 

that? 

Mr. BERGMAYER. Public Knowledge definitely thinks that the 

media ownership rules serve an important purpose in ensuring 

that people have a diversity— 

Mr. WALDEN. So broadcasters should have an ownership cap but 

the others shouldn’t? 

Mr. BERGMAYER. I think, you know, the rules might need to be 

revisited to be more technology-neutral absolutely. When you are 

singling out a particular industry, that might be problematic. But 

in general, media ownership serves a purpose. 

And I have to point out that the issue that affects retransmission 

consent in particular are ownership problems that don’t really trigger the rules because they are about stations that are in different 

markets that still jointly negotiate retransmission consent with 

large MVPDs. And I am sure some of the cable companies can address that issue better than I can. 

Mr. WALDEN. They are not necessarily negotiating at all times 

with mom-and-pop cable operators anymore either, are they? 

Mr. BERGMAYER. There are many small cable operators throughout the country—— 

Mr. WALDEN. Yes—— 

98 

Mr. BERGMAYER [continuing]. And rural areas that have retransmission consent— 

Mr. WALDEN. We have sort of gotten to the point where we have 

got big organizations on both sides in many cases, right? 

Mr. BERGMAYER. Well, there are big organizations on both sides, 

and unfortunately, sometimes there are still little guys on both 

sides—— 

Mr. WALDEN. I don’t dispute that. 

Mr. BERGMAYER [continuing]. That get forgotten in this. 

Mr. WALDEN. Yes. So, Mr. Campbell, Mr. Dodge, and Mr. 

Rozzelle, from what I understand, the MVPDs generally object to 

the bundling of broadcast channels with cable networks during retransmission consent negotiations. And at the same time, each 

MVPD before us no doubt offers bundled packages of channels to 

their customers. They also likely offer bundled video and voice and 

data service or want to offer data. Everybody is kind of getting into 

that. What is the difference from your perspective between the 

bundles offered by the programmers and the bundles that the 

MVPDs themselves offer? 

Mr. Dodge, you look like you want to leadoff. Have at it. 

Mr. DODGE. Sure. Well, you know, DISH, I think, it has been 

very, very innovative in the bundles it offers—— 

Mr. WALDEN. Um-hum. 

Mr. DODGE [continuing]. In the market creating family-friendlyonly packages that are smaller and more affordable for families, 

and actually, the bundles offered by the programmers and the bundles offered by the distributors largely are the same thing. We wish 

we had more flexibility in how we could actually package, but as 

the bundles are offered to us, they also include restrictions on how 

we can actually create packages. 

Mr. WALDEN. All right. Mr. Campbell? 

Mr. CAMPBELL. One of the differences in the bundles we offer to 

our subscribers if they don’t like them or want to go somewhere 

else, they can call a competitor. In these retransmission negotiations, the bundles are forced on us and if we agree to the terms 

and conditions, we carry the programming. If not, then we have nowhere else to get it. 

So, yes, to echo Mr. Dodge, we are very creative with our bundling package as well in trying to make it as competitive as possible. I think the real issue on the retrans side is the one-sided negotiations of it. 

Mr. WALDEN. All right. Mr. Rozzelle? 

Mr. ROZZELLE. The packages that we offer our customers are 

structured as flexibly as we can given the program contracts that 

we have with the distributors, including the broadcasters under 

RTC. And that restricts us from doing a lot of things that we would 

do were we left on our own in terms of offering flexible packages. 

We are very mindful of the impact of video cost on the affordability 

of video services. In many of our small markets it is a big issue, 

and we wish we had more flexibility, Mr. Chairman. 

Mr. WALDEN. All right. Mr. Munson, did you want to comment 

on that? 

Mr. MUNSON. I do not work for a company that owns multiple—— 

99 

Mr. WALDEN. Um-hum. 

Mr. MUNSON [continuing]. Cable networks, but if you look at it 

holistically, there are over 1,200 television stations in America. The 

networks themselves, let’s say ABC, Disney I think actually owns 

only 8 of those 1,200. So the effective bundling of cable channels 

with broadcast stations is really a small part of the regular negotiation. 

Mr. WALDEN. All right. My time is expired. 

I turn now to the gentlelady from California, Ms. Eshoo, for 5 

minutes. 

Ms. ESHOO. Thank you, Mr. Chairman. And thank you to each 

one of the witnesses. I think you all gave really very fine testimony 

obviously, with, you know, your own best wishes of what you think 

is excellent for everyone. But that is the way it is. 

Let me start with Mr. Dodge. Although DISH wasn’t part of last 

month’s dispute between Time Warner Cable and CBS, I understand many of your customers were still impacted. Why were they 

impacted? 

Mr. DODGE. That is true because CBS ultimately blocked anyone 

who had Time Warner broadband service from receiving their online content regardless of whether they actually received a video 

from—— 

Ms. ESHOO. So internet service was blocked as well? 

Mr. DODGE. Correct. Regardless of whether you were—— 

Ms. ESHOO. Well, I think that is something for all of my colleagues to keep under their hat as we consider this. I mean, you 

know, it is metastasizing. I mean this isn’t just one area where 

people are affected. There is a multiplicity of impacts. Thank you 

for that. 

I would like to go to Mr. Munson. In Mr. Campbell’s testimony 

he points out that the FCC rules prohibit cable providers from taking down broadcast signals during a Nielsen ratings sweeps week. 

My discussion draft includes a similar provision during a retransmission consent negotiation impasse. Why is it unlawful for a payTV provider to pull your signal during sweeps weeks but it is OK 

for a broadcaster to pull their signal during a retrans dispute often 

time to occur actually on the eve of a big sporting event? 

Mr. MUNSON. First of all, I’ll maybe answer the last question 

first. And again, I wasn’t involved in the CBS/Time Warner dispute 

but—— 

Ms. ESHOO. No, but you are here representing the broadcasters, 

so that is why I am asking the broad question, excuse the expression. 

Mr. MUNSON. As I understand, that retransmission consent contract ended sometime in June or July. There were extensions to it 

and the dispute ended up with CBS coming off the cable system in 

August. And really the month of August we are kind of in the doldrums of summer and we are in reruns. 

Ms. ESHOO. So you don’t find any disparity even on the face of 

this? You don’t see anything that is wrong with it? 

Mr. MUNSON. Well, there is always—— 

Ms. ESHOO. Are you defending it? 

Mr. MUNSON [continuing]. Marquee events that are going on—— 

Ms. ESHOO. But I mean are you defending it? 

100 

Mr. MUNSON. I am not sure I understand the question. 

Ms. ESHOO. Well, you know, the whole issue. I already gave you 

my question and, you know, maybe it is difficult for you to answer 

it and I understand why. Maybe that is the real answer. So thank 

you. 

I would like to go to Mr. Bergmayer. Thank you for what you 

said about the discussion draft. We appreciate it and we want to 

work with everyone. We have to have a very good, sensible, bipartisan approach on this thing. So we appreciate what you said in 

your testimony. 

Now, you stated that policymakers should reject attempts whether at the SEC or in Congress to weaken the cable card system or 

to make it more difficult for the FCC to implement its successor. 

Can you explain why ending the integration ban before adopting a 

successor technology would disrupt innovation and harm consumer 

choice in the set-top box marketplace? Now, this is an issue that 

I go way back on, way back on, and I can’t believe that that many 

years have gone by since we did the legislation on it, but I obviously have a keen interest in what that policy produced. So can you 

address it? 

Mr. BERGMAYER. Yes, absolutely. I mean people are relying on 

cable card today and new devices from companies like Samsung 

and TiVo. 

Ms. ESHOO. Maybe just use one sentence to describe to set it up 

for the Members. What does today’s set-top box do and then go to 

answering the question? 

Mr. BERGMAYER. Yes, I mean the set-top box is what allows people to access their cable content. It might be the DVR. It might 

have some other functions. And most people still are renting their 

boxes from their cable company. You know, you don’t go into the 

store and buy a device like you do in a lot of other markets. 

Ms. ESHOO. Um-hum. 

Mr. BERGMAYER. And the Section 629 of the Communications Act 

was intended to address that and make it a more competitive market that is much more similar to other markets. And cable card, 

years ago, was the technology that the FCC and the cable industry 

and a lot of stakeholders came up with to implement 629. And it 

is still being used today. And as I was saying, you know, there are 

new devices coming onto the market that are using cable card not 

just from TiVo, which everyone knows, but also from Samsung entering the cable card market. 

Ms. ESHOO. Um-hum. 

Mr. BERGMAYER. So it remains an important platform for innovation. 

And the integration ban issue, I mean the integration ban tries 

to assure that these third parties get the same level of support as 

operator-supplied devices so that the first party operator-supplied 

box can’t do something that a TiVo or Samsung can’t also do. 

Cable card isn’t perfect and for years Public Knowledge has been 

calling for the FCC to implement a more technology-neutral, a better solution that we think solves a lot of the problems that I think 

Members have identified with the cable card system. But if the system is weakened now without a successor technology in place, I 

think that essentially spells the death knell for Section 629. It will 

101 

still be on the books but the FCC won’t be able to implement it and 

it becomes less likely that it will ever move forward. And the biggest problem with set-top box is still the high cost of people renting 

them every month. 

Ms. ESHOO. Right. Thank you very much. 

Thank you, Mr. Chairman. 

Mr. WALDEN. Thank you. 

The chair now recognizes the gentlelady from Tennessee, Mrs. 

Blackburn. 

Mrs. BLACKBURN. And thank you, sir. 

Mr. Munson, I would like to begin with you. At our last hearing 

on video reform that was in June and I asked a question of Marci 

Burdick, who was here on behalf of the NAB. And I asked her 

whether she thought the position the broadcasters took on the 

radio side where they refused to recognize a performance right for 

sound recording undermines their position for retransmission. And 

we got kind of a convoluted response on that one. I imagine you 

may have heard about that in preparation for the hearing today, 

and it was something about there has been a symbiotic relationship 

between radio and artist but nothing really clear. 

And the reason I bring it up again is because I am sure that you 

saw this ad in yesterday’s Politico, and it quotes a broadcast executive who said, ‘‘the idea that we have to pay them to put up their 

music on our radio stations is absurd.’’ So, Mr. Chairman, I would 

like to enter that into the record. 

Mr. WALDEN. Without objection. 

[The information follows:] 

102 


87023.074

"Receiving 

fair value for 

our content is 

core to who we 

are and we will 

amerk:antelevisionalliance,org 

"The idea that we have to pay them 

to put their music 

on our radio stations 

is abSurd." 

- Les Moonves 

CBS CEO 

Radfolnfo 

September 20, 2012 

Summer's over, but broadcasters 

haven't put away their flip-flops. 

Broadcasters continue to oppose efforts to modernize America's TV rules. They prefer them 

exactly as they were written back in 1992, That way, broadcasters can keep pocketing ever 

higher retransmission consent fees, or as they like to cal! it, Mfair value," 

But when the shoe is on the other foot, and someone proposes that broadcasters pay fees 

to carry content. suddenly "fair value" becomes "fair use." 

It's time Congress and the FCC make our retransmission consent rules fair to aU, especially 

TV viewers. See more broadcaster flip-flops at AmericanTelevisionAUiance.org, 

AMERICAN 

TELEVISION 

ALLIANCE 

A VOICE FOR THE TV VIEWER 
103 

Mrs. BLACKBURN. Thank you, sir. And so I am coming to you 

now, and my question for you, sir, is can you square that up for 

us and explain why the broadcast industry supports compensating 

content owners in the TV market but not in the radio market? 

Mr. MUNSON. Thank you, Congressman. If you take a look at it, 

in essence there are two different business propositions. On the 

radio side—well, let’s start with the TV side. On the TV side we 

are creating content that multichannel video providers want to buy 

and then resell to the consumer. So we enter into negotiation, and 

by the way, they mark that up so that they can make a profit on 

it. Then we enter into negotiation whereby they buy the programming and then resell it. At the same time, at all times, we are over 

the air free and we provide that service for no fee if you want to 

put an antenna up and watch it. 

On the radio side that is a direct relationship between the radio 

station who plays the music of the artist, the artist then increases 

their— 

Mrs. BLACKBURN. Sir, it is all still content. Your answer doesn’t 

square up so you might want to go back and listen to that. 

Mr. Dodge, have you got any thought on that? 

Mr. DODGE. I don’t see any difference. 

Mrs. BLACKBURN. Thank you. Anybody else want to weigh in on 

that? 

Mr. BERGMAYER. Public Knowledge has supported that radio 

broadcasters should pay performance royalties, yes. 

Mrs. BLACKBURN. Yes. OK. Thank you. 

Mr. Campbell, I would like to come to you for just a second. I 

am always amazed and I think you are probably hearing this a lot, 

people talk about retransmission taking place in a free market. 

And I look at some of what goes on and I am thinking, you know, 

you look at the mandates, retransmission consent, compulsory 

copyright, basic tier placement, required tier buy-through, et 

cetera, et cetera. The list goes on. And those are not necessarily 

what we would call free market terms. So if you can, just give me 

kind of a thumbnail sketch when you look at this and we want 

these negotiations to take place in a free market. That may not be 

the case, and if not, what rules do you suggest that Congress examine so that we come to a level playing field? You know, in your perfect world what would we be looking at? 

Mr. CAMPBELL. Representative Blackburn, thank you. You are 

correct. I think in any free market negotiation both sides come to 

the table with some risk and some benefit. And speaking as a new 

entrant, it is completely skewed in favor of the broadcasters, and 

that is largely as a result of the regulations in place today. That 

is why I think the discussion that Representative Scalise started 

last year is a great way and I think that is probably what I heard 

today. And again, I commend Ranking Member Eshoo for her draft 

this week. I think people are realizing there is a problem. 

Our proposal of a distant carriage, we think, brings the scales up 

to a level playing field, and here is why: We need to get local news 

to our consumers and the broadcasters want to tie that together 

with national content. They probably want to have all this tied together and us pay a premium price, 200, 300 percent increases. 

104 

I think if we are carrying another signal in an adjacent market 

even though our consumers don’t get the local news, the broadcasters are incented to come to the table, get a deal, and we are 

incented to come to the table to get a deal because we both now 

have something that we want to offer our consumers that is not 

there at that time. But just saying take it or leave it or you will 

go black or there is nowhere for us to turn is not a free market negotiation. 

Mrs. BLACKBURN. I yield back. 

Mr. WALDEN. I will now go to Mr. Doyle, I believe. 

Mr. DOYLE. Thank you, Mr. Chairman. 

Mr. WALDEN. Mr. Doyle for 5 minutes. 

Mr. DOYLE. Heavy on the Mister. Thank you, Mr. Chairman. 

Well, I want to start out by reiterating something my friend and 

colleague Ms. Eshoo said. And I am very concerned about the 

blocking of online content in retransmission consent disputes. This 

is new ground that is being broken here that we have not seen before in any retransmission negotiations. And the most recent one 

where the broadcast blackouts affected 3 million people, the online 

subscribers to CBS.com, we are talking about 11 million people 

that were affected by that outside the area that was being negotiated, and I hope this doesn’t become the new normal for our retransmission disputes. 

Mr. Campbell and Mr. Rozzelle, you represent companies that 

provide video and broadband services to consumers. What do you 

think the reaction would be if your company blocked access to 

internet content as part of a retransmission dispute? 

Mr. ROZZELLE. Congressman Doyle, I think it is very clear to us 

what would happen. It would be argued that we violated the net 

neutrality principles and that we were engaging in, if not unlawful 

conduct, immoral conduct. 

I will tell you that I was—perhaps I am naı ́ve here—but I was 

very surprised in a way that the FCC didn’t say to CBS in this case 

you are a broadcaster operating as a public trustee in the public 

interest. The programming involved here was created as a result 

primarily of the licenses that you hold from us, and now, you have 

withheld that programming in another venue, but nevertheless, 

withheld that programming from members of the public and we 

don’t find that to be in the public interest. And I am sorry they 

didn’t do that. I think it would have been appropriate. 

Mr. DOYLE. Mr. Campbell? 

Mr. CAMPBELL. Representative Doyle, I really don’t have anything to add. I think Mr. Rozzelle answered it quite well. 

The only other thing I would point out is that, to go back to Representative Blackburn’s suggestion if it is truly a free market, then 

the broadcasters maybe should return some of the free spectrum 

they got to offer that and bid on it. But I would have nothing to 

add to the online blockage other than Mr. Rozzelle. 

Mr. DOYLE. Let me ask a question to again Mr. Rozzelle, Mr. 

Campbell, and Mr. Dodge. There seems to be an increase in the 

number of agreements between local broadcasters to co-own and 

operate equipment and facilities, and I want to say I believe in the 

value of local news and local programming and I believe that 

105 

broadcasters need to find innovative solutions to the advances of 

technology in the marketplace. 

However, both DISH and Suddenlink and Public Knowledge 

mentioned in their testimony instances where joint agreements 

have resulted in separately owned stations in a single market jointly negotiating for retransmission consent. How have you seen this 

trend develop and what do you think the consequences have been? 

Mr. DODGE. Well, the American Cable Association, or the ACA, 

did a study that showed in those scenarios where separately owned 

stations joined together in those so-called local marketing arrangements that the resulting cost to the distributors and ultimately 

consumers increased anywhere between 22 and 160 percent. And 

it is also my understanding that the Department of Justice starts 

to get interested in such things at about the 5 percent mark. So 

I think the numbers are pretty telling. 

Mr. DOYLE. Mr. Rozzelle? 

Mr. ROZZELLE. We have run into circumstances where in one 

market that we serve the ABC affiliate and the Fox affiliate, two 

of the big four, came to us together and it was a very, very difficult 

negotiation for us as a result. 

I would say to you, sir, that if we step back and take a look at 

the result of the increasing retransmission consent fees and try to 

correlate those increases with increases in local programming as a 

result, which was the reason that this whole system was put in 

place to begin with, as I understand it, I don’t think that correlation exists, not positive. 

And so I think that this is a very difficult issue. I think Ranking 

Member Eshoo’s bill is therefore more valuable today than it has 

ever been and we look forward to participating in that process. 

Mr. DOYLE. Mr. Campbell? 

Mr. CAMPBELL. Representative Doyle, as a new entrant, we are 

not in a lot of markets yet where we would probably be subject to 

these sort of arrangements, but obviously, we have heard about 

them. And, you know, as we grow, obviously if any of this happens, 

then we will be sure and provide that data. 

Mr. DOYLE. Mr. Munson, I saw that you wanted to comment. 

Mr. MUNSON. Yes, thank you. If I could make a few comments, 

Congressman. 

Mr. DOYLE. Sure. 

Mr. MUNSON. First of all, there is nothing illegal about these arrangements between television stations. If there was, the FCC 

wouldn’t allow it. But the fact is that in my experience of doing retransmission contracts of this sort, there is never an option that is 

not given where a multichannel video provider could pick up just 

one of the stations. They always offer that. But there is a lot of exchange that goes back-and-forth between the cable company and 

the television station. 

Mr. DOYLE. Mr. Chairman, I see my time is up and I thank you 

for your generosity. 

Mr. WALDEN. We will now go to Mr. Barton for 5 minutes. 

Mr. BARTON. Thank you, Mr. Chairman. I have got just one or 

two basic questions, maybe three. 

106 

The first thing I want each of the panelists to tell me who you 

think the primary stakeholder that you are representing is. And I 

will start with Ms. Aistars. 

Ms. AISTARS. So I represent the Copyright Alliance and we are 

a coalition of 40 institutional members who are copyright owners, 

creators of all varieties. So I am speaking for the creative community. 

Mr. BARTON. OK. 

Mr. DODGE. Consumers. 

Mr. BARTON. Just consumers? 

Mr. DODGE. Yes. 

Mr. BARTON. I hear chuckles at that but that is OK. 

Mr. MUNSON. The National Association of Broadcasters and 

KPHO television and Meredith Corporation. 

Mr. BARTON. Where is KPHO? 

Mr. DODGE. We are in Phoenix. 

Mr. BARTON. Phoenix, Arizona. OK. 

Mr. ROZZELLE. Mr. Dodge stole my response, Congressman, but 

I am here representing Suddenlink Communications. 

Mr. BARTON. Representing who? 

Mr. ROZZELLE. Suddenlink Communications. 

Mr. BARTON. What is Suddenlink Communications? 

Mr. ROZZELLE. Suddenlink Communications is a cable operator. 

It serves about 1.4 million customers throughout the United States. 

And we are a member of the NCTA but I am here representing the 

company. 

Mr. BARTON. OK. 

Mr. CAMPBELL. Representative, Mr. Dodge once again stole my 

thunder. 

We are representing our subscribers who are trying to bring a 

competitive choice in the marketplace against the incumbent providers and other video providers. 

Mr. BARTON. So you are a cable company? 

Mr. CAMPBELL. We are a telecommunications company. We offer 

video services over an IP TV network. We currently negotiate cable 

franchises in some cities where we operate under statewide franchising. But yes, it is a wire-lined facilities-based that currently 

passes over 1.5 million homes. 

Mr. BARTON. OK. 

Mr. BERGMAYER. And Public Knowledge is here to represent the 

interest of TV viewers. 

Mr. BARTON. TV viewers. 

Mr. BERGMAYER. Yes, sir. 

Mr. BARTON. Do people subscribe to Public Knowledge? I mean 

is this kind of like Heritage Foundation or Common Cause? 

Mr. BERGMAYER. We are not quite at that scale but we are a nonprofit public interest group. 

Mr. BARTON. OK. Well, you know, I asked the question because 

the old days, you know, I knew who the broadcasters were and I 

knew who Comcast was and I knew who AT&T was, you know, and 

I knew who the local affiliate station was in my district. But you 

could put a gun to my head and I wouldn’t be able to tell you without you telling me who you folks represent because the marketplace is totally different, totally different. 

107 

Now, I have at various times been a customer, which means I 

pay money for services of Time Warner Cable, Comcast Cable, 

Charter Cable. Currently, I am a paying customer for DIRECTV. 

I just switched from Comcast to Verizon FiOS, and I am in the 

process of switching from Charter to AT&T U-verse. OK. Both 

Verizon FiOS and AT&T U-verse are bundled services, which I get 

telephone service keeping my old telephone number, internet highspeed so-called service, and what I would call cable or television 

service. OK. And I pay a flat monthly rate, which is lower than the 

old separate rates. 

Who can tell me what body is the dominant regulator of the bundled services that I now am receiving through Verizon FiOS and 

AT&T U-verse? Is it the FCC? Is it the cable? I mean who is it? 

Mr. CAMPBELL. Representative, I think the answer is yes. In our 

case we offer the bundled telecommunications, video, and data. 

From a telecommunications perspective, the FCC and the State 

Public Utilities Commissions regulate that portion of the service. 

From the video perspective, local governments and the FCC has 

some oversight but not as much as they used to—regulate the provision of cable service. And then the broadband is kind of out there 

in its own little world. 

Mr. BARTON. Well, my time is about to expire, but the point of 

the first question and the point of the second question is the laws 

that are on the books had no conceptual ability to foresee what is 

now happening in the marketplace. And again, when AT&T was a 

phone company, we kind of understood the law regulating telephone service. And when Charter was a pure cable company, we 

understood the law of regulating cable television. Well, Charter has 

bundled services. All these groups have bundled services. And I 

don’t think even you folks, as smart as you are, really can delineate 

who the dominant regulator is or even how to regulate if you need 

to regulate. 

So, Mr. Chairman, my time is expired but that is why your hearings are so important and I really hope we can come up with a way 

to bring the regulatory scheme if we need one into the 21st century. 

Mr. WALDEN. I thank the gentleman. 

And I am just going to exercise the chairman’s prerogative for 

just a minute because I think it is important we have a little fun 

and frivolity in these hearings, but when asked who you represent 

here, unless you are co-ops, you are probably also representing 

your investors and shareholders through a fiduciary responsibility. 

I recognize you are always representing your customers, but fundamentally, is anybody here not representing your owners? 

Mr. DODGE. Yes, fair enough, Mr. Chairman. I wasn’t sure where 

the question was going, but of course, I represent DISH Network. 

Mr. WALDEN. That is what I thought you meant but I thought 

everybody might want to qualify that unless you are a co-op, right? 

Anybody disagree with that? 

Mr. BERGMAYER. Not at all, no. 

Mr. WALDEN. There you go. All right. Now, we go to, I believe, 

Mr. Latta. 

108 

Mr. LATTA. Thank you, Mr. Chairman. And thank you again to 

all of our witnesses today. I really appreciate hearing your testimony. 

And if I could start with Mr. Rozzelle, in your testimony you 

state that whatever justification there was for the integration ban 

has long since been superseded by marketplace developments, and 

then you go on to state that consumers and operators, this has cost 

them more than $1 billion since it went into effect in 2007. I was 

wondering, could you expand and elaborate on what you gave us 

in your testimony about the integration ban? 

Mr. ROZZELLE. Thank you for the opportunity, Congressman Latta. The figure, $1 billion, comes from a rough calculation that 

the cost of adding a cable card to the boxes that we distribute directly to our customers costs about $50 a box. It also adds significantly increased electrical cost associated with the operating of the 

box. 

There are roughly 40 million cable cards out. The program has 

been successful. It was passed in 2007 and the country is full of 

cable cards. The relationship that we have with TiVo, which uses 

cable cards, is an example of the success of that program. And it 

is one of the big reasons why that experience that we have had and 

our continued operating premise, which is that any video customer 

that comes to us with a device from wherever it came will be supported by us if it wants to take our cable television services. Video 

services are so highly competitive that if we do not support them, 

they will go someplace else. 

Mr. LATTA. Let me ask real quick when you say that you will 

support anything that is brought to you, does that put a technological strain on you or on your tech crews? 

Mr. ROZZELLE. You know, I am no engineer, sir, so it is possible, 

I suppose, someone could show up on our doorsteps with something 

that simply wouldn’t work, but if it is a device that was designed 

to work on our network, I can tell you that we would do everything 

that we reasonably could to make certain that we kept that customer happy. 

Mr. LATTA. Thank you. And kind of following up if I could maybe 

ask everybody this question what Mr. Barton had brought up, you 

know, really where the laws are out there today. For each of you 

sitting out there today, you know, and we pretty much have heard 

from everyone that, you know, the laws are either outdated or we 

have problems. If each of you could just kind of briefly say if you 

had the opportunity, what law on the books would you want to get 

rid of or change today? And I will start ladies first. 

Ms. AISTARS. I think as I said in my testimony, the Copyright Alliance represents largely copyright owners, and from a copyright 

perspective, statutory licenses are disfavored, and I think to a 

greater or lesser extent most of my members would agree that the 

existing licenses are an anachronism, but we also recognize that 

there are business practices that have grown up around them and 

so to unwind them we would have to, you know, give some further 

thought as to how to do that in a way that is not disruptive. 

Mr. LATTA. OK. Mr. Dodge? 

Mr. DODGE. So if the choice was completely getting rid of something versus targeted reform, then we would say get rid of the reVerDate Aug 31 2005 13:21 Apr 16, 2014 Jkt 037690 PO 00000 Frm 00112 Fmt 6633 Sfmt 6633 F:\113-81~1\113-81~1 WAYNE
109 

transmission consent scheme to the core along the lines of what 

Mr. Scalise has proposed. 

Mr. LATTA. Mr. Munson? 

Mr. MUNSON. I guess I would say the ownership caps would be 

the first thing, but if I could mention one other thing. 

Mr. LATTA. Oh, sure. 

Mr. MUNSON. Thank you. And that is that there has been a lot 

of talk about whether the retransmission consent is broken or not, 

but I don’t know if I am the only one on this panel—I think I am— 

that actually has negotiated a retransmission consent contract, and 

I find that it works. It ends up going down to the wire, as many 

negotiations with businesses do, but what is not broken here even 

though we have brick cell phones and everything else, but what is 

not broken here is when two companies get together, one company 

wants what the other one has and they get together and negotiate 

a deal, and then only 1/2 of 1 percent of the deals go public and 

end up with an impasse. 

Mr. LATTA. I am running out of time here. Mr. Rozzelle? 

Mr. ROZZELLE. Congressman Latta, I have also negotiated retransmission consent contracts and I would tell you that in the 

case of Suddenlink, they were almost always successfully negotiated because we simply didn’t have any power at the table to do 

anything other than accept the deal we were given. 

If I was going to affect a set of laws, I would affect the broadcast 

carriage laws that impact retransmission consent. 

Mr. LATTA. Mr. Campbell? 

Mr. CAMPBELL. I would echo Mr. Dodge and Mr. Rozzelle said. 

And I, too, have negotiated retransmission consent. Obviously, over 

the years the leverage has been swayed in favor of one side, and 

at some point this is accelerating upward, and the model breaks 

with these types of increases. 

Mr. LATTA. Mr. Bergmayer? 

Mr. BERGMAYER. Well, it is hard to pick just one but for these 

purposes basic tier buy-through, and our testimony has a number 

of provisions that should be sunsetted, listed. 

Mr. LATTA. Thank you. Mr. Chairman, my time is expired and 

I yield back. 

Mr. WALDEN. The gentleman yields back. 

I will now go to Mr. Scalise for 5 minutes. 

Mr. SCALISE. Thank you, Mr. Chairman. 

When we talk about the different challenges that each of you 

face, you each have different groups that you answer to, corporations, boards, customers. Ultimately, you are all trying to provide 

services and represent those people that create the great content 

that we all enjoy. And so when we have this conversation, the reason I appreciate the chairman’s focus and the ranking member’s interest in this is that I think we all want to make sure that the policy is smart and reflective of the world that we live in today. 

And I bring the phone not just to point out that it cannot text 

the chairman or give him the LSU/Oregon score on this phone, but 

this was the modern device at the time these laws were written. 

And if you look at what you can do with this device today and you 

compare it to what you can do with this device, and when people 

realize that the laws that are on the books today that all of you 

110 

have to deal with were written for this, not for this and haven’t 

been changed since this device was the modern device, it shows you 

how outdated the laws are but it shows you how complicated it 

makes your jobs and your daily lives. 

And government needs to go and get with the times and figure 

out that you are living in a different world. You have to go in negotiations every single day dealing with the realities of modern technology. You couldn’t even text somebody but you surely couldn’t 

download video, audio. 

The things you can do today have complicated the marketplace 

because now the laws are written in a way where you literally had 

one broadcaster sitting in a room with one cable operator. You had 

a monopoly negotiating against a monopoly. And maybe that 

worked back in that day but we are not in that day anymore. 

Every consumer benefits from the fact that they have got multiple options. If they want to turn on the TV, they can get that 

through a cable wire, they can get it through a fiber, they can get 

it through a satellite, they can get it from so many sources but they 

can also go on their mobile device and just download it onto their 

iPhone or iPad or Galaxy or whatever device you have got. And yet, 

the rules are so rigid that it forces in some cases government picking winners and losers. In some cases you have complications you 

have got to go to the FCC to get a ruling. And the innovation that 

is lost is really what hurts the consumer. And that is really why 

we are here today. 

I want to ask you, Mr. Campbell, because you all just recently 

rolled out Prism. It is a fairly new product, you know, that you are 

into this marketplace and video, and you have had to go through 

some of those growing pains in establishing these relationships and 

negotiations. And the negotiations are different depending on what 

kind of cable service or what kind of product you are trying to provide. Because if you are going to a broadcaster, it is a different negotiation than, for example, you know, you all are based in Monroe, 

Louisiana. We are proud to have you as a Fortune 500 company 

in Louisiana, but you are in Monroe. And a lot of people now know 

about Monroe because of Duck Dynasty, number one show in the 

country. We are very proud of that. They are from West Monroe 

they would tell you, not just Monroe. 

But, you know, the reason 11 million people or so last week 

wanted to watch that show was because it is really good entertainment. But that is not a broadcast network. The number one show 

in the country is not a broadcast network or it is not CBS or ABC 

or NBC or Fox. It is A&E. So you are in negotiation with them to 

get that program that everybody wants is a lot different under the 

law than a negotiation with CBS or ABC or one of those broadcast 

stations, is that correct? 

Mr. CAMPBELL. That is correct. 

Mr. SCALISE. And so all you’re asking for is a free marketplace 

where you want to pay people for their copyright. You know, our 

copyright artists, Ms. Aistars’ clients, they provided content; they 

ought to get paid for it. But shouldn’t that negotiation happen for 

A&E the same way as CBS because you are a consumer. You are 

just flipping through the channels. You want to watch a show. You 

know, why should one negotiation be ruled by the government in 

111 

a different way than the other channel when for the consumer, it 

is a seamless operation? 

Mr. CAMPBELL. Representative Scalise, I have spent a lot of 

money at the Duck Dynasty shop for my children, by the way. But 

you are exactly right. A&E was created and there is no sort of 

scales that are tipped in their favor under the law that would give 

them an advantage over us in a negotiation. They have cleared 

their copyrights. Sometimes the broadcasters that we deal with, 

they don’t want to clear all of those, which is part of the compulsory license issue. 

But you are absolutely right. They are under no regulatory regimes so we sit down with them on one channel, we negotiate carriage, we come up with agreement, and we put them on. 

Mr. SCALISE. And clearly, we want everybody to be treated fairly. 

We want you to have to go and whether it is CBS or A&E or any 

other channel, you know, go have a negotiation. If you come to an 

agreement, great; if not, you know, obviously, you go somewhere 

else. You look for other means to provide the service. But the 

broadcasters ought to be paid for their content, the artist who created the content ought to be paid, but it should be done in a free 

market. You shouldn’t have must carry here and then you have got 

a buy-through, you have got free transmission consent, you have 

got compulsory copyright. There are all these things stacked on top 

of each other. 

Broadcasters have limitations under current law. They can’t even 

own multiple media outlets, yet if you are operating on the internet, you don’t have any of those limitations. And yet you are competing against each other but one guy has got one set of rules he 

is playing by and somebody else has a different set of rules. And 

so all we are trying to do here is start this conversation to say, 

look, it might have worked in 1992. Things are dramatically different in a great way for us in terms of innovation but don’t have 

these laws hold us back on the innovation for today. And that is 

why the conversation not only needs to start but ultimately we 

need to get to the point where we can actually get to text, get to 

a position where we can update and modernize these laws to reflect 

what is happening in the world we are in today. 

And I appreciate all of you for what you do to provide great services because customers love it, but we ought to make sure it is 

being done in a free and open marketplace that reflects today’s 

technology. 

Mr. CAMPBELL. Thank you, Representative. 

Mr. SCALISE. Thank you, Mr. Chairman. I yield back the balance 

of my time. 

Mr. WALDEN. Thank you, Mr. Scalise, for your work. 

We will turn out to Mr. Lujan for 5 minutes. 

Mr. LUJAN. Mr. Chairman, thank you very much and to you and 

to the ranking member for the work you have been doing in this 

space. 

The conversation that we are having today, as complex as it is, 

but a reality that hits everyone across this country as we look not 

only for information for valuable content and entertainment as 

well. So thanks to everyone for being here. 

112 

I want to recognize as well the important work that the broadcasters do in making sure that during times of emergency we are 

able to get that local news. There is actually flash flood warnings 

taking place in my district as we speak. There was a tornado that 

was spotted early this morning that warnings went out to the community that we are able to depend on that. 

But on the same note, as we talk about that, when these conversations are taking place with the breakdown that took place between CBS and Time Warner and content is shut off, that valuable 

asset, if consumers don’t have redundancy, my rabbit ears are now, 

I guess, the digital form of those in the home, and our form of redundancy at least for me is my smartphone, which I think would 

be redundant. But if internet content was even cut off and now 

that I couldn’t see it on my television, I couldn’t go to my device 

and try to pull it up because I still have internet connectivity 

whether it is through whatever my phone is receiving or through 

the internet signal that I still have in the home, that concerns me. 

And I think that in the same vein that I talk about the importance of the critical service that is provided, it concerns me that 

this shutout can take place from a blanket perspective. 

And I don’t know if, Mr. Munson, we can talk about that a little 

bit to see what we can do to prevent that from happening when, 

at the very least, this is occurring. And I say that because the 

broadcasters know I still have a lot of concerns about orphan counties. And, at least in New Mexico, we still haven’t solved this problem. And we need to because there are still places in New Mexico 

that those that are subscribers or that live in rural areas—and I 

invite anyone to drive out with me to New Mexico. It takes 8–1/ 

2 hours to cross my district alone, rural in nature. And there are 

a lot of people living in these rural towns that count on receiving 

local information, but now, because of the way that some of these 

lines are drawn they don’t get local news; they get news from the 

neighboring State but maybe not some of the warnings that they 

would like to hear as well. So, you know, that is a whole other 

issue. 

But in regards to where sometimes the conversations break down 

and it is the consumer that was left out of that warning, can you 

talk about that a little bit, Mr. Munson? 

Mr. MUNSON. Yes, thank you, Congressman. 

First of all, I want to reiterate something I said in my opening 

statement, and that is that we never went dark. CBS never went 

dark in those markets. Their transmitters were on. They were 

broadcasting at full power during the entire time. People can receive our signals. We have spent a lot of money on a very robust 

system. As you know, in the southwest, we count on translators in 

many cases to repeat that signal through large areas of land to 

reach as many people as we can possibly reach with the over-theair signal. 

Mr. LUJAN. Well, Mr. Munson, I don’t want to interrupt, sir, but 

then it goes back to redundancy. And my question is if I am going 

to make an investment in my home to put a digital receiver so that 

I can receive the broadcast feed off of that, then should I be open 

to what is being suggested by the chairman and the ranking member to say that I have made the investment to receive that digital 

113 

signal, so I get my local affiliates for free. So then why am I paying 

for them on my DISH feed or my cable feed? 

Mr. MUNSON. Primarily—— 

Mr. LUJAN. And I think we need to be careful when we say that 

it is constantly being said because then, as a consumer, where am 

I? If I am going to invest in what I believe is redundant again to 

my smartphone and through what I perceive to be able to get information over the ’net but even that was chopped off, then my redundancy is the investment with what I need to do, especially in a 

rural area. And so, you know, a feed in New York City is different 

than a feed in New Mexico. 

Mr. ROZZELLE. Congressman, if I might, one of the redundant 

features that exists is your local cable television operator because 

he has an emergency alert system. And that is triggered by, as you 

know, various stages from the Federal Government all the way 

down to the local entity. And that includes weather alerts as well. 

I thought I would point it out. 

Mr. LUJAN. Well, I think that is fair but in a day that—and, Mr. 

Chairman, I see my time has run out—we are highlighting the importance of a broadcast feed never going down and always being 

fed. I guess that is where I am caught a little bit now as I am looking at this closer when trying to understand what that means. 

So if I am watching my local channel, CBS goes out, that is the 

channel that I watch. I know that when I turn it on, it is blank; 

it says talk to your cable subscriber or talk to whatever it is so we 

can try to get this figured out, is that emergency broadcast still 

going to run on that channel or am I going to have to flip the channel in hopes—because probably I am going to turn it off and then 

I am going to go to my smartphone if I know that something is 

happening. 

Mr. MUNSON. It does run on our television station, yes. 

Mr. LUJAN. So even with that signal, even with that little note 

up there, I would still get the message? 

Mr. MUNSON. In the particular case you have described, if it 

were to happen to have an impasse between a cable company and 

a broadcaster, nothing is passed through because there had been 

an expiration of that particular contract. 

I want to also mention again that we are talking about 1–1/2 

percent or a half of 1 percent of the times we enter into these negotiations as broadcasters it ended up in an impasse. It is unfortunate and it is particularly outlined, as we talked about in the CBS/ 

Time Warner, it was very public and 30 days long. But that is a 

rare occurrence in these negotiations. There are probably people 

negotiating as we are sitting here in new retransmission deals that 

we don’t know about. 

Mr. LUJAN. I appreciate it. Thank you, Chairman. 

Mr. WALDEN. And I think your point is it is still over-the-air 

broadcast so it is not a complete blackout. If you have an antenna, 

you still get CBS? It is just not available on a cable or satellite provider, depending on who is having the blackout. 

Mr. MUNSON. That is correct, Chairman. Yes, sir. 

Mr. LUJAN. Thank you. Thank you, Mr. Munson. I appreciate 

that. 

Mr. MUNSON. Thank you. 

114 

Mr. WALDEN. We will now go to the gentleman from Colorado, 

Mr. Gardner. 

Mr. GARDNER. Well, thank you, Mr. Chairman. And I had hoped 

that Mr. Scalise would still be here because for the record he still 

brings his 8-track player. 

But thank you very much, all of you, for being here. I particularly welcome Mr. Campbell and Mr. Dodge for your representation 

today. Both of you are responsible for creating thousands of jobs in 

my district and across the State of Colorado, so I thank you so 

much to both of you for being here. 

Now, with regards to the topic of today’s hearing, there are two 

primary concerns that I have. One is a consumer’s ability to get 

what they want at a reasonable price and the free market mechanisms that allow that to happen. But it seems like we are more and 

more facing impasses as we try to achieve those 2 goals of the free 

market and giving the consumer what it is that they want at a reasonable price. 

Broadcasters come before the committee and our office and say 

that everything is working the way it should, but others say that 

it is not working the way that it should. And I will tell you in Congress when we get accused of things working or not working, we 

end up with negotiations, concessions, those kinds of words that 

pop up, compromise. Each side has to give a little, a bit for the 

sake of the people who are affected to try to meet the two concerns 

I addressed of the consumer. 

And so I don’t purport to have an answer and I don’t know that 

anybody here on this committee has purported to have all of the 

answers or to say that there is one proposal that will fix this situation. But the fact is that there are still blackouts and that consumers are paying the price both figuratively and literally. But in 

my mind one blackout is one too many, especially when it is one 

that affects so many millions of people. And I think we can all 

agree on that. And sadly, it isn’t just one and it hasn’t been just 

one. The rising cost of programming and the number of retransmission consent disputes and impasses leads me to believe that we 

do have a problem. 

So with that, I have a few questions for our witnesses. To Mr. 

Dodge, could you please explain a little bit more about your plan? 

Would you pay broadcasters in the adjacent market if you were to 

import their signal? And what would this do to help the problem 

that we all see? 

Mr. DODGE. Yes, we would. The imported signal if you will would 

be compensated under the current distant network signal royalty 

scheme, which is negotiated with each reauthorization of STELA, 

SHVERA, whatever flavor it is with the copyright holders and represents a fair market rate. And the idea would be that when a local 

signal is down we could import an adjacent market signal, which, 

as I noted in my opening remarks, is quite an imperfect substitute. 

It allows people to continue to have access to the core network programming but there would be no local content, so there would still 

be an incentive for both parties to negotiate and reach a fair deal 

to retrans at the local station. 

Mr. GARDNER. You spoke about it earlier in your opening statement in terms of this being a permanent solution. This is not a perVerDate Aug 31 2005 13:21 Apr 16, 2014 Jkt 037690 PO 00000 Frm 00118 Fmt 6633 Sfmt 6633 F:\113-81~1\113-81~1 WAYNE
115 

manent solution because I mean if you want to watch the Denver 

Broncos, you are not going to be thrilled if you have to watch the 

Cleveland Browns. Of course—— 

Mr. DODGE. Many would say that. 

Mr. GARDNER [continuing]. In this case it has worked out very 

well for us. 

But will this process though help you get a solution though for 

consumers, a settlement so to speak? 

Mr. DODGE. We think it will because it will somewhat level the 

playing field which today we think is quite out of skew. And there 

is sort of two goalposts, which I think are represented by Representative Scalise’s bill and Ranking Member Eshoo’s bill, which 

in one you can do a complete deregulatory approach or you can try 

and level the playing field a little bit so there are fair negotiations. 

Mr. GARDNER. And to Mr. Munson, during the last hearing, I 

asked each panel member if they believed the current system was 

a free market system and why. And I had one broadcaster respond 

by stating that it was in fact a free market. And that I will quote 

from the hearing: ‘‘In terms of retransmission consent, we view 

that as a mechanism of actually entering into negotiation, and I 

think one of the tenants of our businesses we spent a lot of money 

in creating content and we want to be able to, you know, get an 

appropriate return on that content.’’ 

And so my question to you, with regard to the proposal that is 

outlined in the testimony today to import distant signals even if a 

cable company is willing to pay you for importing a distant signal, 

you are still opposed to that idea? And you are opposed even if it 

is over a short period of time? And why is that? 

Mr. MUNSON. My experience is, Congressman, that it would prolong the dispute, not shorten it. By bringing another CBS affiliate 

in in this particular case, first of all, it violates the long-held contract that I have with the television network for the exclusivity for 

the CBS product, in this case Phoenix. You can’t import ESPN 

from another market if you have a dispute with ESPN. You can’t 

say, well, I want to bring the ESPN signal from Tucson into the 

ESPN market into Phoenix. Why would it be any different to import the CBS signal, which violates our contract? 

It really goes to the core of localism. As you have already mentioned, it destroys the localism. Bringing a distant signal in with 

television commercials, with programs, news programs, traffic, 

weather that doesn’t reflect that particular community destroys the 

whole idea behind localism, which was the foundation of over-theair broadcasting. 

Mr. GARDNER. So I mean do you think that what we have today 

is a free market system, a system that works in the free market? 

Mr. MUNSON. I do. I think that having the deadline—I mentioned 

this earlier—having a deadline, while gut-wrenching for the parties 

at some times, it generally brings the parties together. But by prolonging it, by bringing another station in, it artificially kicks the 

can down the road with the deadline, and therefore, the parties 

don’t negotiate and get a deal done. 

Mr. GARDNER. Mr. Chairman, I yield back. 

Mr. WALDEN. The gentleman yields back. Looks like we go now 

to gentleman from Missouri, Mr. Long. 

116 

Mr. LONG. Thank you, Mr. Chairman, and thank you all for 

being here today for your testimony. It looks like maybe I am the 

cleanup hitter today. 

So, Mr. Dodge, let me start with a question for you. Do you think 

that DISH and others involved in efforts to change these retransmission consent laws, do you think that you and others are working hard enough out in the marketplace as it exists today to reach 

successful deals? 

Mr. DODGE. We do. 

Mr. LONG. I am sorry? 

Mr. DODGE. Yes, we do. 

Mr. LONG. You do? OK. Earlier, you said in your testimony when 

it was your turn at the microphone there you said that blackouts 

are occurring with more frequency and last longer. So if that is the 

case, if they are happening with more frequency and they are for 

a longer period of time, just ballpark, but how many disputes has 

your company been involved in over, say, the last 5 or 6 years? 

Mr. DODGE. Actually, I don’t have a number of the top of my 

head. 

Mr. LONG. Can you get it for me? 

Mr. DODGE. Of course. 

Mr. LONG. OK. Because I would kind of like to know what—because if we are doing everything we can out there in the marketplace to, you know, prevent these and then they are happening 

more and more with more frequency and lasting longer, I would 

kind of like to—if you can get me an answer to that, I would appreciate it. 

Mr. DODGE. Of course. 

Mr. LONG. OK. Thank you. And is it Aistars? 

Ms. AISTARS. Aistars, yes. 

Mr. LONG. Ms. Aistars, OK. The satellite compulsory licenses 

were created, as we saw—I don’t know if it was Joe Barton’s phone 

that Scalise held up there or what, but they were created a quarter 

of a century ago and for very specific reasons of course at that 

time, as you are well aware of. 

So looking at the satellite compulsory licenses 25 years or better, 

are those reasons still relevant today with what we have heard 

today and all of the new technology and everything? 

Ms. AISTARS. Thank you for the question. 

As I said when I introduced myself, I am a copyright lawyer 

rather than a Communications Act lawyer, and so I think some of 

the justifications for the creation of those licenses were more 

steeped in communications law than copyright law, although they 

reside in Title 17. 

But I guess I would just say that the marketplace is vibrant with 

a variety of new services, as you have pointed out. You can do more 

today with the devices you have in your pocket than ever before. 

There is more creative content available to consumers through a 

variety of new services. And so I am enthusiastic about video marketplaces as we see it today, and I don’t see that it is in need of 

any new regulation. 

Mr. LONG. OK. OK. 

And with that, Mr. Chairman, I yield back. 

Mr. WALDEN. Does the gentleman yield? 

117 

Mr. LONG. I already yielded back, yes. Do you want me to yield 

to somebody? 

Mr. WALDEN. Yes, he was asking. 

Mr. LONG. Oh, I am sorry. 

Mr. WALDEN. Mr. Lujan. 

Mr. LONG. Now, you don’t have a Vermont accent. 

Mr. LUJAN. No, sir. I have got this one over here but—— 

Mr. LONG. That is not what it says on the TV monitor. 

Mr. WALDEN. And is that really a Missouri accent? That is what 

I want to know. No one knows. 

Mr. LUJAN. I thank the gentleman for yielding. I guess just a few 

follow-ups with what was said. 

Mr. Munson, I really appreciate the response to Mr. Gardner associated with where these territories and markets were drawn and 

they give you your competitive advantage for the space that you operate in, but it also impacts a dilemma that I am trying to solve 

in my State in my district with orphaned counties. The consumers 

are not given the choices with what content they want delivered to 

them because someone drew an arbitrary line based on a population center, based on a market penetration of where the epicenter 

is for advertising. They get whatever content is going to be thrown 

at them. 

In this day and age I think with DISH through my Slingbox I 

can get the content recorded and then I can watch it digitally anywhere that I have access to the internet that there is enough bandwidth for the video stream capacity. So I get my local content from 

New Mexico when I am here that way. But in a day and age where 

I am able to subscribe to a suite of information, there should be 

no reason that, based on some lines that were drawn that leave my 

consumers out if they want information. 

But as I have described before in this committee, if they are 

savvy enough as far as a DISH Network or DIRECTV subscriber 

and they go get a Post Office Box in an area that gets local programming, no matter where they are, I could do it here. I could 

have a DISH Network or DIRECTV network here. I could get billed 

to my New Mexico address and set the thing up here and I could 

get all the local programming that I want from New Mexico. 

It seems that something is broken in a way that I today based 

on a law that is preventing consumer choice should be able to get 

whatever programming from Arizona, California, Colorado, or New 

Mexico that I so desire as well. 

And so I just wanted a little bit of time to explain that that is 

a concern that I have with where these lines were drawn with how 

it is hurting my consumers when they want local news and they 

can’t even get that. 

Thank you, Chairman. And I yield back. 

Mr. WALDEN. The gentleman yields back. And I think that wraps 

up what I think has been a traffic hearing. We really appreciate 

all the testimony, your answers to our questions. And, as you 

know, we don’t have to tell you this is a complicated issue that we 

are trying to work our way through. 

We also know STELA has a timeline and a clock on it. We also 

know there are a lot of people who want to hang every caboose and 

main car and everything else onto STELA if they can. So we are 

118 

going to be having further discussions about the video marketplace 

as we go forward. 

And with that, the committee stands adjourned. 

[Whereupon, at 4:41 p.m., the subcommittee was adjourned.] 

[Material submitted for inclusion in the record follows:] 

119 


87023.075

Opening Statement of Chairman Fred Upton 

Communications and Technology Subcommittee Hearing on 

"Innovation Versus Regulation in the Video Marketplace" 

September 11, 2013 

The Energy and Commerce Committee is committed to fostering a smaller 

and more effective government for the innovation era. Furthering that effort, the 

Subcommittee on Communications and Technology today turns to the video 

marketplace to examine whether the laws for the video market are keeping pace in 

our age of innovation and competition. 

The video marketplace has been addressed by Congress numerous times, but 

those laws are showing their age. We first enacted the Satellite Home Viewer ActSTELA's great-great-grandfather- in 1988 when the video landscape was much 

different. Cable's governing statute was enacted in 1992 when its business was 

booming and competitors like direct broadcast satellite service were in their 

infancy. And the broadcast regulations derive from the era of Cronkite and 

Brinkley, not the era of You Tube and Netflix. 

Currently, the satellite industry serves one-third of America's pay-TV 

audience; broadcasters are experimenting with new digital and mobile services; 

cable providers are offering broadband and telephone service; and the Internet has 

opened the video market and lowered barriers for new players who are hoping to 

transform the way we all watch television. 
120 


87023.076

This hearing will put our video laws in context of to day's video marketplace. 

Our responsibility, as lawmakers, is to ensure that as technological advancements 

and breakthroughs transforms the video marketplace, government is not standing in 

the way. Statutes and regulations adopted during a bygone era may not only be 

hindering innovation but worse, may impose inefficiencies that harm businesses, 

consumers, and jobs. We should also bear in mind as we look at this marketplace 

that a free market, without the interference of the government and in which every 

company in the video value chain is compensated for their contribution, is best for 

all involved. 

I welcome this review and look forward to hearing from our witnesses. 
121 


87023.077

September 11,2013 

Innovation vs. Regulation in the Video Marketplace 

Opening Statement of Rep. Leonard Lance 

Thank you Mr. Chairman. 

I thank you for holding this hearing as we continue to look at possible actions this Committee 

may take in conjunction with dealing with the STELA provisions that expire at the end of next 

year. I have found the previous hearings to be very informative and helpful as we frame this 

debate for the coming year. 

I thank all of our witnesses for sharing their views with us this afternoon; they represent a crosssection of the various entities in the video industry that are affected by today's regulatory and 

statutory framework that governs how all of our constituents receive video services. 

There is a place for some federal regulation in this space but it should treat like services in the 

same fashion. I am concerned that many of the rules and regulations that govern the provision of 

video services treat MVPDs differently based primarily on the type of technology used to deliver 

that service. Federal regulations should be technology neutral and applied uniformly across 

industry actors providing the same service. 

There is no reason that the federal government should treat traditional cable operators any 

differently from satellite companies or telecom providers who offer the same type of service to 

customers. Unfortunately, as many of our witnesses point out in their submitted testimony, this 

is not necessarily the case today in our siloed regulatory structure. 

We have an incredibly vibrant marketplace today; all three technologies I have mentioned are 

represented in the top five MVPDs measured by number of customers and the market is hosting 

frequent new entrants as customers turn to broadband and mobile sources to supplement their 

entertainment choices. In light of such a competitive marketplace my preference is to keep the 

heavy hand of government out of private negotiations as much as possible. A competitive and 

free open market will deliver a greater value for American consumers. It is incumbent upon us 

as lawmakers to ensure that federal regulations and statutes are not unnecessarily interfering with 

the free market and are limited only to situations where intervention is absolutely necessary. 

This Subcommittee in the past has attempted to move legislation updating these laws and I 

appreciate that the Chairman is taking the time to study whether we should make another attempt 

to do so in the context of STELA. I look forward to a robust debate from our Members and 

witnesses this afternoon. 

Once again, I welcome our witnesses here today and thank the Chairman for holding this 

hearing; I yield back the balance of my time. 
122 


87023.078

FRED UPTON, MICHIGAN 

CHAIRMAN 

HENRY A. WAXMAN, CALIFORNIA 

RANKING MEMBER 

Ms. Sandra Aistars 

Executive Director 

Copyright Alliance 

ONE HUNDRED THIRTEENTH CONGRESS 

(:ongre~~ of tbe mnlteb ~tate~ 

1$OU5t of !\tprt5tntahbt5 

COMMITTEE ON ENERGY AND COMMERCE 

2125 RAYBURN HOUSE OFFICE BUILDING 

WASHINGTON, DC 20515-6115 Majority (202) 225-2927 

Minority (202) 225-3641 

December 20, 2013 

1224 M Street, N.W., Suite 101 

Dear Ms. Aistars: 

Thank you for appearing before the Subcommittee on Communications and Technology on 

Wednesday, September 11,2013, to testify at the hearing entitled "Innovation Versus Regulation in the 

Video Marketplace." 

Pursuant to the Rules of the Committee on Energy and Commerce, the hearing record remains 

open for ten business days to permit Members to submit additional questions for the record, which are 

attached. The format of your responses to these questions should be as follows: (I) the name of the 

Member whose question you are addressing, (2) the complete text of the question you are addressing in 

bold, and (3) your answer to that question in plain text. 

To facilitate the printing of the hearing record, please respond to these questions by the close of 

business on Tuesday, January 14,2014. Your responses should be e-mailed to the Legislative Clerk in 

Word format at Charlotte.savercool@mail.house.gov and mailed to Charlotte Savercool, Legislative 

Clerk, Committee on Energy and Commerce, 2125 Rayburn House Office Building, Washington, D.C. 

20515. 

Thank you again for your time and effort preparing and delivering testimony before the 

Subcommittee, 

Jre~l~ WtJJ.iM '~en Chairman 

Subcommittee on Communications and Technology 

cc: Anna Eshoo, Ranking Member, Subcommittee on Communications and Technology 

Attachment 
123 


87023.079

January 14, 2014 

The Honorable Greg Walden 

Chairman 

copyright alliance 

Connecting cmato",·Pmtecting """,liVe work 

House of Representatives Committee on Energy and Commerce, 

Subcommittee on Communications and Technology 

2125 Rayburn House Office Building 

Washington D.C. 20515 

Dear Chairman Walden: 

Thank you for the opportunity to testify before the Subcommittee on 

Communications and Technology on September 11, 2013 at the hearing entitled 

"Innovation Versus Regulation in the Video Marketplace," and for the opportunity to 

answer the further questions posed by Rep. Bobby Rush for the record. My 

responses to the questions are set forth below. Please note that in some instances 

the questions concern issues outside the mandate of the Copyright Alliance's 

activities and raise nuanced and complex matters of telecommunications law about 

which the Copyright Alliance has not taken a position. 

Thank you again for the opportunity to take part in your Subcommittee's important 

deliberations. 

Best regards, 

Sandra M. Aistars 

Chief Executive Officer 

Copyright Alliance 

1224 M St. N.W. 

Suite 101 

Washington D.C., 20005 

1224 M Street, NW Suite 101 Washington, D.C. 20005 I 202-S40-2243Icopyrightalliance.org 
124 


87023.080

copyright alliance 

COlUlectinll' creatots· Ploteetlll\l' cmative work 

Response Of Sandra Aistars. Chief Executive Officer. Copyri"ht Alliance 

To Questions For The Record By The Honorable Bobby Rush 

1. Do you believe that technologies and industry models have changed or are 

changing dramatically enough for Congress to consider redefining or revising 

the term, "multichannel video programming distributor" (MVPD) in the 

Communications Act? 

As many of you know, the DC Circuit Court of Appeals heard oral arguments 

this week in the case ofVerizon vs. FCC, which challenges the Commission's 

authority under the Communications Act to promulgate "so-called" net 

neutrality rules. 

If the DC Circuit were to VACATE or to order the Commission to revise its rules 

substantially, how might that affect parties' abilities to negotiate 

retransmission consent agreements "in good faith" and at arms-length? 

2. Would there be resulting business uncertainties and would those 

uncertainties be good or bad for consumers? Why? 

Response: 

Happily, because creators are pursuing diverse modes of distribution, audiences 

have more choices than ever before for viewing films and television programs. 

Services such as Netflix, Hulu, VUDU, HBOGO, Crackle, MUBI, Amazon, and EpixHD; 

devices such as AppleTV and Roku; and technologies such as UltraViolet enable 

consumers to watch what they want, when they want, where they want. The 

creative community has embraced all of these options, and is continually creating 

more opportunities for audiences. 

These examples show that the technologies and business models underlying the 

video industry are evolving daily and at an ever-increasing pace. The creative 

community is innovating and experimenting with different ways of creating, 

funding, and delivering video to viewers. This experimentation is healthy and spurs 

the development of other delivery systems. We must allow and incentivize artists to 

create, entrepreneurs to innovate, and markets to operate in this burgeoning 

environment without imposing the constraints of new compulsory licenses on them. 

1224 M Street, NW Suite 101 Washington, j).C 20005 I 202-540-2243Icopyrightalliance,org 
125 


87023.081

copyright alliance 

COIU\llct:inl1 "",.tors· PNl<Jcting creative worlc 

With respect to revising the existing definitions in the Communications Act, and to 

the Commission's authority to promulgate so called "net neutrality" rules, these 

questions concern issues outside the mandate of the Copyright Alliance's activities 

and raise nuanced and complex matters of telecommunications law about which the 

Copyright Alliance has not taken a position. 

We respectfully refer you to the comments filed by several of our members on these 

topics in the ongoing FCC In the Matter of 

Public Notice on Interpretation of the Terms "Multichannel Video Programming 

Distributor" and "Channel" as Raised in Pending Program Access Complaint 

Proceeding, MB Docket No. 12-83. 

Regarding another line of cases, it appears that the DC Circuit and the US 

Second Circuit are in some disagreement over when and whether emerging 

video networks can retransmit over-the-air hroadcast content. 

3. I know that the DC Circuit ruling is only a few days old and you may not have 

fully reviewed it, but which of the courts' interpretations of federal 

communications and copyright law is more defensible? 

4. If one circuit court's application of the law and legal reasoning is more 

compelling or defensible than the other circuit court's ruling, please explain 

why. 

Response 

Article I, Section 8 of the Constitution grants Congress the authority "to Promote the 

Progress of Science and the useful Arts, by securing for limited Times to Authors and 

Inventors the exclusive Right to their respective Writings and Discoveries." As one 

of the few constitutionally enumerated powers of the Federal government, this 

grant of authority reflects the Founders' belief that copyright protection is a 

significant governmental interest, and that ensuring appropriate rights to authors 

would drive innovation and benefit society. Ensuring the author's right to control 

the distribution of his or her works is key to these societal benefits. 

It is axiomatic that to benefit society, copyright law must have a dual purpose: to 

create a framework that encourages both creation and 

dissemination/commercialization of works. As the Court explained in ~ 

l1!Jl.dJll:. "Nothing in the text of the Copyright Clause confines the "Progress of 

Science" exclusively to "incentives for creation." Evidence from the founding, 

moreover suggests that inducing dissemination - as opposed to creation - was 

viewed as an appropriate means to promote science. Until 197 6, in fact, Congress 

1224 M Street, NW Suite 101 Washington. D.C. 200051202-540-2243jcopyrightalliance,org 
126 


87023.082

copyright alliance 

made "federal copyright contingent on publication[,) [thereby] providing incentive 

not primarily for creation, but for dissemination. [Later Supreme Court] decisions 

correspondingly recognize that "copyright supplies the economic incentive to create 

and disseminate ideas." 1 

Since the dissemination of works properly requires the consent of the author, the 

history and development of copyright law reflects both economic and other societal 

goals. A creator's control over the use of his or her work - the right to determine 

how and when to license it - drives innovation and creativity. 

Numerous of our members are currently actively engaged in litigation in the line of 

cases you reference, and we expect to learn soon whether the Supreme Court will 

accept certiorari to decide the issues posed in those cases. The Copyright Alliance 

has submitted a brief as amici curiae in support of the Petition by the American 

Broadcasting Companies, et. al. for a writ of certiorari in American Broadcasting 

Companiesv. Aereo,lnc. to review (and reverse) the decision of the U.S. Court of 

Appeals for the Second Circuit. (attached hereto as an exhibit for the record). As we 

note there: 

"For over 35 years, the copyright, broadcast, cable and technology 

industries had the expectation that all retransmission of copyrighted content 

over the Internet would be subject to consent, compensation, or both. Yet, as 

a result of the Second Circuit's decision below, Aereo has become an exception 

to the rule. No logical reason for this exception exists: instead, Aereo was 

based on perceived "assembly instructions" from Cartoon Network LLLP u. 

CSC Holdings, Inc., 536 F.3d 121 (2d Cir. 2008), cert. denied, Cable News 

Network, Inc. u. CSC Holdings, Inc., 129 S. Ct. 2890 (2009) [hereinafter 

"Cableuision"J. According to the Aereo court, Cablevision permits avoidance 

of the copyright law if a provider makes intermediate (and unnecessary) 

copies of transmitted works, from which copies the programming is "played 

back" on a near-live basis. 

The practical consequences of allowing this loophole in the law are 

substantiaL First, they threaten to upend a long-established structure that 

ensures the integrity of the copyright laws: to promote the development and 

dissemination of creative works. Allowing certain parties to circumvent this 

structure will cut into these incentives to create works and other 

programming, and to make it available to the public to consume and enjoy. 

I Golan v Holder 565 US _ (2012) 

1224 M Street, NW Suite 101 Washington, D.C. 200051202·540-2243Icopyrightalliance,org 
127 


87023.083

copyright alliance 

Conneetlnq cteator.·Prote<:tillq ctealive wod: 

The decision below also has the effect of creating perverse incentives to 

the technology community to prioritize the creation of sham technology that 

evades the law, rather than technology that is truly innovative and best 

serves the public. It should be left to public demand and the ingenuity of the 

technological community to drive the development of technology that best 

distributes the programming, to which that technology owes its existence. To 

allow a handful of lawyers to determine the trajectory of this country's 

technological development is shortsighted and unwise. 

But the Aereo decision threatens to have consequences well beyond the 

broadcast industry, extending to those who rely on and interpret this 

country's copyright laws. It reinforces a statutory misreading of the law set 

out by the Second Circuit five years earlier in Cablevsion - one that the 

Government expressed concerned about when this Court was considering 

granting certiorari. Worse, the Aereo decision builds upon the error by 

establishing "guideposts" that have no foundation in the law. In the interim, 

other courts have rejected the application of Cablevision to Aereo-like 

technologies. This has created conflicting results, including a situation in one 

district where the technology is both legal and illegal at the same time. 

The Court should not tacitly approve these types of outcomes. They do not 

serve the fundamental principles underlying this country's jurisprudence. 

Instead, permitting the ruling to stand will embolden others to seek ways to 

avoid compliance with the law, rather than encouraging the bar and 

American businesses and citizens to comply with the statutes and legal 

principles that this Court is tasked with interpreting." 

Mr. Munson pointed out in his testimony that added regulations on 

broadcasters "stem from what some have characterized as a 'social contract' 

between the government and the broadcasting industry: broadcasters use 

licensed spectrum to serve the public interest and offer their service free to 

American consumers." 

Many of these broadcast TV consumers and watchers are minorities. In the 

2013 Ownership Survey and Trend Report, it was cited that 22 percent of all 

African-American households and 25 percent of Hispanic households are 

broadcast-only homes. Additionally, minorities comprise 41 percent. 

Notwithstanding this fact, minority and female ownership of television 

stations and cable systems has shrunk dramatically over the years. 

1224 M Street, NW Suite 101 Washington, D.C. 20005120Z-540-2243Icopyrightalliance.org 
128 


87023.084

copyright alliance 

Conna"tlnq "",ato,"· Prote<:ting ,," .. 11M! _tk 

5. Do any of you challenge or take issue with the proposition that minority TV 

broadcast and cable system owners can be just as if not more responsive to 

the needs of their minority viewers and audiences? 

6. Other than the reinstitution of the minority tax certificate, which NAB has 

supported, what measures can Congress take so that more programming and 

news meeting the critical needs of minority viewers and consumers gets 

carried over the public airwaves, using public rights-of-way? 

Response 

The questions posed concern issues outside the mandate of the Copyright Alliance's 

activities and raise matters of telecommunications law about which the Copyright 

Alliance has not taken a position. We note, however, that some of our members and 

their affiliates are themselves minority TV broadcast [I'd be careful here. If you 

mean TV & cable channels OWNED by minorities very few come to mind & which of 

these are your members?} and channel owners and/or specifically aim to serve 

minority viewers and audiences. We do not challenge the propOSition that minority 

TV broadcast and cable system owners can be just as if not more responsive to the 

needs of their minority viewers and audiences as non-minority owned broadcasters 

and cable systems are. As you correctly note, members of the Copyright Alliance 

have indiVidually expressed support for the reinstitution of the minority tax 

certificate and are active in encouraging efforts to ensure that programming and 

news meeting the critical needs of minority viewers and consumers is carried over 

the public airwaves as well as via cable channels. 

Mr. Munson says in his testimony that broadcasters are more regulated than 

any other video platform, including cable and satellite. He goes further to say 

that FCC public filing rules, including a requirement for local broadcast TV 

stations to place sensitive pricing information online should also apply to 

cable systems. 

7. Assuming for argument that this requirement was made applicable to other 

video providers, COUldn't it lead to more good faith negotiation over 

retransmission consent agreements? 

Response 

The question posed concerns issues outside the scope of the Copyright Alliance's 

activities and raise matters of telecommunications law about which the Copyright 

Alliance has not taken a position. 

1224 M Street, NW Suite 101 Washington, D.C. 200051202-540-2243Icopyrightalliance.org 
129 


87023.085

FRED UPTON, MICHIGAN 

CHAIRMAN 

HENRY A. WAXMAN, CALIFORNIA 

RANKING MEMBER 

ONE HUNDRED THIRTEENTH CONGRESS 

«ongrt~~ of tbt Wntttb ~tatt~ 

~OU.5t of l\tprt5tntatibt5 

COMMITTEE ON ENERGY AND COMMERCE 

2125 RAYBURN HOUSE OFFICE BUILDING 

WASHINGTON, DC 20515-6115 Majority (20l) 225-2927 

Minority (2021 225-3641 

December 20, 2013 

Mr, R, Stanton Dodge 

Executive Vice President and General Counsel 

DISH Network LLC 

1110 Vermont N,W" Suite 750 

Washington, D,C, 20005 

Dear Mr, Dodge: 

Thank you for appearing before the Subcommittee on Communications and Technology on 

Wednesday, September 11,2013, to testify at the hearing entitled "Innovation Versus Regulation in the 

Video Marketplace." 

Pursuant to the Rules of the Committee on Energy and Commerce, the hearing record remains 

open for ten business days to permit Members to submit additional questions for the record, which are 

attached. The format of your responses to these questions should be as follows: (I) the name of the 

Member whose question you are addressing, (2) the complete text of the question you are addressing in 

bold, and (3) your answer to that question in plain text. 

To facilitate the printing of the hearing record, please respond to these questions by the close of 

business on January 14,2014. Your responses should be e-mailed to the Legislative Clerk in Word 

format at Charlotte.savercool@mail.house.gov and mailed to Charlotte Savercool, Legislative Clerk, 

Committee on Energy and Commerce, 2125 Rayburn House Office Building, Washington, D.C. 20515, 

Thank you again for your time and effort preparing and delivering testimony before the 

Subcommittee. 

Sincerely, 

~W~ 

Chairman 

Subcommittee on Communications and Technology 

cc: Anna Eshoo, Ranking Member, Subcommittee on Communications and Technology 

Attachment 
130 


87023.086

Stanton Dodge's Responses to Congressman Bobby Rusb's Questions for tbe Record 

from September 11,2013 Hearing Entitled "Innovation Versus Regulation in tbe Video Marketplace" 

Submitted January 28, 2014 

1, Do you believe that technologies and industry models bave cbanged or are changing dramatically enougb 

for Congress to consider redefining or revising the term, "multichannel video programming distributer" 

(MVPD) in tbe Communications Act? 

DISH has not yet taken a position on this matter. 

As many of you know, the DC Circuit Court of Appeals beard oral arguments this week in tbe case of 

Verizon vs. FCC, wbicb challenges the Commission's authority under tbe Communications Act to 

promulgate "so-caUed" net neutrality rules. 

Iftbe DC Circuit were to VACATE or to order the Commission to revise its rules substantially, how migbt 

tbat affect tbe parties' abilities to negotiate retransmission consent agreements "in good faitb" and at armslengtb? 

DISH is still reviewing the potential impacts (if any) that the DC Circuit's decision may have on the parties' 

abilities to negotiate retransmission consent agreements "in good faith" and at arms-length. Separately from the 

net neutrality decision, we believe that the broken retransmission consent system is a major problem for DISH's 

business and its customers. The video laws passed in 1992 no longer reflect the marketplace (there was no 

satellite video business then and no Internet). Unfortunately, the broadcasters are exploiting the failure of 

Congress to update the rules for this Century. As a result, consumers' bills are rising and blackouts are at an 

historic high. 

2. Would tbere be resulting business uncertainties and would tbose uncertainties be good or bad for 

consumers? Why? 

DISH was pleased that the D.C. Circuit found that the Federal Communications Commission has authority to 

promulgate rules governing broadband providers' treatment ofInternet traffic. We were disappointed that the 

court vacated the anti-blocking and anti-discrimination rules, but we believe the Commission has the ability on 

remand to craft new rules that will comply with the DC Circuit's decision and protect consumers. 

Regarding another line of cases, it appears tbat the DC Circuit lind tbe US Second circuit are in some 

disagreement over when and wbether emerging video networks can retransmit over-tbe-air broadcast 

content. 

3. I know that the DC Circuit ruling is only a few days old and you may not have fully reviewed it, but which 

of the courts' interpretations of federal communications and copyright law is more defensible? 

DISH has not yet taken a position on these cases. 

4. If one circuit court's application orthe law and legal reasoning is more compelling or defensible tban tbe 

other circuit court's ruling, please explain why. 

DISH has not yet taken a position on these cases. 

Mr. Munson pointed out in his testimony that added regulations on broadcasters "stem from what some 

have characterized as a 'social contract' between the government and the broadcasting industry: 

broadcasters use licensed spectrum to serve the public interest and offer their service free to American 

consumers." 
131 


87023.087

Many of these broadcast TV consumers and watchers are minorities. In tbe 2013 Ownersbip Survey and 

Trend Report, it was cited tbat 22 percent of all African-American bousebolds and 25 percent of Hispanic 

bousebolds are broadcast-only bomes. Additionally, minorities comprise 41 percent. Notwithstanding tbis 

fact, minority and female ownersbip of television stations and cable systems has shrunk dramatically over 

the years. 

5. Do any of you challenge or take issne with the proposition that minority TV broadcast and cable system 

owners can be just as if not more responsive to tbe needs of their minority viewers and audiences? 

DISH has not yet taken a position on this issue. 

6. Other than the reinstitution of the minority tax certificate, which NAB has supported, wbat measures can 

Congress take so that more programming and news meeting tbe critical needs of minority viewers and 

consumers gets carried over the public airwaves, using public rights-of-way? 

Congress, as part of the STELA re-authorization, should pass meaningful retransmission consent legislation. The 

broken retransmission consent regime is in dire need of comprehensive reform. In the past few years we have 

seen an escalating number ofbJackouts arising from impasses in negotiations between the broadcasters and their 

distributors. And, these blackouts are lasting longer than in the past, and impacting millions more subscribers. 

Among other things, we have voiced support for proposals such as interim carriage authority, which would 

temporarily permit a distant signal to be imported during a retransmission consent dispute. That measure would 

alleviate the problem of service disruptions and prevent the use of consumers as pawns. And, the broadcaster 

whose signal is imported will be compensated under the already established distant signal royalty rate. If the 

broadcaster's local content is as valuable to consumers as they assert, then the imported distant network is an 

inferior substitute, and both parties would continue to have every incentive to reach an agreement. The imported 

distant signal simply fills the void for the network programming. 

We also support the Video CHOICE Act introduced by Ms. Eshoo and Ms. Lofgren. If passed, the legislation 

would give consumers greater choice over their programming, tackle the growing problem of bundling of cable 

channels with network channels, and empower the Federal Communications Commission with significant 

authority to curtail blackouts. 

Mr. Munson says in his testimony that broadcasters are more regulated than any other video platform, 

including cable and satellite. He goes further to say that FCC public filing rules, including a requirement 

for local broadcast TV stations to place sensitive pricing information online should also apply to cable 

systems. 

7. Assuming for argument that tbis requirement was made applicable to other video providers, couldn't it 

lead to more good faith negotiation over retransmission consent agreements? 

DISH does not believe that providing sensitive pricing information of video providers online would lead to more 

productive negotiations. 
132 


87023.088

FRED UPTON, MICHIGAN 

CHAIRMAN 

HENRY A. WAXMAN, CALIFORNIA 

RANKING MEMBER 

ONE HUNDRED THIRTEENTH CONGRESS 

((ongrt~!) of tbt Wnittb ~tatt~ 

"OU5t of l\tprt5tntatibt5 

COMMITTEE ON ENERGY AND COMMERCE 

2125 RAYBURN HOUSE OFFICE BUILDING 

WASHINGTON, DC 20515-6115 

Mr. Edward L. Munson, Jr. 

Vice President and General Manager 

KPHO-TV 

4016 North Black Canyon 

Phoenix, AZ 85017-4730 

Dear Mr. Munson: 

Majority (202) 225-2927 

Minority (202) 225-3641 

December 20,2013 

Thank you for appearing before the Subcommittee on Communications and Technology on 

Wednesday, September 11,2013, to testify at the hearing entitled "Innovation Versus Regulation in the 

Video Marketplace." 

Pursuant to the Rules of the Committee on Energy and Commerce, the hearing record remains 

open for ten business days to permit Members to submit additional questions for the record, which are 

attached. The format of your responses to these questions should be as follows: (I) the name of the 

Member whose question you are addressing, (2) the complete text of the question you are addressing in 

bold, and (3) your answer to that question in plain text. 

To facilitate the printing of the hearing record, please respond to these questions by the close of 

business on January 14,2014. Your responses should be e-mailed to the Legislative Clerk in Word 

fonnat at Charlotte.savercool@mail.house.gov and mailed to Charlotte Savercool, Legislative Clerk, 

Committee on Energy and Commerce, 2125 Rayburn House Office Building, Washington, D.C. 20515. 

Thank you again for your time and effort preparing and delivering testimony before the 

Subcommittee. 

Sincerely, 

IJ., ~~ L:Jtfk-. ~;;a.en Chairman 

Subcommittee on Communications and Technology 

cc: Anna Eshoo, Ranking Member, Subcommittee on Communications and Technology 

Attachment 
133 


87023.089

Responses to Questions for the Record from Mr. Edward L. Munson 

Questions from the Honorable Bobby Rush 

1. Do you believe that technologies and industry models have changed or are changing 

dramatically enough for Congress to consider redefining or revising the term, 

"multichannel video programming distributor" (MVPD) in the Communications Act? 

Answer: 

The FCC currently has an open proceeding on the appropriate scope of the "multichannel 

video programming distributor" definition. While it is clear that new technologies and 

services are changing the way viewers consume video content, NAB does not believe 

Congress should intervene at this time. If Congress were to consider any revision to the 

term "MVPD" it should ensure that new technologies and services are prohibited from 

expropriating broadcast signals. Broadcasters must maintain the ability to control the 

distribution of their signals over the internet and to negotiate for compensation from 

broadband video providers seeking to retransmit broadcast signals. 

2. As many of you know, the DC Circuit Court of Appeals heard oral arguments this week 

in the case of Verizon vs. FCC, which challenges the Commission's authority under the 

Communications Act to promulgate "so-called" net neutrality rules. 

If the DC Circuit were to VACATE or to order the Commission to revise its rules 

substantially, how might that affect parties' abilities to negotiate retransmission 

consent agreements "in good faith" and at arms-length? 

Would there be resulting business uncertainties and would those uncertainties be 

good or bad for consumers? Why? 

Answer: 

NAB does not believe that the FCC's rules on net neutrality and retransmission consent are 

interrelated, or that the court's decision has any relation to the ability of parties in a 

retransmission consent negotiation to bargain "in good faith." 

3. Regarding another line of cases, it appears that the DC Circuit and the US Second 

Circuit are in some disagreement over when and whether emerging video networks 

can retransmit over-the-air broadcast content. 

I know that the DC Circuit ruling is only a few days old and you may not have fully 

reviewed it, but which of the courts' interpretations of federal communications and 

copyright law is more defensible? 
134 


87023.090

Answer: 

NAB agrees with the courts that have noted that creating inefficient systems purely to avoid 

copyright law is not good policy and circumvents the law. NAB's position is more fully 

explained in the attached amicus brief filed by NAB in support of a recent petition to the 

Supreme Court in the American Broadcast Companies, Inc. v. Aereo, Inc. litigation. 

4. If one circuit court's application of the law and legal reasoning is more compelling or 

defensible than the other circuit court's ruling, please explain why. 

Answer: 

NAB agrees with the courts that have noted that creating inefficient systems purely to avoid 

copyright law is not good policy and circumvents the law. A more detailed legal argument is 

contained in the attached amicus brief filed by NAB in support of a recent petition to the 

Supreme Court in the American Broadcast Companies, Inc. v. Aereo, Inc. litigation. 

5. Mr. Munson pointed out in his testimony that added regulations on broadcasters 

"stem from what some have characterized as a 'social contract' between the 

government and the broadcasting industry: broadcasters use licensed spectrum to 

serve the public interest and offer their service free to American consumers." 

Many of these broadcast TV consumers and watchers are minorities. In the 2013 

Ownership Survey and Trend report, it was cited that 22 percent of all AfricanAmerican households and 25 percent of Hispanic households are broadcast-only 

homes. Additionally, minorities comprise 41 percent. Notwithstanding this fact, 

minority and female ownership of television stations and cable systems has shrunk 

dramatically over the years. 

Do any of you challenge or take issue with the proposition that minority TV 

broadcasters and cable system owners can be just as if not more responsive to the 

needs of their minority viewers and audiences? 

Answer: 

NAB shares your desire for broadcast ownership to better reflect our diverse society. The 

transition from analog to digital television has offered a new opportunity for increased 

diversity on the broadcast dial. For the first time, stations can offer new, innovative and 

niche streams on their multicast channels. Multicast channels offer new diverse 

programming options for viewers, such as the minority-owned Bounce TV and Soul of the 
135 


87023.091

South television networks, which air programming that targets African American viewers. 

Many markets have seen multicast broadcast programming options specifically tailored to 

latino, Indian, Chinese, Japanese and other audiences. 

One of the potential obstacles to increased diversity, however, may be the upcoming 

incentive auction which could reduce the diversity of programming on broadcast television. 

By design, the incentive auction will reduce the number of full power and low power 

broadcast stations, which will thereby reduce the opportunity for minorities to own 

television stations. Furthermore, according to press reports, television stations that choose 

to participate in the auction will likely be those less profitable stations, some of which could 

be stations that program to minority populations and offer unique minority-centric 

programming. When designing the incentive auction, NAB is hopeful the FCC will take into 

consideration the potential impact on diversity. 

6. Other than the reinstitution of the minority tax certificate, which NAB has supported, 

what measures can Congress take so that more programming and news meeting the 

critical needs of minority viewers and consumers gets carried over the public 

airwaves, using public rights-of-way? 

Answer: 

NAB has supported reinstatement of the tax certificate for the purpose of promoting 

greater diversity in ownership of broadcast television and radio stations. NAB also has 

advanced several proposals before the FCC that are intended to promote ownership 

diversity. These include: (I) an incubator or waiver program that would give broadcasters 

incentives to provide technical and financial assistance to qualifying businesses entering 

broadcast ownership; and (ii) modifying FCC rules to allow sellers of broadcast stations to 

hold a reversionary interest in broadcast licenses pursuant to certain guidelines to 

incentivize sellers to be more willing to finance a station purchased by a qualifying owner by 

retaining the ability to reacquire the station in the event of a default. Such measures also 

could be taken up by Congress to encourage increased minority ownership of broadcast 

outlets. 

7. Mr. Munson says in his testimony that broadcasters are more regulated than any 

other video platform, including cable and satellite. He goes further to say that FCC 

public filing rules, including a requirement for local broadcast TV stations to place 

sensitive pricing information online should also apply to cable systems. 
136 


87023.092

Assuming for argument that this requirement was made applicable to other video 

providers, couldn't it lead to more good faith negotiation over retransmission consent 

agreements? 

Answer: 

The current public file rules require television broadcasters to place sensitive advertising 

price information online. This is a rule that is ONLY applicable to broadcasters, not any 

other video platform that competes directly with broadcasters, such as cable, satellite or 

teleco companies. NAB believes that if broadcasters must comply with this regulation, then 

other competitors in the video marketplace should have to fulfill the requirement as well. 

NAB does not believe there is any connection between whether retransmission consent 

negotiations are meeting the good faith standard and whether or not this public file 

requirement is placed upon our competitors. 
137 


87023.093

No. 13-461 

IN THE 

~upreme ([ourf o£ tire ~niteh ~taf.es 

AMERICAN BROADCASTING COMPANIES, INC., et al. 

Petitioners, 

v. 

AEREO, INC., FIKlA BAMBOOM LABs, INC., 

Respondent. 

ON PETITION FOR A WRIT OF CERTIORARI TO THE 

UNITED STATES COURT OF APPEALS FOR THE SECOND 

CIRCUIT 

BRIEF OF THE NATIONAL ASSOCIATION OF 

BROADCASTERS, THE ABC TELEVISION 

AFFILIATES ASSOCIATION, THE CBS 

TELEVISION NETWORK AFFILIATES 

ASSOCIATION, THE NBC TELEVISION 

AFFILIATES, AND THE FBC TELEVISION 

AFFILIATES ASSOCIATION, AS AMICI CURIAE 

IN SUPPORT OF PETITIONERS 

November 2013 

Robert A. Long 

Counsel of Record 

Matthew S. DelNero 

David M. Zionts 

COVINGTON & BURUNG LLP 

1201 Pennsylvania Ave., NW 

Washington, DC 20004-2401 

rlong@cov.com 

(202) 662-6000 

Counsel for Amici Curiae 
138 


87023.094

TABLE OF CONTENTS 

Page 

TABLE OF AUTHORITIES ....................................... ii 

INTEREST OF AMICI CURIAE ............................... 1 

INTRODUCTION AND 

SUMMARY OF ARGUMENT .................................... 3 

ARGUMENT .............................................................. 6 

1. Aereo Subverts Congress' Careful 

Balance Through Technological 

Contrivance ...................................................... 6 

A. Broadcasters Provide Important 

Services To Their Communities 

At Substantial Cost.. ............................. 6 

B. Congress Has Struck A Balance 

To Protect Local Broadcasters, 

MVPDs, Copyright Holders, And 

Ultimately, The Public ........................ 11 

C. Aereo's "Rube Goldberg-Like 

Contrivance" Violates The Plain 

Text Of The Copyright Act and 

Circumvents Its Purpose .................... 14 

II. This Court's Review Is Necessary To 

Bring Stability And Certainty To The 

Broadcasting, MVPD And ContentProducing Industries ..................................... 18 

CONCLUSION ......................................................... 26 

- 1 -
139 


87023.095

TABLE OF AUTHORITIES 

Page(s) 

Cases 

Capital Cities Cable, Inc. v. Crisp, 

467 U.S. 691 (1984) .............................................. 12 

Cartoon Network LP, LLLP v. CSC Holdings, 

Inc. ("Cablevision"), 

536 F.3d 121 (2d Cir. 2008) ................................. 16 

CBS Broad. Inc. v. FilmOn.com, Inc., 

No. 10-cv-7532-NRB (S.D.N.Y. Aug. 9, 

2012) ..................................................................... 15 

Community Television of Utah, LLC v. Aereo, 

Inc., 

No. 2: 13-cv-00910 (D. Utah Oct. 7, 2013) ............ 19 

Fortnightly Corp. v. United Artists 

Television, Inc., 

392 U.S. 390 (1968) ........................................ 11, 17 

Fox Television Stations, Inc. v. BarryDriller 

Content Systems, PLC, 

915 F. Supp. 2d 1138 (C.D. CaL 2012), 

appeal docketed sub nom. Fox Television 

Stations, Inc. v. Aereokiller, LLC, Nos. 13-

55156, 13-55157 (9th Cir. Jan. 25, 2013) ...... 18,20 

- 11 -
140 


87023.096

Fox Television Stations, Inc. v. FitmOn X 

LLC, 

No. 13-758,2013 WL 4763414 (D.D.C. 

Sept. 5,2013), appeal docketed, No. 13-

7146 (D.C. Cir. Sept. 17,2013) ...................... 19, 20 

Hearst Stations Inc. v. Aereo, Inc., 

No. 13-11649,2013 WL 5604284 (D. 

Mass. Oct. 8, 2013), appeal docketed, No. 

13-2282 (1st Cir. Oct. 16, 2013) ........................... 18 

Sony Corp. of Am. v. Universal City Studios, 

Inc., 

464 U.S. 417 (1984) .............................................. 17 

Teleprompter Corp. v. Columbia Broad. Sys., 

Inc., 

415 U.S. 394 (1974) ........................................ 11, 17 

Turner Broad. Sys., Inc. v. FCC, 

512 U.S. 622 (1994) ................................................ 6 

Twentieth Century Fox Film Corp. v. 

ICraveTV, 

Nos. Civ.A. 00-120, Civ.A. 00-121, 2000 

WL 255989 (W.D. Pa. Feb. 8, 2000) .................... 15 

United States v. Sw. Cable Co., 

392 U.S. 157 (1968) ................................................ 6 

Warner Bros. Entm't, Inc. v. WTV Sys., Inc., 

824 F. Supp. 2d 1003 (C.D. Cal. 2011) ................ 14 

WPIX, Inc. v. ivi, Inc., 691 F.3d 275 (2d Cir. 

2012), cert. denied, 133 S. Ct. 1585 (2013) .. passim 

- III • 
141 


87023.097

Statutes 

17 U.S.C. § 101 .......................................................... 15 

17 U.S.C. § 106 .......................................................... 11 

17 U.S.C. § 119 .................................................... 12,22 

17 U.S.C. § 122 .......................................................... 12 

47 U.S.C. § 325 .......................................................... 13 

Cable Television and Consumer Protection 

and Competition Act of 1992, Pub. L. No. 

102-385, 106 Stat. 1460 ....................................... 13 

Copyright Act of 1976, Pub. L. No. 94-553, 90 

Stat. 2541 ............................................................. 12 

Satellite Home Viewer Improvement Act of 

1999, Pub. L. No. 106·113, 113 Stat. 1501. ......... 13 

Legislative and Regulatory Materials 

Comments of the National Association of 

Broadcasters, Examination of the Future 

of Media and Information Needs of 

Communities in a Digital Age, 

FCC GN Docket No. 10-25 (lVIay 7, 2010), 

available at 

http://tinyurl.comlFutureNewMedia ............. 10,11 

• lV -
142 


87023.098

FCC, Annual Assessment of the Status of 

Competition in the Market for the Delivery 

of Video Programming, 

MB Docket No. 12·203, 28 FCC Red. 

10,496 (2013) ................................................ passim 

H.R. Rep. No. 94-1476 (1976), reprinted in 

1976 U.S.C.C.A.N. 5659 ................................. 12, 16 

Joint Reply Comments of Broadcasters, 

Amendment to the Commission's Rules 

Related to Retransmission Consent, 

FCC MB Docket No. 10-71 (June 27, 

2011), available at 

http://tinyurl.com/RetransComments ................... 9 

Promoting Investment and Protecting 

Commerce Online: The ART Act, the NET 

Act and Illegal Streaming: Hearing Before 

the Subcomm. on Intellectual Prop., 

Competition and the Internet of the H. 

Comm. on the Judiciary, 112th Congo 6 

(2011) .................................................................... 15 

Reply Comments of the National Association 

of Broadcasters, Amendment of the 

Commission's Rules Related to 

Retransmission Consent, FCC MB Docket 

No. 10-71 (June 27,2011), available at 

http://tinyurl.comlEisenachCaves ....................... 13 

Rethinking the Children's Television Act for a 

Digital Media Age: Hearing Before the S. 

Comm. on Commerce, Science, and 

Transportation, 111th Congo 7 (July 22, 

2009) ....................................................................... 9 

- v -
143 


87023.099

S. Rep. No. 106-42, at 10 (1999) ................................ 12 

Steven Waldman, FCC, The Information 

Needs of Communities (July 2011), 

available at 

http://tinyurl.comIFCCWaldman ........................... 7 

Other Authorities 

Advisory, FCC, FCC Provides the Public 

With Important Tips for Communicating 

in the Aftermath of Hurricane Sandy 

(Oct. 31, 2012), 

http://tinyurl.comIFCCSandy ................................ 8 

Steve Donohue, Britt: Aereo Could Help Time 

Warner Cable Stop Paying 

Retransmission-Consent Fees, 

FierceCable, Apr. 26, 2012, 

http://tinyurl.comlBrittAereo ............................... 23 

Andy Fixmer et al., DirecTV, Time Warner 

Cable Are Said to Weigh Aereo-Type 

Services, Bloomberg, Oct. 26, 2013, 

http://tinyurl.comlDirecTVAereo ......................... 22 

National Association of Broadcasters, 

Broadcasters' Public Service: TV Stories, 

http://tinyurl.comlTVStories (last visited 

Nov. 7, 2013) ........................................................... 7 

News Release, FCC, Broadcast Station 

Totals as of September 30, 2013 (Oct. 24, 

2013), http://tinyurl.comIFCC9-30-13 ................... 6 
144 


87023.100

Barb Palser, A Promising New Venue: TV 

stations and their digital outlets may play 

a more prominent role in investigative 

reporting, American Journalism Review, 

Aug. 27, 2012, 

http://tinyurl.com/AJRPalser ................................. 8 

Pew Research Center, Understanding the 

Participatory News Consumer (March 1, 

2010), available at 

http://tinyurl.comlPewNewsConsumer ................. 7 

Press Release, Aereo, Inc., Aereo Announces 

Expansion Plans for 22 New U.S. Cities 

(Jan. 8, 2013), 

http://tinyurl.com/AereoExpansion ..................... 19 

Press Release, FCC, Ten Days and Counting 

to DTV Transition (June 2, 2009), 

http://tinyurl.com/DTVI0Days .............................. 8 

Press Release, National Association of 

Broadcasters, Over-the-Air TV 

Renaissance Continues as Pay TV CordCutting Rises (June 21, 2013), 

http://tinyurl.comINABRenaissance ...................... 8 

Shalini Ramachandran, TV Service Providers 

Held Talks With Aereo, Wall St. J., Apr. 1, 

2013, at Bl ........................................................... 22 

Brian Stetler, Broadcasters Circle Wagons 

Against A TV Streaming Upstart, N.Y. 

Times, Apr. 9, 2013, 

http://tinyurl.com/CBSAereo ............................... 24 

- Vll -
145 


87023.101

Ira Teinowitz, FOX-Aereo Dispute Could 

Force Network Off Broadcast Tv, Says 

Chase Carey, The Wrap, Apr. 8, 2013, 

http://tinyurl.comlCareyAereo ............................. 24 

TVB, TV Basics (June 2012), 

http://tinyurl.comtrVBasics ................................... 9 

Ted Johnson, NBC, ABC, CBS Board Suit 

Against Barrydriller.com, Variety, Aug. 

13, 2012, http://tinyurl.comNarietyBD ............... 25 

- Vlll • 
146 


87023.102

INTEREST OF AMICI CURIAE 

The National Association of Broadcasters, the 

ABC Television Mfiliates Association, the CBS 

Television Network Affiliates Association, the NBC 

Television Mfiliates, and the FBC Television 

Mfiliates Association (collectively, the "Broadcaster 

Associations") are associations representing the 

interests of television broadcasters.1 The National 

Association of Broadcasters (NAB) is a non-profit, 

incorporated association of radio and television 

stations and broadcasting networks. NAB serves and 

represents the American broadcasting industry, 

advocating before Congress, the Federal 

Communications Commission, and the courts on 

behalf of its members. The majority of NAB's 

members are not large entities; they are local, 

independent stations. 

The ABC Television Affiliates Association, the 

CBS Television Network Affiliates Association, the 

NBC Television Affiliates, and the FBC Television 

Mfiliates Association represent hundreds of local 

television stations affiliated with the national ABC, 

CBS, NBC, and FOX television networks, 

respectively. Together, the Broadcaster Associations' 

1 Pursuant to Rule 37.6, amici affirm that no counsel for a party 

authored this brief in whole or in part and that no person other 

than amici made any monetary contributions intended to fund 

the preparation or submission of this brief. Counsel of record 

for all parties received notice at least 10 days prior to the due 

date of amici's intention to file this brief, and their letters 

consenting to the filing of all amicus curiae briefs have been 

filed with the Clerk. 

- 1 -
147 


87023.103

members serve millions of viewers in every state in 

the country. 

The Broadcaster Associations have a 

compelling interest in promoting adherence to 

copyright and communications laws that govern 

public performances of television programming and 

retransmission of broadcast signals to the viewing 

public. Without adherence to these laws, 

broadcasters could not fulfill their obligation to offer 

television programs that meet the needs and 

interests of the communities they are licensed to 

serve. Unauthorized retransmissions of broadcast 

programming siphon viewers away from lawfully 

authorized sources, which include over-the-air 

broadcasts, cable and satellite subscription services, 

and authorized online distributors. As a result, the 

Broadcaster Associations' members lose advertising 

revenues and retransmission fees essential to 

recouping the significant costs of acqUIrmg, 

producing, and distributing local and national 

programming. This undermines broadcasters' ability 

to create new innovative programming and 

distribution mechanisms, and threatens existing 

programs, such as original local news and 

community affairs programming, that are costly to 

produce. 

- 2 -
148 


87023.104

INTRODUCTION AND 

SUMMARY OF ARGUMENT 

Quality broadcast television, delivered for free 

over the air by local stations, is a public good, as 

Congress has long recognized. But free over-the-air 

television is not cost-free and cannot be taken for 

granted. Aereo and others following in its footsteps 

seek to subvert a carefully constructed legal 

framework with a technological gimmick, and the 

federal judiciary is divided on whether Aereo has 

succeeded. This is an important, cleanly presented 

question of federal law, and there is little to gain -

and much to be lost - if review by this Court is 

delayed. 

1. Broadcast stations serve their communities 

by delivering quality programming, including local 

news programs, on which the public relies. Nearly 

60 million Americans, including many low-income 

households, rely exclusively on over-the-air 

broadcast signals. Still more watch broadcast 

programming through multichannel video 

programming distributors (MVPDs). Over-the-air 

broadcasting involves substantial costs, including 

capital expenses, network affiliation fees, licenses for 

popular syndicated programs, and the personnel, 

equipment, and facilities needed to produce 

informative news programs and emergency coverage. 

Congress has struck a careful balance that 

protects the interests of broadcasters and others. 

Overriding earlier decisions of this Court, Congress 

decided that cable systems may not retransmit 

copyrighted broadcast programs without consent, but 

created a compulsory licensing system to facilitate 

- 3 -
149 


87023.105

these systems' access to such programming. 

Separately, Congress granted broadcasters rights in 

their signals, including the right to negotiate with 

:MVPDs for the ability to retransmit those signals. 

Together, this interlocking set of provisions assigns 

distinct benefits and burdens to broadcasters, 

:MVPDs, and copyright owners. 

The decision below subverts this balance by 

allowing Aereo to exploit broadcasters' creative 

efforts and investment by retransmitting their 

programs and signals for a profit, without producing 

anything and without paying broadcasters anything. 

Aereo does this through a technological gimmick, 

using thousands of dime-sized antennae and 

identical digital copies to simultaneously retransmit 

live television programming and signals to its paying 

subscribers, while claiming these are not "public 

performances." As Judge Chin explained, this 

system clearly constitutes an unauthorized public 

performance under the plain text of the Copyright 

Act: it is a "device or process," used to transmit 

copyrighted television programming, i.e., the 

"performances," to "paying strangers," i.e., "the 

public."2 The panel majority's view that the system 

is saved by its "technical details" is foreclosed by the 

text of the statute and is inconsistent with its 

purpose and legislative history. 

2. Courts are divided over the legality of 

Aereo and similar systems. Some courts have 

rejected challenges to it, while others have issued 

2 Pet. App. 43a-44a (Chin, J., dissenting). 

- 4 -
150 


87023.106

injunctions covering large portions of the country; 

the issue is currently pending in three circuit courts, 

all on substantially identical and virtually 

undisputed facts. Although the Second Circuit is the 

only court of appeals that has ruled on the issue to 

date, the judiciary has developed two wellarticulated but competing readings of the Copyright 

Act. Delaying review of the cleanly presented 

question of law in this case would not aid this Court 

in vetting additional issues or otherwise assist this 

Court. 

Instead, delay would only exacerbate the 

significant harms being suffered by broadcasters. As 

several courts have found, Aereo and similar 

schemes: 

(i) seriously undermine the value of network 

and local advertising, the largest revenue stream 

supporting free, over-the-air broadcasting; 

(ii) impair broadcasters' ability to negotiate for 

retransmission consent fees, their second-most 

important revenue stream; 

(iii) interfere with authorized online 

distribution of broadcast programming, an 

increasingly important issue for broadcasters; and 

(iv) threaten to cause a migration of popular 

network programming to subscription services, and 

present local broadcasters with difficult financial 

decisions with respect to costly programmmg on 

which their communities rely. 

- 5 -
151 


87023.107

This Court should consider the legality of 

Aereo's "Rube Goldberg-like contrivance" 3 now, 

before the economic foundations of free, over-the-air 

local broadcasting are irrevocably weakened. 

ARGUMENT 

I. Aereo Subverts Congress' Careful 

Balance Through Technological 

Contrivance. 

A. Broadcasters Provide Important 

Services To Their Communities At 

Substantial Cost. 

1. "[T]he importance of local broadcasting 

outlets can scarcely be exaggerated." 4 As of 

September 30, 2013, there were 1,387 full-power 

commercial stations operating in the United States, 5 

each licensed by the Federal Communications 

Commission (FCC) to serve the needs and interests 

of a particular geographic area. 6 Some commercial 

broadcast television stations are owned and operated 

3 Pet. App. 40a (Chin, J., dissenting). 

4 Turner Broad. Sys., Inc. v. FCC, 512 U.S. 622, 663 (1994) 

(quoting United States v. Sw. Cable Co., 392 U.S. 157, 177 

(1968) (internal quotation mark omitted». 

5 News Release, FCC, Broadcast Station Totals as of September 

30,2013 (Oct. 24, 2013), http://tinyurl.comIFCC9-30-13. 

6 See FCC, Annual Assessment of the Status of Competition in 

the Market for the Delivery of Video Programming, MB Docket 

No. 12-203, 28 FCC Red. 10,496, 10,573 (2013) [hereinafter 

Video Competition Report]. 

- 6 -
152 


87023.108

by the network with which they are affiliated, but 

the majority are independently owned. 7 

The most-watched broadcast television 

stations make three principal forms of programming 

available. First, most of these stations obtain a 

significant amount of their programming from the 

national network with which they are affiliated, such 

as ABC, CBS, NBC, and FOX.8 Second, stations 

obtain syndicated programming from content 

providers. 9 And third, stations broadcast locallyproduced news, sports, public affairs, and related 

programming of particular interest to the station's 

community of license. 10 

Broadcasters' role in delivering the news is 

especially significant, and "[i]n many ways ... more 

important than ever," according to a recent FCC 

report.l1 On a "typical" day, "78% of Americans get 

news from a local TV station."12 These stations 

7 Id. at 10,573-74. 

BId. 

g Id. at 10,574. 

10 Id.; see also National Association of Broadcasters, 

Broadcasters' Public Service: TV Stories, 

http://tinyurl.comITVStories (last visited Nov. 7, 2013) 

(compiling examples of public service provided in broadcast 

news and other programming). 

11 Steven Waldman, FCC, The Information Needs of 

Communities 13 (July 2011), available at 

http://tinyurl.com/FCCWaldman. 

12 Pew Research Center, Understanding the Participatory News 

Consumer 10 (March 1, 2010), available at 

http;lItinyur1.comlPewNewsConsumer. 

- 7 -
153 


87023.109

increasingly "fill the void" in investigative journalism 

left by changes in other media sectors.13 And 

broadcast news plays an irreplaceable role in 

emergency situations, when the viewing public as 

well as law enforcement authorities rely on the wallto-wall coverage provided by local stations. 14 

2. Local broadcasters make this programming 

available to the general public free of charge through 

over-the-air service. Approximately 22.4 million 

American households, accounting for nearly 60 

million people, rely exclusively on over-the-air 

broadcast signals, including 30 percent of households 

with annual incomes under $30,000. 15 As the FCC 

has noted, "[f]or many people, free, over-the-air 

television is their primary source of news, 

information and emergency alerts - not to mention 

entertainment." 16 

13 Barb Palser, A Promising New Venue: TV stations and their 

digital outlets may playa more prominent role in investigative 

reporting, American Journalism Review, Aug. 27, 2012, 

http://tinyurl.com/AJRPalser. 

14 For example, the FCC and FEMA called on citizens to "[t]une 

in to your local television or radio stations ... for important 

news alerts" related to Hurricane Sandy. Advisory, FCC, FCC 

Provides the Public With Important Tips for Communicating in 

the Aftermath of Hurricane Sandy (Oct. 31, 2012), 

http://tinyurl.com/FCCSandy. 

15 Press Release, National Association of Broadcasters, Overthe-Air TV Renaissance Continues as Pay TV Cord-Cutting 

Rises (June 21, 2013), http://tinyurl.com/NABRenaissance 

(citing GfK Media & Entertainment, The Home Technology 

Monitor (2013». 

16 Press Release, FCC, Ten Days and Counting to DTV 

Transition (June 2, 2009), http://tinyurl.comlDTV10Days; see 

(continued ... ) 

- 8 -
154 


87023.110

Millions more watch broadcast television 

stations as retransmitted - with authorization - by a 

cable system, satellite carrier, or other multichannel 

video programming distributor (MVPD) to which 

viewers pay a monthly fee. 17 Because the most 

popular local and national television programs 

appear on broadcast stations, MVPDs typically are 

willing to pay for the right to retransmit popular 

stations. IS 

also Rethinking the Children's Television Act for a Digital 

Media Age: Hearing Before the S. Comm. on Commerce, Science, 

and Transportation, 111th Congo 7 (July 22, 2009) (Statement 

of Julius Genachowski, Chairman, FCC) ("Broadcast television 

remains an essential medium, uniquely accessible to all 

Americans."). 

17 About 100 million television households subscribe to an 

MVPD. Some households receive local television signals both 

over-the-air and via an MVPD for different television sets 

within the household. Nearly 18 million households 

subscribing to an MVPD service have one or more television 

sets unconnected to the service. See Comments of the National 

Association of Broadcasters, Annual Assessment of the Status of 

Competition in the Market for the Delivery of Video 

Programming, MB Docket No. 12-203, at 2 (Sept. 10, 2012), 

available at http://tinyurl.comINABComments (citing GfKKnowledge Networks, Home Technology Monitor, 2012 

Ownership Survey and Trend Report (Spring 20121Mar. 2012». 

18 See Video Competition Report, 28 FCC Red. at 10,521-23. 

MVPDs routinely label top broadcast programming as "musthave" in their advocacy before the FCC. See Joint Reply 

Comments of Broadcasters, Amendment to the Commission ~ 

Rules Related to Retransmission Consent, FCC MB Docket No. 

10-71, at 6 & n.27 (June 27, 2011), available at 

http://tinyurl.com/RetransComments; see also TVB, TV Basics 

11 (June 2012), http://tinyurl.com/TVBasics (broadcasters aired 

96 of the top 100 most-watched programs in 2011-12). 

- 9 -
155 


87023.111

3. Bringing top-quality national and local 

programming to the public entails significant costs 

for broadcasters. Local stations face substantial 

capital expenses for their transmission facilities and 

invest heavily in innovation. I9 They pay network 

affiliation fees and other compensation to acquire 

exclusive rights to popular network programming in 

their local markets, as well as licensing fees to 

acquire exclusive local rights to syndicated 

programming. 20 Broadcasters may pay syndication 

fees of up to $2.5 million in barter and cash for a 

single episode of top shows such as Modern Family 

and The Big Bang Theory.21 Stations also incur 

significant costs to produce local programming, 

including hiring reporters and camera crews, 

purchasing news vans and other equipment, and 

maintaining production facilities. A survey of 

television stations reported that, on average, they 

spend over $4 million per year in their news 

operating budgets and over $700,000 in their news 

capital budgets.22 Finally, stations provide 

expensive-to-produce news coverage on which the 

19 See Video Competition Report, 28 FCC Red. at 10,605-06. For 

example, as of the end of 2011, over 80% of full-power stations 

were broadcasting in high-definition. Id. at 10,500. 

20Id. at 10,587-88, 10,599. 

21 Id. at 10,588. 

22 See Comments of the National Association of Broadcasters, 

Examination of the Future of Media and Information Needs of 

Communities in a Digital Age, FCC GN Docket No. 10-25, at 5-

6, 33 (May 7, 2010), available at 

http://tinyurl.comIFutureNewMedia. 

- 10 -
156 


87023.112

public depends, such as commercial-free reporting 

during times of emergency. 23 

B. Congress Has Struck A Balance To 

Protect Local Broadcasters, MVPDs, 

Copyright Holders, And Ultimately, 

The Public. 

Broadcast television is available for free over 

the air to viewers; it is not and could not be free to all 

entities for all purposes. Like any business, 

commercial television broadcasters would suffer 

devastating harm if other commercial enterprises 

could appropriate their product freely and without 

compensation. Congress has crafted a 

comprehensive statutory scheme to ensure that this 

does not happen. 

The right to authorize public performances of 

a copyrighted audiovisual work is an exclusive right 

secured to copyright holders. 24 Prior to 1976, 

decisions of this Court held that retransmissions of 

broadcast programming by cable systems were not 

"performances" of that programming, allowing cable 

systems to retransmit broadcast television for free. 25 

But Congress concluded that these decisions posed a 

serious threat to the broadcast industry and 

23 See id. at 16 (reporting that a single season's hurricane 

coverage cost one local station $160,000 even before accounting 

for lost advertising revenue). 

24 17 U.S.C. § 106(4). 

25 See Teleprompter Corp. v. Columbia Broad. Sys., Inc., 415 

U.S. 394 (1974); Fortnightly Corp. v. United Artists Television, 

Inc., 392 U.S. 390 (1968). 

. 11 . 
157 


87023.113

abrogated them in the Copyright Act of 1976.26 As 

the legislative history confirms, Congress specifically 

decided that a "commercial enterprise 0" - like Aereo 

- "whose basic retransmission operations are based 

on the carriage of copyrighted program material" -

again, like Aereo - should pay "copyright royalties" 

to the "creators of such programs."27 

At the same time, Congress was concerned 

that individual negotiations with every copyright 

owner would be "impractical and unduly 

burdensome." It therefore created a narrowly 

tailored compulsory licensing regime, not universally 

applicable, but limited to cable operators and later 

satellite providers. 28 Thus, Congress struck a 

balance: copyright holders receive robust protection 

that applies to retransmission of broadcast 

programming, but select entities - cable and satellite 

systems - are granted a streamlined licensing 

mechanism. 29 

26 Pub. L. No. 94-553, 90 Stat. 2541; see also Capital Cities 

Cable, Inc. v. Crisp, 467 U.S. 691, 709-10 (1984). 

27 H.R. Rep. No. 94-1476, at 89 (1976), reprinted in 1976 

U.S.C.C.A.N. 5659, 5704. 

28 See Capital Cities Cable, Inc., 467 U.S. at 709 (quoting H.R. 

Rep. No. 94-1476, at 89); 17 U.S.C. §§ 119, 122. In determining 

to "act as narrowly as possible," Congress highlighted the 

importance of not derogating from the "property rights" of 

copyright holders more than necessary. S. Rep. No. 106-42, at 

10 (1999). 

29 These congressionally-created compulsory licenses also 

include conditions on MVPDs, violation of which results in full 

copyright liability. See 17 U.S.C. § 111(c)(2)-(4); 17 U.S.C. 

§ 119(a)(4)-(7); 17 U.S.C. § 122(d)-(f). 

- 12 -
158 


87023.114

Distinct from the copyright interests in 

broadcast programming, Congress enacted the Cable 

Television and Consumer Protection and 

Competition Act of 1992,30 and the Satellite Home 

Viewer Improvement Act of 1999.31 These statutes 

created a separate right for broadcasters in their 

signals and allowed commercial television stations to 

bargain regarding the right of MVPDs to retransmit 

those signals. 32 

Together, these interlocking statutory 

provisions strike a careful balance designed to serve 

the public interest: 

• Over-the-Air Broadcasts: Each local broadcast 

station receives a license from the FCC to 

transmit program services on a particular 

frequency, and is required to operate the 

station in a manner that serves the public 

interest. 

• Retransmission Consent: Local commercial 

broadcast stations have control over 

retransmission of their signals by MVPDs. 

Because of the demand for the mix of 

programming they make available,33 network30 Pub. 1. No. 102·385, 106 Stat. 1460. 

31 Pub. L. No. 106-113, 113 Stat. 150l. 

32 See 47 U.S.C. § 325(b)(1). 

33 See Reply Comments of the National Association of 

Broadcasters, Amendment of the Commission ~ Rules Related to 

Retransmission Consent, FCC MB Docket No. 10-71, Ex. A., 

Reply Declaration of Jeffrey A. Eisenach and Kevin W. Caves, 

at 15 n.28 (June 27, 2011), available at 

http://tinyurl.com/EisenachCaves. 

- 13 -
159 


87023.115

affiliated television stations typically negotiate 

compensation from MVPDs for the right to 

deliver the broadcast signal to subscribers 

("retransmission consent"),34 

• Copyright Owners: Copyright holders 

authorize broadcasters to publicly perform 

their works over the air, but this permission 

does not necessarily carryover to other 

platforms. Only cable systems and satellite 

carriers may bypass direct negotiations with 

rights holders through a statutory compulsory 

licensing system; other would-be 

retransmitters must obtain individualized 

consent. 35 

C. Aereo's "Rube Goldberg-Like 

Contrivance" Violates The Plain Text 

Of The Copyright Act and 

Circumvents Its Purpose. 

Unauthorized streaming of copyrighted 

programming to the public over the Internet is 

illegal. 36 To its subscribers, Aereo functions just like 

34 See Video Competition Report, 28 FCC Red. at 10,521. 

35 See WPIX, Inc. v. ivi, Inc., 691 F.3d 275, 278-87 (2d Cir. 

2012), cert. denied, 133 S. Ct. 1585 (2013). ivi held that an 

online service that streamed live, copyrighted broadcast 

programming without consent could be held liable for publicly 

performing such programming. As Judge Chin recognized, the 

litany of harms the Second Circuit identified with respect to ivi 

"appl[ies] with equal force" to Aereo. Pet. App. 57a (Chin, J. 

dissenting). 

36 See, e.g., ivi, 691 F.3d at 275; Warner Bros. Entm't, Inc. v. 

WTV Sys., Inc., 824 F. Supp. 2d 1003 (C.D. Cal. 2011); 

(continued ... ) 

- 14 -
160 


87023.116

the indisputably infringing services that came before 

it. Aereo, however, claims it is different because it 

employs a convoluted technological ruse: in making 

live television programs available to its subscribers, 

it claims to use "thousands of individual dime-sized 

antennas" to make identical "unique copies" that it 

then transmits simultaneously to as many 

subscribers. This "Rube Goldberg-like contrivance, 

over-engineered ... to take advantage of a perceived 

loophole in the law," does not change the basic fact 

that Aereo is "publicly performing" copyrighted 

works in violation of the Copyright Act. 37 

The exclusive right to "perform the 

copyrighted work publicly" includes the right to 

"transmit or otherwise communicate a performance 

... to the public, by means of any device or process" 

(the "Transmit Clause"). 38 The expansive language 

of the Transmit Clause makes clear that a 

performance is public "whether the members of the 

Stipulated Consent Judgment and Permanent Injunction, CBS 

Broad. Inc. v. FitmOn.com, Inc., 10-cv-7532-NRB (S.D.N.Y. 

Aug. 9, 2012), ECF No. 49; Twentieth Century Fox Film Corp. v. 

ICraveTV, Nos. Civ.A. 00-120, Civ.A. 00-121, 2000 WL 255989 

(W.D. Pa. Feb. 8, 2000); see also Promoting Investment and 

Protecting Commerce Online: The ART Act, the NET Act and 

Illegal Streaming: Hearing Before the Subcomm. on Intellectual 

Prop., Competition and the Internet of the H. Comm. on the 

Judiciary, 112th Congo 6, 11 (2011) (statement of Maria A. 

Pallante, Register of Copyrights) ("As streaming becomes an 

increasingly popular means of accessing creative works ... , it 

will continue to be attractive to infringers. Unfortunately, the 

problem of unauthorized streaming is here to stay."). 

37 Pet. App. 40a (Chin, J., dissenting). 

38 17 U.S.C. § 101. 

- 15 -
161 


87023.117

public capable of recelvmg the performance or 

display receive it in the same place or in separate 

places, and at the same time or at different times."39 

As Judge Chin explained, Aereo fits squarely within 

the statute: its "system of thousands of antennas" is 

a "device or process," and it uses that system to 

transmit copyrighted television programming, i.e., 

the "performances," to "paying strangers," i.e., "the 

public."4o This common-sense interpretation is also 

supported by the legislative history of the Copyright 

Act of 1976, which explains that Congress intended 

to cover "all conceivable forms and combinations of 

wired or wireless communications media," in order to 

anticipate future technological developments. 41 

The panel majority incorrectly reasoned that 

the "technical details" of Aereo's system allow it to 

thwart this straightforward application of the law.42 

According to the majority, the Transmit Clause 

applies only if "'a particular transmission of a 

performance'" can be received by the public; each 

"transmission sent by Aereo" to its subscribers is 

"generated from [a] unique copy" of the television 

program, so that copy is not transmitted to "the 

public."43 But the Act says nothing about whether 

the underlying "performance" is "transmitted" to "the 

39 Id. 

40 Pet. App. 43a-44a (Chin, J., dissenting). 

41 H.R. Rep. No. 94-1476, at 64. 

42 Pet. App. 33a. 

43 Pet. App. 18a (quoting Cartoon Network LP, LLLP v. CSC 

Holdings, Inc., 536 F.3d 121, 135 (2d Cir. 2008) ("Cablevision"». 

- 16 -
162 


87023.118

public" using one copy or multiple (technologically 

unnecessary) copies. To the contrary, the Transmit 

Clause "does not use the terms 'copy' or 'copies'" at 

all. 44 Instead, in language that is remarkable for its 

comprehensiveness and breadth, the statute applies 

to "any device or process," without regard to whether 

the underlying work is transmitted to members of 

the public "in separate places" or "at different times." 

Nothing in this statutory text accords talismanic 

significance to the "technical details" of the device or 

process used to transmit a copyrighted television 

program to paying subscribers. 

Beyond its lack of textual justification, 

Aereo's contrivance plainly subverts the balance 

Congress struck. Like broadcasters, Aereo transmits 

programming to the public. But unlike broadcasters, 

it pays nothing for that programming and has no 

duty to serve the public. Like MVPDs, Aereo retransmits broadcast signals and profits from 

charging monthly subscription fees to viewers.45 But 

unlike MVPDs, it does not negotiate with rights 

holders, pay any fees, or comply with any of the 

44 Pet. App. 146a (Chin, J., dissenting from denial of reh'g en 

banc). 

45 In this respect, Aereo's commercial retransmission service is 

not remotely similar to an individual viewer recording 

copyrighted programming for personal viewing at a later time, 

or even to a retailer whose products can be used by others for 

that purpose. Cf. Sony Corp. of Am. v. Universal City Studios, 

Inc., 464 U.S. 417 (1984). Analogizing the actions of a for-profit 

retransmitter to those of an individual viewer was the exact 

approach Congress rejected when it abrogated Teleprompter 

Corp. and Fortnightly Corp. 

- 17 -
163 


87023.119

statutory conditions Congress imposed upon 

MVPDS.46 Like copyright holders, Aereo profits from 

valuable programming. But unlike copyright 

holders, it does none of the innovation, supplies none 

of the creativity, and contributes none of the 

financial investment. This is not a legitimate 

function contemplated by Congress's carefully 

calibrated regime; it is simply free-riding. 

II. This Court's Review Is Necessary To 

Bring Stability And Certainty To The 

Broadcasting, MVPD And ContentProducing Industries. 

Although only one court of appeals has ruled 

on the legality of Aereo's scheme to date, the state of 

the law is now in considerable disarray, and there is 

little reason to expect the circuits to converge on a 

single consensus view. The legal status of Aereo and 

its ilk is literally all over the map: challenges to 

Aereo have been rejected in the Second Circuit and 

in Boston,47 while a competitor with a virtually 

identical service has been enjoined from operating in 

the Ninth Circuit48 and separately enjoined from 

46 In addition to payment of fees, these conditions include 

compliance with certain FCC rules, reporting requirements, 

prohibitions against alterations in programs, and prohibitions 

or other limitations against the importation of distant signals 

into a broadcast station's local market. See supra note 29. 

47 Hearst Stations Inc. v. Aereo, Inc., No. 13-11649, 2013 WL 

5604284 (D. Mass. Oct. 8, 2013), appeal docketed, No. 13-2282 

(1st Cir. Oct. 16, 2013). 

48 Fox Television Stations, Inc. v. BarryDriller Content Systems, 

PLC, 915 F. Supp. 2d 1138 (C.D. Cal. 2012), appeal docketed 

(continued ... ) 

- 18 -
164 


87023.120

operating anywhere outside the Second Circuit. 49 

Appeals are pending in the First, Ninth, and D.C. 

Circuits. Just days before the petition in this case 

was filed, local broadcasters and a national network 

filed a copyright infringement suit against Aereo in 

Utah. 50 Aereo's aggressive expansion plans foretell 

even further expansion of this legal playing field. 51 

This is not a case where further percolation 

would aid this Court in vetting legal issues or 

identifying a suitable vehicle for review. Across the 

country there are now two competing readings of the 

Copyright Act being applied to virtually identical 

and almost entirely undisputed facts. One view -

that a copyrighted television program may not be 

artificially sliced into discrete "transmissions," and 

each one delivered to paying subscribers without 

authorization - has been adopted by two appellate 

judges and two district courts. 52 The contrary view 

has been defended at length by two appellate judges 

and two district courts. Delaying review would 

sub nom. Fox Television Stations, Inc. v. Aereokiller, LLC, Nos. 

13·55156, 13·55157 (9th Cir. Jan. 25, 2013). 

49 Fox Television Stations, Inc. v. FilmOn X LLC, No. 13-758, 

2013 WL 4763414 (D.D.C. Sept. 5, 2013), appeal docketed, No. 

13-7146 (D.C. Cir. Sept. 17,2013). 

50 Complaint, Community Television of Utah, LLC v. Aereo, Inc., 

No. 2:13-cv-00910 (D. Utah Oct. 7, 2013). 

51 Press Release, Aereo, Inc., Aereo Announces Expansion Plans 

for 22 New U.S. Cities (Jan. 8, 2013), 

http://tinyurl.eom/AereoExpansion. 

52 Judge Wesley endorsed Judge Chin's interpretation of the 

Transmit Clause. See Pet. App. 128a (Chin, J., joined by 

Wesley, J., dissenting from denial of reh'g en bane) . 

. 19 -
165 


87023.121

achieve little more than allowing additional courts to 

line up behind one fully developed approach or the 

other, without vetting new issues, resolving factual 

disputes, or otherwise improving the record for this 

Court's ultimate review. 

Delay in reviewing Aereo's illegal conduct will 

instead only exacerbate the significant - and, as 

several courts have found, irreparable 53 - harms 

faced by broadcasters. And the harm to local 

stations points to a broader harm: to the system of 

national and local broadcast television service that 

has long benefited the public. 

1. Aereo's technological contrivance 

undermines the largest revenue stream supporting 

free, over-the-air television: advertising. Aereo 

audiences are "not measured by Nielsen" ratings, 

meaning broadcasters cannot command advertising 

revenues commensurate with their viewership. 54 

Since 88 percent of broadcast revenue is derived from 

53 See FilmOn X LLC, 2013 WL 4763414, at *29-32 (identifying 

several categories of irreparable harm broadcasters will suffer 

without preliminary injunction); BarryDriller Content Systems, 

PLC, 915 F. Supp. 2d at 1147 (same). Even the district court in 

this case agreed that broadcasters would suffer various 

irreparable harms in the absence of an injunction. Pet. App. 

109a-1I6a. 

54 Pet. App. 1l0a. The industry "relies on [the] Nielsen 

[Company's] data to measure broadcast television station 

audiences" and thereby determine advertising rates. Video 

Competition Report, 28 FCC Red. at 10,592. 

- 20 . 
166 


87023.122

advertising, even small differences in ratings points 

can have a huge financial impact on local stations. 55 

Aereo and services like it may further 

diminish advertising revenues by diverting viewers 

out of their local markets. Aereo's purported controls 

against out-of-market viewing are illusory 

customers are invited to watch programming from 

any available market so long as they click a button 

that says, "I swear, I am in market."56 More 

fundamentally, the Second Circuit's reasoning allows 

Aereo and its sister services to offer streaming of outof-market stations. If an unauthorized streaming 

service allows Californians to watch New York 

programs - three hours early, and with commercials 

for New York car dealerships instead of California 

ones - it would further "reduce the value of ... local 

advertisements." 57 Enabling this viewing of out-ofmarket television stations would also destroy local 

stations' bargained-for program exclusivity rights. 

These are the very harms Congress sought to 

prevent in significantly restricting, and in some 

55 See id. at 10,583. 

56 Decl. of Dr. John P.J. Kelly" 74-75, Am. Broad. Cos., Inc. v. 

Aereo, Inc. (S.D.N.Y. Apr. 30, 2012) (reproduced in the joint 

appendix before the Second Circuit at A-1838). By clicking the 

"in market" button, the viewer is invited to state that she is 

located within the authorized viewing area for the station in 

question, even if she is actually outside that area. 

57 ivi, 691 F.3d at 286. 

- 21 -
167 


87023.123

cases outright prohibiting, the importation of out-ofmarket stations. 58 

2. Aereo also directly jeopardizes 

retransmission consent fees, broadcasters' secondmost important revenue stream. These fees 

represent a Hsubstantial and growing revenue source 

for the television programming industry."59 The 

threat to this revenue comes not only from Aereo, 

which retransmits broadcast programming for profit 

without paying these fees; large MVPDs are already 

exploring ways to take advantage of a legal regime in 

which paying for programming is apparently 

optional. 60 Aereo's very existence gives cable 

compames "leverage to negotiate deals with 

58 See 17 U.S.C. § 111(c)(1) (requiring cable systems to comply 

with FCC rules, including those enforcing limitations on the 

importation of distant signals); 47 C.F.R. §§ 76.92, 76.101, 

76.120; see also 17 U.S.C. § 119(a)(6) (restricting "violations of 

territorial restrictions" by satellite carriers). 

59 ivi, 691 F.3d at 285; see also Video Competition Report, 28 

FCC Red. at 10,599-600 (retransmission consent fees represent 

$2.36 billion in broadcast station industry revenues in 2012, up 

from $1.76 billion in 2011). 

60 See Andy Fixmer et aI., DirecTV, Time Warner Cable Are 

Said to Weigh Aereo-Type Services, Bloomberg, Oct. 26, 2013, 

http://tinyurl.comlDirecTVAereo ("DirecTV, Time Warner Cable 

Inc. (TWC) and Charter Communications Inc. (CHTR), taking a 

page from Aereo Inc., are considering capturing free broadcastTV signals to avoid paying billions of dollars in so-called 

retransmission fees."); Shalini Ramachandran, TV Service 

Providers Held Talks With Aereo, Wall St. J., Apr. 1, 2013, at 

B1 (reporting that Aereo has discussed partnerships with major 

pay-TV distributors, including AT&T and DISH Network). 

- 22 -
168 


87023.124

broadcasters on more favorable terms."61 Even if the 

Court eventually rejects the Second Circuit's flawed 

construction of the Copyright Act, the fundamental 

economics of broadcast television will already have 

been undermined by years of bargaining in the 

shadow of Aereo. 

3. Aereo is also undermining broadcasters' 

negotiating position with respect to authorized 

online distribution. Ensuring that broadcasters have 

the exclusive "first run" of popular programming 

ahead of Internet sources is an important point of 

negotiation between broadcast television stations 

and their programming suppliers, including the 

networks with which they are affiliated. 62 

"[N]egotiated Internet retransmissions for 

example, on Rulu.com - typically delay Internet 

broadcasts so as not to disrupt plaintiffs' broadcast 

distribution models, reduce the live broadcast 

audience, or divert the live broadcast audience to the 

Internet."63 Aereo subverts the carefully negotiated 

balance between first-run live broadcasts and 

authorized Internet viewing. 

4. In combination, the harms described above 

will reduce broadcasters' ability to continue offering 

costly and diverse national and local programming 

free over-the-air. Aereo's free riding creates a 

61 See Steve Donohue, Britt: Aereo Could Help Time Warner 

Cable Stop Paying Retransmission-Consent Fees, FiereeCable, 

Apr. 26, 2012, http://tinyurl.eomlBrittAereo. 

62 See Video Competition Report, 28 FCC Red. at 10,607-10. 

63 iui, 691 F.3d at 285. 

- 23 -
169 


87023.125

substantial danger that quality programming will 

migrate from broadcast television to pay services. 64 

Local broadcasters will also face difficult choices. As 

entities licensed to serve their local communities, 

broadcasters strive to avoid scaling back 

programming on which the public depends. 

However, with both advertising and retransmission 

consent revenues jeopardized, expensive-to-produce 

local news coverage, such as wall-to-wall emergency 

reporting, faces clear financial challenges. 65 

All of these costs are real and immediate, and 

their confluence "threaten[s] to destabilize the entire 

industry," not just one market or one company.66 In 

addition to Aereo's own expansion, other would-be 

free-riders are likely to follow the Second Circuit's 

roadmap for unauthorized retransmission. Indeed, 

the derivatively-named "Aereokiller" service (since 

re-named FilmOn X) was consciously "designed to 

take advantage of the logic of the recent court ruling 

64 For example, in the wake of the Second Circuit's decision, 

News Corp. President and COO Chase Carey stated that FOX 

may convert to a subscription-only model, explaining that "[w]e 

simply cannot provide the type of quality sports, news, and 

entertainment content that we do from an ad supported only 

business model." Ira Teinowitz, FOX-Aereo Dispute Could 

Force Network Off Broadcast TV; Says Chase Carey, The Wrap, 

Apr. 8, 2013, http://tinyurl.com/CareyAereo. Executives at CBS 

and Univision have echoed these sentiments. Brian Stetler, 

Broadcasters Circle Wagons Against A TV Streaming Upstart, 

N.Y. Times, Apr. 9, 2013, http://tinyurl.comlCBSAereo. 

65 See supra Part LA.3. 

66 ivi, 691 F.3d at 286. 

- 24-
170 


87023.126

in the Aereo litigation." 67 Until this Court 

intervenes, unauthorized streaming services are 

likely to proliferate, and so too will the harms to 

broadcast television. 

Before this Court is a cleanly presented and 

important question of law: whether an unauthorized 

retransmission service is legal simply because it uses 

thousands of technologically unnecessary antennae 

and digital copies instead of one. The Court should 

resolve that important question now, before the 

economic pillars of free, over-the-air local 

broadcasting are compromised. 

67 Ted Johnson, NBC, ABC, CBS Board Suit Against 

Barrydriller.com, Variety, Aug. 13, 2012, 

http://tinyurl.comNarietyBD. 

- 25 -
171 


87023.127

CONCLUSION 

For the foregoing reasons, as well as the 

reasons set forth in the petition for writ of certiorari, 

the Court should grant the petition. 

November 2013 

Respectfully submitted, 

Robert A. Long 

Counsel of Record 

Matthew S. DelNero 

David M. Zionts 

COVINGTON & BURLING LLP 

1201 Pennsylvania Ave, NW 

Washington, DC 20004·2401 

rlong@cov.com 

(202) 662·6000 

Counsel for Amici Curiae 

·26· 
172 


87023.128

FRED UPTON, MICHIGAN 

CHAIRMAN 

HENRY A, WAXMAN, CALIFORNIA 

RANKING MEMBER 

ONE HUNDRED THIRTEENTH CONGRESS 

€ongrt~~ of tbt Wntttb ~tatt~ 

.,ouse of l\epresentatibes 

COMMITTEE ON ENERGY AND COMMERCE 

2125 RAYBURN HOUSE OFFICE BUILDING 

WASHINGTON, DC 20515-6115 

Mr, Dave Rozzelle 

Executive Vice President 

Sudden link Communications 

12444 Powerscourt Drive, Suite 450 

St. Louis, MO 63131 

Dear Mr, Rozzelle: 

Majority (202) 225-2927 

Minority (202) 225-3641 

December 20, 2013 

Thank you for appearing before the Subcommittee on Communications and Technology on 

Wednesday, September I I, 2013, to testifY at the hearing entitled "Innovation Versus Regulation in the 

Video Marketplace," 

Pursuant to the Rules ofthe Committee on Energy and Commerce, the hearing record remains 

open for ten business days to permit Members to submit additional questions for the record, which are 

attached. The format of your responses to these questions should be as follows: (I) the name of the 

Member whose question you are addressing, (2) the complete text of the question you are addressing in 

bold, and (3) your answer to that question in plain text. 

To facilitate the printing of the hearing record, please respond to these questions by the close of 

business on January 14,2014. Your responses should be e-mailed to the Legislative Clerk in Word 

format at Charlotte.savercoo!@mail.house.gov and mailed to Charlotte Savercool, Legislative Clerk, 

Committee on Energy and Commerce, 2125 Rayburn House Office Building, Washington, D.C. 20515. 

Thank you again for your time and effort preparing and delivering testimony before the 

Subcommittee. 

Sincerely, 

~p~ Chairman 

Subcommittee on Communications and Technology 

cc: Anna Eshoo, Ranking Member, Subcommittee on Communications and Technology 

Attachment 
173 


87023.129

David Rozzelle 

Ms. Charlotte Savercool 

Legislative Clerk 

Committee on Energy and Commerce 

2125 Rayburn House Office Building 

Washington, DC 20515 

Dear Ms. Savercool: 

January 6,2014 

Attached are my answers to the questions for the record sent to me by letter of 

December 20, 2013. The questions pertain to the hearing of September 11, 2013 on 

Alnnovation Versus Regulation in the Video Marketplace@ held by the Subcommittee on 

Communications and Technology. 

Please note that as of January 1, 2014, I have retired from Sudden link 

Communications. If there are additional questions that should be directed to 

Sudden link, they should be addressed to: Mike Zarrilli, Vice President for Government 

Relations, Suddenlink Communicatio 

Respectfully submitted, 

David Rozzelle 
174 


87023.130

Question from The Honorable Henry Waxman: 

Advocates for retransmission consent reform have proposed a standstill during disputes, so 

consumers don't experience blackouts. Just last week, the cable industry won a case in the 

Second Circuit overturning an FCC rule requiring a standstill during program carriage disputes. 

Why is a standstill to preserve consumer access to programming appropriate in the 

retransmission consent context but not during program carriage disputes? 

Answer: 

Viewed from a consumer's position in the programming distribution process, television 

broadcasters have long been required to produce programming serving the broader public interest 

given their status as public trustees of the broadcast spectrum, which belongs to the people of the 

United States. That historical obligation has led to a reliance by television viewers on 

broadcasters to provide news and public interest programming on a daily and regular basis. The 

often cited examples are local news and weather, including breaking news stories that may have 

high local importance and local weather alerts. Broadcasters have been steadily moving away 

from this obligation, but the relationship persists and references to the public trustee nature of the 

broadcasters' role continue. 

Again, from a consumer's perspective, no such relationship exists with national network 

programming like MTV, ESPN, Comedy Central, Spike, USA, Cartoon Network, etc. While 

there are networks that provide very valuable news and weather information, they are a small 

portion of the overall national network inventory. 

Having said the above, it should be noted that outside the Big Four network affiliates, there is 

virtually no vestige of the public trustee obligation evident. Perhaps that is one reason that almost 

all those stations, if they elect retransmission consent ("RTC") status on their own, select must 

carry. Among the Big Four, the quality of local programming efforts has become very 

inconsistent since the amount and quality of public interest programming is no longer measured 

in any meaningful way by the FCC. Nevertheless, in most markets there is a news and public 

affairs leader that truly should be available to consumers at all times. 

Thus, the loss of local television broadcast programming has a much higher probability of 

causing public harm than the loss of national entertainment networks. 

As explained above, I believe there is logical reason to treat RTC disputes and program carriage 

disputes differently. One should have public interest values to protect, at least among the Big 

Four stations; the other usually does not. 

Finally, I would note that in the Time Warner v. FCC case, the standstill argument was a 

secondary argument in a much larger discussion of the First Amendment rights of distributors of 

video programming in the context of a broad federal policy with the stated goal of promoting 

QFRs for David Rozzelle December 20,2013 
175 


87023.131

greater programming diversity by granting special carriage rights to a select group of content 

providers. 

Questions from The Honorable Bobby Rush: 

Do you believe that technologies and industry models have changed or are changing dramatically 

enough for Congress to consider redefining or revising the term, multichannel video 

programming distributor (MVPD) in the Communications Act. 

Answer: 

I believe the technologies are changing rapidly. I believe the programming distribution model is 

changing in a slower, but evolutionary way. Traditionally, MVPD status has meant a video 

program distributor that owns and operates a facilities based network which is used in whole (as 

in the case of satellite), or in part (as is the case with cable and telephone) to provide video 

service to the end user. At least one on-line video distributor (OVD) has legally claimed to be an 

MVPD for copyright purposes, but not for other obligations, such as must carry. Its argument did 

not prevail. 

To make matters more complex, the rights and obligations are not uniform across MVPDs. 

Satellite has certain obligations peculiar to the nature of its technology as does cable. Indeed, as 

an MVPD, cable has more obligations than any other form of video distribution. 

Therefore, I believe that the entire structure of the MVPD regulatory scheme should be 

considered if there is an effort to change any part of it. If there is an effort to examine the 

Communications Act as a whole in the future, this topic should be included. 

Question: 

If the DC Circuit were to VACATE or to order the Commission to revise its [net neutrality] rules 

substantially, how might that affect parties' abilities to negotiate retransmission consent 

agreements in good faith and at arms-length? 

Answer: 

It might affect the timing of a resolution of an ongoing negotiation while the parties tried to 

analyze the implications of the decision. 

Substantively, retransmission consent involves the MVPD carriage of broadcast video. Net 

neutrality, when the discussion is focused on video, pertains to video received via the Internet, 

sometimes referred to as "over the top" video, which is not subject to the RTC rules and 

regulations. Therefore, I believe there should be no direct impact on RTC negotiations if the net 

neutrality rules are remanded to the FCC for further work. 

QFRs for David Rozzelle 2 December 20,2013 
176 


87023.132

Question: 

Would there be resulting business uncertainties and would those uncertainties be good or bad for 

consumers? Why? 

Answer: 

The reversal of an existing policy always introduces an element of uncertainty. Uncertainty does 

not support investment or creative experimentation. I believe consumers could be hurt as a 

result. 

It should be remembered that there have been virtually no formal, public complaints about 

network operations under the existing net neutrality policy, which is not surprising given the 

vigorous competition for consumers' broadband business by the telephone and cable companies 

in almost all markets. Many members of the public may well wonder why a change is necessary. 

Question: 

Regarding another line of cases, it appears that the DC Circuit and the US Second Circuit are in 

some disagreement over when and whether emerging video networks can retransmit over-the-air 

broadcast content. 

I know the DC Circuit ruling is only a few days old and you may not have fully reviewed it, but 

which of the courts' interpretations of federal communications and copyright law is more 

defensible? 

Answer: 

I am not a practicing lawyer, so I will let those more qualified argue which decision is a better 

legal conclusion. 

From a public policy perspective, I believe the Second Circuit decision is far better for 

consumers. Aereo, Inc. has fashioned a service to deliver broadcast television programming that 

was cleverly designed to fit in a crevice formed by the interaction of copyright law and the 

Communications Act (not to mention the old Sony Betamax case). Viewed from the consumer's 

perspective, the business model gives each customer her own DVR-like functionality to use as 

she wishes to consume local video products. Each technical component of the Aereo system is 

dedicated to only one consumer each time the consumer logs on the service just like a home 

DVR. I believe this viewpoint, sort of a bottoms up analysis, fits nicely under the Second Circuit 

opinion. 

The DC Circuit, on the other hand, seems to support the viewpoint of the broadcast owners. 

They look at the Aereo service from the top down as a business structure solely designed to 

QFRs for David Rozzelle 3 December 20,2013 
177 


87023.133

sidestep traditional distribution methods. Since the consumer occupies the bottom of the 

distribution chain in the facts of the case, the DC decision is not a favorable one for the end user 

in my opinion. 

Question: 

If one circuit court's application of the law and legal reasoning is more compelling or defensible 

than the other circuit court's ruling, please explain why. 

Answer: 

I am not a practicing lawyer, so I will let those more qualified opine as to the better decision. 

Question: 

Mr. Munson pointed out in his testimony that added regulations on broadcasters stem from what 

some have characterized as a social contract between the government and the broadcasting 

industry: broadcasters use licensed spectrum to serve the public interest and offer their service 

free to American consumers. 

Many of these broadcast TV consumers and watchers are minorities. In the 2013 Ownership 

Survey and Trend Report, it was cited that 22 percent of all African-American households and 25 

percent of Hispanic households are broadcast-only homes. Additionally, minorities comprise 41 

percent. Not withstanding this fact, minority and female ownership of television stations and 

cable systems has shrunk dramatically over the years. 

Do any of you challenge or take issue with the proposition that minority TV broadcast and cable 

system owners can be just as if not more responsive to the needs of their minority viewers and 

audiences? 

Answer: 

I do not. Moreover, I have no reason to believe that minority owners would not be as responsive 

to the needs of all their viewers, regardless of their characteristics. 

As discussed further below, I believe that creating an environment that would foster investment 

in minority owned broadcast stations is important because it will make it more likely that a wider 

divergence in viewpoints is made available to the public. 

Question: 

Other than the reinstitution of the minority tax certificate, which NAB has supported, what 

measures can Congress take so that more programming and news meeting the critical needs of 

QFRs for David Rozzelle 4 December 20, 2013 
178 


87023.134

minority viewers and consumers gets carried over the public airwaves, using public rights-ofway? 

Answer: 

I believe that the more robust an investment environment we create, the greater the opportunity 

for new voices we create. Money will flow toward new content producers more easily if the 

overall investment environment in the industry is viewed as safe from regulatory uncertainty and 

is viewed as growing new audiences. Audience growth may come from the nature of the new 

content or from the new devices being used by the new customers. New devices often encourage 

users to seek some content forms over others, often at the expense of traditional offerings. For 

instance, shorter program lengths and content designed to be viewed easily on small screens has 

created opportunities for new speakers, including minority group members. 

Question: 

Mr. Munson says in his testimony that broadcasters are more regulated than any other video 

platform, including cable and satellite. He goes further to say that FCC public filing rules, 

including a requirement for local broadcast TV stations to place sensitive pricing information 

online should also apply to cable systems. 

Assuming for argument that this requirement was made applicable to other video providers, 

couldn't it lead to more good faith negotiations over retransmission consent agreements? 

Answer: 

I believe the reference to sensitive pricing information relates to the requirement that a 

broadcaster's political file contain pricing information that enables legally qualified candidates to 

assess whether they are getting the lowest unit rate. If so, it obviously has nothing to do with 

RTC. 

The idea, however, of placing RTC agreements in the public files of TV broadcast stations is a 

good one, including the pricing information. Multiple station owners have been quite open about 

the fact that RTC renewal cycles start with smaller cable operators who have a weak market 

position and end up paying more per customer than larger operators, including satellite providers. 

The price achieved in the smaller markets sets the baseline for later negotiations with larger 

MSOs who have greater market power. 

Since smaller operators own systems in small markets, the result is that consumers in small 

towns pay significantly more for a broadcast station than viewers in larger markets. A public 

record of this uneven application of a government created fee might engender discussion about 

establishing a more even negotiating platform. It would certainly shed light on how free a TV 

broadcast signal is under the RTC regime. 

QFRs for David Rozzelle 5 December 20, 2013 
179 


87023.135

FRED UPTON, MICHIGAN 

CHAIRMAN 

HENRY A. WAXMAN, CALIFORNIA 

RANKING MEMBER 

Mr. James Campbell 

ONE HUNDRED THIRTEENTH CONGRESS 

«ongrt~~ of tbt Itnittb ~tatt~ 

~ou9'e of l\epresentatibes 

COMMITTEE ON ENERGY AND COMMERCE 

2125 RAYBURN HOUSE OFFICE BUILDING 

WASHINGTON, DC 20515-6115 Majority (2:02) 225-2927 

Minority (202) 225-3641 

December 20,2013 

Vice President of Regulatory and Legislative Affairs, Midwest Region 

CenturyLink, Inc. 

1099 New York Avenue, N.W., Suite 250 

Washington, D.C. 20001 

Dear Mr. Campbell: 

Thank you for appearing before the Subcommittee on Communications and Technology on 

Wednesday, September 11,2013, to testifY at the hearing entitled "Innovation Versus Regulation in the 

Video Marketplace." 

Pursuant to the Rules of the Committee on Energy and Commerce, the hearing record remains 

open for ten business days to permit Members to submit additional questions for the record, which are 

attached. The format of your responses to these questions should be as follows: (1) the name of the 

Member whose question you are addressing, (2) the complete text of the question you are addressing in 

bold, and (3) your answer to that question in plain text. 

To facilitate the printing of the hearing record, please respond to these questions by the close of 

business on January 14,2014. Your responses should be e-mailed to the Legislative Clerk in Word 

format at Charlotte.savercool@mail.house.gov and mailed to Charlotte Savercool, Legislative Clerk, 

Committee on Energy and Commerce, 2125 Rayburn House Office Building, Washington, D.C. 20515. 

Thank you again for your time and effort preparing and delivering testimony before the 

Subcommittee. 

Sincerely, 

~p~ Chairman 

Subcommittee on Communications and Technology 

cc: Anna Eshoo, Ranking Member, Subcommittee on Communications and Technology 

Attachment 
180 


87023.136

Responses to Additional Questions for the Record Jim Campbell 

The Honorable Bobby Rush 

Do you believe that technologies and industry models have changed or are changing dramatically 

enough for Congress to consider redefining or revising the term, "multichannel video programming 

distributor" (MVPDj in the Communications Act? 

Centurylink welcomes a comprehensive conversation about updating our nation's video laws in 

order to reflect the 21st Century marketplace in which we live today. We look forward to 

working with Congress to overhaul the twenty-year old video statute in order to help consumers 

realize the benefits of today's existing robust marketplace, one that did not exist when the law 

was enacted back in 1992. 

As many of you know, the DC Circuit Court of Appeals heard oral arguments this week In the case of 

Verizon vs. FCC, which challenges the Commission's authority under the Communications Act to 

promulgate "so-called" net neutrality rules. 

If the DC Circuit were to vacate or to order the Commission to revise its rules substantially, how might 

that affect parties' abilities to negotiate retransmission consent agreements "in good faith" and at 

arm's length? 

Would there be resulting business uncertainties and would those uncertainties be good or bad for 

consumers? Why? 

We do not anticipate that the DC Circuit decision in Verizon v. FCC {regarding the Open Internet 

order} will have a direct impact on parties' abilities to negotiate retransmission consent 

agreements. As such, we do not anticipate additional impacts on retransmission consentrelated business uncertainties that could impact consumers. 

Regarding another line of cases, it appears that the DC Circuit and the US Second Circuit are in some 

disagreement over when and whether emerging video networks can retransmit over-the-air broadcast 

content. 

I know that the DC Circuit ruling is only a few days old and you may not have fully reviewed it, but 

which of the courts' interpretations of federal communications and copyright law is more defensible? 

If one circuit court's application of the law and legal reasoning is more compelling or defensible than 

the other circuit court's ruling, please explain why. 

CenturyUnk has not participated in the DC Circuit, Second Circuit or other proceedings regarding 

whether emerging video networks can retransmit over-the-air broadcast content, and has not 

taken a position on the merits of the courts' interpretations of copyright laws. 
181 


87023.137

Mr. Munson pointed out in his testimony that added regulations on broadcasters "stem from what 

some have characterized as a 'social contract' between the government and the broadcasting 

industry: broadcasters use licensed spectrum to serve the public interest and offer their service free to 

American consumers." 

Many of these broadcast TV consumers and watchers are minorities. In the 2013 Ownership Survey 

and Trend Report, it was cited that 22 percent of all African-American households and 2S percent of 

Hispanic households are broadcast only homes. Additionally, minorities comprise 41 percent. 

Notwithstanding this fact, minority and female ownership of television stations and cable systems has 

shrunk dramatically over the years. 

Do any of you challenge or take issue with the proposition that minority TV broadcast and cable 

system owners can be just as if not more responsive to the needs of their minority viewers and 

audiences? 

Other than the reinstitution of the minority tax certificate, which NAB has supported, what measures 

can Congress take so that more programming and news meeting the critical needs of minority viewers 

and consumers gets carried over the public airwaves, using public rights-of-way? 

CenturyLink strongly supports program diversity and is proud of the breadth and collection of 

diverse offerings that it makes available to its consumers. We recognize the changing 

demographics of the country and thus distinguish ourselves in the video marketplace through a 

diverse selection of programming intended to meet the needs of all viewers. As we begin our 

participation in the Committee's Communications Act update process, we look forward to 

working with your office and other committee members on programming diversity issues. 

Mr. Munson says in his testimony that broadcasters are more regulated than any other video 

platform, including cable and satellite. He goes further to say that FCC public filing rules, including a 

requirement for local broadcast TV stations to place sensitive pricing information online should also 

apply to cable systems. 

Assuming for argument that this requirement was made applicable to other video providers, couldn't 

it lead to more good faith negotiation over retransmission consent agreements? 

Greater transparency in how a publicly-licensed broadcast station determines its pricing, terms 

and conditions for fair and reasonable access to its programming could aid more rational and 

predictable retransmission consent costs for video programming distributors. This in turn could 

benefit consumers through greater stability of MVPD video service offerings and pricing. 

However, to the extent Mr. Munson's reference to sensitive pricing information refers to 

advertising rates contained in public inspection files, we do not perceive a connection to the 

retransmission consent negotiation process. 
182 


87023.138

FRED UPTON, MICHIGAN 

CHAIRMAN 

HENRY A. WAXMAN, CALIFORNIA 

RANKING MEMBER 

Mr. John Bergmayer 

Senior Staff Attorney 

Public Knowledge 

ONE HUNDRED THIRTEENTH CONGRESS 

(:ongre~~ of tbe itntteb ~tate~ 

:u,ouse of l\epresentatibes 

COMMllTEE ON ENERGY AND COMMERCE 

2125 RAYBURN HOUSE OFFICE BUILDING 

WASHINGTON, DC 20515-6115 Majority (202) 225-2927 

Minority (202) 225-3641 

December 20, 2013 

1818 N. Street, N.W., Suite 410 

Washington, D.C. 20036 

Dear Mr. Bergmayer: 

Thank you for appearing before the Subcommittee on Communications and Technology on 

Wednesday, September 11,2013, to testify at the hearing entitled "Innovation Versus Regulation in the 

Video Marketplace," 

Pursuant to the Rules of the Committee on Energy and Commerce, the hearing record remains 

open for ten business days to permit Members to submit additional questions for the record, which are 

attached. The format of your responses to these questions should be as follows: (I) the name of the 

Member whose question you are addressing, (2) the complete text of the question you are addressing in 

bold, and (3) your answer to that question in plain text. 

To facilitate the printing of the hearing record, please respond to these questions by the close of 

business on January 14,2014. Your responses should be e-mailed to the Legislative Clerk in Word 

format at Charlotte.savercool@mail.house.gov and mailed to Charlotte Savercool, Legislative Clerk, 

Committee on Energy and Commerce, 2125 Rayburn House Office Building, Washington, D.C. 20515. 

Thank you again for your time and effort preparing and delivering testimony before the 

Subcommittee. 

itre~, I;>~ 

~:~~n Chairman 

Subcommittee on Communications and Technology 

cc: Anna Eshoo, Ranking Member, Subcommittee on Communications and Technology 

Attachment 
183 


87023.139

Response to questions from The Honorable Bobby Rush by John Bergmayer, 

Senior Staff Attorney at Public Knowledge 

January 14, 2014 

1. Do you believe that technologies and industry models have changed or are 

changing dramatically enough for Congress to consider redefining or revising 

the term, "multichannel_video programming distributor" (MVPD) in the 

Communications Act? 

There are several ways that Congress could consider revisiting the regulatory 

category of "multichannel video programming distributor" (MVPD). The most 

obvious would be for policymakers to clarify that this is a technology-neutral term 

that does not depend on last-mile facilities ownership. 

Congress has already adopted a technology-neutral definition of multichannel video 

programming distributor. Section 602(13) of the Communications Act defines one 

as, 

a person such as, but not limited to, a cable operator, a multichannel 

multipoint distribution service, a direct broadcast satellite service, or a 

television receive-only satellite program distributor, who makes available for 

purchase, by subscribers or customers, multiple channels of video 

programming. 

I believe this broad definition encompasses any distributor of channels of "video 

programming" as defined by the Act--which would mean that a "virtual cable 

system" like Sky Angel would qualify, but a provider of on-demand or downloadable 

programming (such as Netflix or iTunes) would not. For the Subcommittee's 

reference, I am attaching a more detailed legal analysis of this point that Public 

Knowledge has previously filed with the FCC. In short, however, I see no evidence 

that Congress intended the term to encompass only technologies in existence at the 

time of the provision's adoption, or that it should be restricted to providers that 

own last-mile physical facilities. 

However, I am aware that not all in the Commission or the Communications bar 

more generally agree with this interpretation. I would therefore support 

legislatively clarifying that the term encompasses all technologies, including online 

video. 

Longer term, Congress may wish to revisit the practice of distinguishing between 

video providers that offer "channels" and those that do not. However, such a change 

would be more appropriate after more competition has developed in the video 

market. Premature action in this regard could solidify the market position of current 

MVPD incumbents and harm online competition. 
184 


87023.140

As many of you know, the DC Circuit Court of Appeals heard oral arguments 

this week in the case ofVerizon vs. FCC, which challenges the Commission's 

authority under the Communications Act to promulgate "so-called" net 

neutrality rules. 

If the DC Circuit were to VACATE or to order the Commission to revise its rules 

substantially, how might that affect parties' abilities to negotiate 

retransmission consent agreements "in good faith" and at arms-length? 

If the DC Circuit were to vacate the Open Internet rules, I do not think there would 

be many direct effects on retransmission negotiations. However, an open Internet is 

necessary to protect online video competition. The existence of online video 

providers can affect carriage negotiations, since they serve both as alternate 

providers for consumers, alternate sources of programming, and alternate 

distributors. 

2. Would there be resulting business uncertainties and wonld those 

uncertainties be good or bad for consumers? Why? 

There would be business uncertainties that harmed consumers if the DC Circuit 

vacates the Open Internet order--in particular, investment in online video ventures 

may be lessened. 

Regarding another line of cases, it appears that the DC Circuit and the US 

Second Circuit are in some disagreement over when and whether emerging 

video networks can retransmit over-the-air 

broadcastconten~ 

3. I know that the DC Circuit ruling is only a few days old and you may not have 

fully reviewed it, but which of the courts' interpretations of federal 

communications and copyright law is more 

defensible? 

4. If one circuit court's application of the law and legal reasoning is more 

compelling or defensible than the other circuit court's ruling, please explain 

why. 

Public Knowledge has filed amicus briefs in various cases arguing that Aereo and 

like services should prevail on the merits. With regard to the Aereo and FilmOn 

Cases, the Second Circuit's analysis is more sound, because it preserves the 

distinction between "public" and "private" performances. Every day, people access 

content over the Internet that they have lawfully paid for via cloud storage and 

other services. It should be clear that a person accessing his own content on a cloud 

service is not engaging in a performance, and that a cloud service is not "publicly 

performing" a copyrighted work simply by allowing a user to store and access her 
185 


87023.141

own content. However, under the DC Circuit's reasoning, it is unclear whether many 

existing online business models are somehow engaging in public performances of 

various works, simply by providing basic storage and access functions. Parties on 

the other side of this dispute have not put forth a convincing case that their legal 

position would not have consequences for online businesses that extend beyond the 

specialized fact pattern of online antenna rental services. 

Mr. Munson pointed out in his testimony that added regulations on 

broadcasters "stem from what some have characterized as a 'social contract' 

between the government and the broadcasting industry: broadcasters use 

licensed spectrum to serve the public interest and offer their service free to 

American consumers." 

Many of these broadcast TV consumers and watchers are minorities. In the 

2013 Ownership Survey and Trend Report, it was cited that 22 percent of all 

African-American households and 25 percent of Hispanic households are 

broadcast-only homes. Additionally, minorities comprise 41 percent. 

Notwithstanding this fact, minority and female ownership oftelevision 

stations and cable systems has shrunk dramatically over the years. 

5. Do any of you challenge or take issue with the proposition that minority TV 

broadcast and cable system owners can be just as if not more responsive to 

the needs of their minority viewers and audiences? 

I agree that the best way to ensure that the media remain responsive to minority 

needs and interests is to promote and preserve minority ownership of media--

minorities should write, produce, broadcast, and distribute video programming, and 

minorities should own companies and facilities at every link in this chain. Ensuring 

that media meets the needs of all members of the community is an important 

component of the public interest. 

6. Other than the reinstitution of the minority tax certificate, which NAB has 

supported, what measures can Congress take so that more programming and 

news meeting the critical needs of minority viewers and consumers gets 

carried over the public airwaves, using public rights-of way? 

The FCC and other policymakers have an obligation to ensure that media companies 

that use the public airwaves or public rights-of-way are serving the public interest. 

If media companies are not, I believe policymakers should be more ready than they 

have been in the past to deny them access to these public assets. 
186 


87023.142

Going forward, I also believe that policymakers should encourage minorities to 

bypass traditional gatekeepers and produce their own content and distribute it 

online, while protecting their ability to reach viewers by promoting Internet 

openness, ensuring that data caps do not discourage the emergence of the Internet 

as a primary video distribution platform, and ensuring universal access to adequate 

broadband. 

Mr. Munson says in his testimony that broadcasters are more regulated than 

any other video platform, including cable and satellite. He goes further to say 

that FCC public filing rules, including a requirement for local broadcast TV 

stations to place sensitive pricing information online should also apply to 

cable systems. 

7. Assuming for argument that this requirement was made applicable to other 

video providers, couldn't it lead to more good faith negotiation over 

retransmission consent agreements? 

The best way to promote good-faith negotiation (apart from the FCC's adoption of a 

few key per se bad faith rules) would be binding, baseball-style arbitration. In this 

style of arbitration, each party makes its best offer, and the arbitrator chooses the 

fairest of the two offers. This encourages each side to make its offer as fair as 

possible from the beginning and discourages extreme starting negotiating positions. 

Arbitrators should generally have access to whatever information they need to 

make a fair assessment. 

Certainly, if MVPDs make more information public, this might aid negotiations, as 

well. While I would hesitate to say that MVPDs should have the exact same 

disclosure requirements as broadcasters--the public interest calculus for the 

different types of entity is simply different--I also think that consumers would 

benefit from knowing where their cable bills are going. Indeed, some MVPDs might 

welcome certain disclosure requirements, as they can be prohibited from disclosing 

the terms of carriage deals by contract. 
187 


87023.143

Before the 

FEDERAL COMMUNICATIONS COMMISSION 

Washington, DC 20554 

In the matter of ) 

) 

Interpretation of the terms ) MB Docket No. 12-83 

"Multichannel Video Programming ) 

Distributor" and "Channel" as Raised ) 

in Pending Program Access ) 

Complaint Proceeding ) 

) 

COMMENTS OF PUBLIC KNOWLEDGE 

John Bergmayer 

Senior Staff Attorney 

Public Knowledge 

1818 N St. NW 

Suite 410 

Washington DC, 20036 

May 14,2012 
188 


87023.144

TABLE OF CONTENTS 

Introduction and Summary .................................................................................................. 1 

I. The Term "Multichannel Video Programming Distributor" Encompasses 

AU Platforms That Make Available Prescheduled "Video Programming" ... 2 

A. Principles of Statutory Construction Demand That The Commission Take 

Account of Context When Interpreting a Statute ....................................................... 2 

B. Other Provisions of the Law, Commission Practice, and Common Usage All 

Demonstrate That the Term "Channel" Has Both a "Container" and a 

"Contents" Sense ...................................................................................................................... 4 

C. The 1992 Cable Act Uses "Channel" To Mean "Prescheduled Video 

Programming" ........................................................................................................................... 8 

D. The Legislative History of the 1992 Cable Act Confirms That "MVPD" Is a 

Technology-Neutral Category ......................................................................................... 12 

E. A Narrow Reading of "Channel" Would Have Unintended Consequences ... 15 

F. Many Policy Benefits Would Follow From the Bureau's Clarification That 

Online Services Can Choose to Compete as MVPDs ............................................... 17 

1. Consumers Would Benefit ................................................................................................. 17 

2. Independent Programmers Would Benefit. ............................................................... 17 

3. All Online Video Distributors Would Benefit, Even Ones ThatAre Not 

MVPDs ........................................................................................................................................ 18 

4. Device Makers and Their Customers Would Benefit ............................................. 19 

5. Competitive MVPDs Would Benefit. ............................................................................ 21 

G. The Majority of Current Online Video Services Are Not, and Could Not 

Become, MVPDs Unless They Chose To ...................................................................... 21 

II. The Commission Has Discretion to Interpret the Law to Enhance 

Competition ................................................................................................................... 22 

A. The Commission Should Resolve Any Statutory Ambiguity in Favor of 

Competition ............................................................................................................................. 22 

B. The Commission Can Use Its Ancillary Authority to Promote Video 

Distribution Competition .................................................................................................. 23 

III. The Commission Should Update Its Policy Frameworkfor Online and On 

Demand Video ............................................................................................................... 24 

A. Section 628 Prohibits Anti-Competitive Actions By an MVPD Against Any 

Video Distributor .................................................................................................................. 24 

B. The Commission Should Consider the Policy Implications of the Increasing 

Popularity of On Demand Video ..................................................................................... 25 

CONCLUSION ........................................................................................................................... 26 

ii 
189 


87023.145

INTRODUCTION AND SUMMARY 

The Commission should clarify that online video providers such as Sky Angel are 

"multichannel video programming distributors" (MVPDs). Only a technology-neutral 

reading of the term is consistent with the text and purpose of the Communications 

Act.1 This action will not redefine all online video platforms as MVPDs. Nor will it 

define any online video system as a cable system. 2 Rather, only those MVPDs that 

closely emulate traditional, channel-based MVPDs will be affected. To implement 

this, the Commission will have to slightly modify a few of its regulations. But this 

reading is consistent with the technologically-neutral approach Congress has taken 

to video competition since the Cable Television Consumer Protection and 

Competition Act of 1992, and as such, no statute stands in the way of this proconsumer, pro-competitive understanding of the law. 

Additionally, the Commission should find that Section 628 of the 

Communications Act prohibits anti-competitive actions by any MVPD against any 

video programming distributor, multichannel or not. There is no sound policy 

reason for the Commission to prohibit anti-competitive actions by one MVPD 

against another MVPD, but not by an MVPD against a non-MVPD video programming 

distributor. 

Finally, the Commission should issue a further notice of inquiry in this docket 

that seeks comment on a comprehensive policy framework for non-multichannel 

1 For example, the Commission is charged with promoting an "efficient" 

communications system. 47 U.S.C. § 151. The goal of "efficiency" would not be wellserved if the Bureau makes distinctions between like systems based only on 

irrelevant technical implementation details. 

2 For Communications Act purposes. Whether a system is a "cable system" for 

copyright purposes is another matter. See 17 USC § 111. 

1 
190 


87023.146

video. While on-demand content is "video programming" under the Act, it is not 

channel-based. But it is clear that the market is moving increasingly toward ondemand video, and the Commission should seek to understand the competitive 

effects that this transition may cause. 

I. The Term "Multichannel Video Programming Distributor" Encompasses All 

Platforms That Make Available Prescheduled "Video Programming" 

Any provider that makes available mUltiple channels of video programming is a 

"multichannel video programming distributor" ("MVPD"). While distributors like 

Sky Angel indisputably offer "video programming," the Bureau has asked whether 

online services offer "channels" of video programming. As used in the Cable 

Television Consumer Protection and Competition Act of 1992, a "channel" is a 

stream of signal of prescheduled video programming. Since an online distributor 

like Sky Angel offers "channels" in this sense just as DirectTV or Time Warner Cable 

do, such distributors meet the definition of MVPD. 

A. Principles o/Statutory Construction Demand That The Commission Take 

Account 0/ Context When Interpreting a Statute 

The word "channel" is used in different ways in the Communications Act. In a 

video context, the Act uses the term both in a "container" sense, to refer to a range of 

frequencies used to transmit programming, and in a "content" sense to refer to the 

programming itself, or the programmer. This figure of speech is known as 

synecdoche, and it pervades the language. "When we say 'the kettle is boiling' we do 

not mean that the metal container (the kettle) has become a lump of molten metal; 

2 
191 


87023.147

we mean that the contents of the kettle (the water in it) has boiled."3 Thus when the 

term is used in the Act it is necessary to read the word in either the "container" 

sense, or in the "contents" sense, as context demands. 

There is nothing unusual about reading a statutory term different ways in 

different contexts. While there is an interpretive presumption that a term that 

appears several times in a statute is given the same reading each time,4 the Supreme 

Court has explained that this presumption "readily yields" and that "[i]t is not 

unusual for the same word to be used with different meanings in the same act, and 

there is no rule of statutory construction which precludes the courts from giving to 

the word the meaning which the legislature intended it should have in each 

instance."s As the Court further explained, 

Where the subject matter to which the words refer is not the same in the 

several places where they are used, or the conditions are different, or the 

scope of the legislative power exercised in one case is broader than that 

exercised in another, the meaning well may vary to meet the purposes of the 

law, to be arrived at by a consideration of the language in which those 

purposes are expressed, and of the circumstances under which the language 

was employed.6 

Commission practice confirms that the same word can be given a different 

construction when it is used by different acts. For example, the Commission 

interprets the word "telecommunications" to mean one thing under the 

Telecommunications Act, and another thing under the Communications Assistance 

3 CHRISTOPHER KELEN, AN INTRODUCTION TO RHETORICAL TERMS 28 (Humanities-Ebooks 

2007). 

4 RatzlaJv. United States, 510 U.S. 135, 143 (1994) 

S Atlantic Cleaners & Dyers. v. United States, 286 US 427, 433-34 (1932) 

61d. at433. 

3 
192 


87023.148

for Law Enforcement Act.7 As the DC Circuit recognized, it is well within the 

Commission's authority to give words different constructions from one act to 

another when the different laws evince "different texts, structures, legislative 

histories, and purposes."s Similarly, the word "channel" means one thing when used 

as part of the Cable Communications Act of 19849 ("1984 Cable Act") and another 

thing when used as part of the definition of multichannel video programming 

distributor ("MVPD") in the Cable Television Consumer Protection and Competition 

Act of 199210 ("1992 Cable Act"). In particular, the word "channel" in the 1992 Cable 

Act should be given a "content" reading, since only that reading is consistent with 

the Act's pro-competitive purposes. 

B. Other Provisions of the Law, Commission Practice, and Common Usage All 

Demonstrate That the Term "Channel" Has Both a "Container" and a 

"Contents" Sense 

According to the 1984 Cable Act, "the term 'cable channel' or 'channel' means a 

portion of the electromagnetic frequency spectrum which is used in a cable system 

and which is capable of delivering a television channel (as television channel is 

defined by the Commission by regulation)." In the Sky Angel Standstill Denial11 the 

Bureau used this definition to find that Sky Angel is not a "multichannel video 

programming distributor" (MVPD), since an MVPD "makes available for 

purchase ... multiple channels of video programming."12 The Bureau reasoned that 

7 See American Council on Educ. v. FCC, 451 F. 3d 226, 230 (DC Cir. 2006). 

8/d. at 231. 

9 PL 98-549,98 Stat. 2779 (1984). 

10 PL 102-385, 106 Stat. 1460 (1992). 

11 Sky Angel Emergency Petition for Temporary Standstill, Order, 25 FCC Rcd. 3879 

(MB 2010). 

1247 USC § 522(13). 

4 
193 


87023.149

Sky Angel does not make available for purchase any "channels" since the 

electromagnetic frequency spectrum that its video programming uses for 

transmission is provided by a viewer's broadband ISP and not by Sky Angel.13 

This construction's primary flaw is that it ignores the relevant context. The term 

"MVPD" was adopted as part of the 1992 Cable Act, not the 1984 Cable Act. As will 

be discussed below, the 1992 Cable Act was concerned with promoting interplatform competition and (contrary to the Bureau's conclusion) not all of systems 

listed in the statute as illustrative of MVPDs provide a transmission path. But it is 

important to note that even the 1984 Cable Act's definition uses both senses of the 

term "channel" (the container sense and the contents sense) when it speaks of one 

kind of channel carrying another kind of channel. This demonstrates that the 

drafters of the 1984 Cable Act saw a channel as both a medium of communication 

(in this case, the frequency which a communication may use) and the content of a 

communication itself (a television station, or television channel). Otherwise, the 

statute would be incoherent. Used only in the "container" sense, one channel cannot 

"deliver" another. A channel can be used to retransmit content, but one portion of 

the electromagnetic frequency spectrum cannot be used to "deliver" another portion 

of the electromagnetic frequency spectrum. A channel can only deliver 

programming. Thus the 1984 Cable Act's definition of "channel" itself uses the term 

"channel" in both the "delivery" sense and the "content" sense. 

The Commission frequently uses the term in both senses, as well. For example, in 

its recent NPRM on revision of the program access rules, it wrote that "consumers 

13 Sky Angel Standstill Denial at 1f 4. 

5 
194 


87023.150

do not consider the SD version of a particular channel to be an adequate substitute 

for the HD version."14 The word "channel" in this context makes no sense if it means 

"a portion of the electromagnetic frequency spectrum." There is no "HD" or "SO" 

version of a particular frequency band; rather, particular frequency bands can carry 

content that is in either HD or SO. Similarly the Commission, in discussing the 

Comcast Network, wrote that "this terrestrially delivered, Comcast-affiliated local 

news and information channel is available only to Comcast and Cablevision 

subscribers and is withheld from competitors to incumbent cable operators."15 Here 

again the Commission uses the term to refer to content and not to a frequency band. 

And in its Comcast/NBCU conditions order, while the Commission declined to 

resolve whether an online video distributor (OVO) could be an MVPO,16 it discussed 

how "the fact that most OVD services do not currently offer consumers all popular 

linear channels does not mean that they cannot and will not do so in the near 

future."17 Thus the Commission has already acknowledged that no technical barrier 

stands in the way of online services providing "channels" of programming to their 

customers. Generally speaking it is clear from context whether the Commission (or 

Congress) is using "channel" in a content or a container sense, and in those cases 

14 Revision of the Commission's Program Access Rules, Notice of Proposed 

Rulemaking, MB Docket No. 12-68, FCC 12-30 (Mar. 20, 2012) at ~ 54. See also 

Program Access Rules & Examination of Programming Tying Arrangements, First 

Report & Order, 25 FCC Rcd. 746, ~ 55 (2010). 

15 Program Access Rules & Examination of Programming Tying Arrangements, First 

Report & Order, 25 FCC Rcd. 746, ~ 30 (2010). 

16 Applications of Comcast Corp., GE Co. & NBC Universal, Inc., Memorandum Opinion 

& Order, 26 FCC Red. 4238 (2011) at ~ 61 n.131. 

17 ld. ~ 80. 

6 
195 


87023.151

where there may be ambiguity, qualifying words (such as "channel capacity"18) 

provide the necessary disambiguation. In the case of the definition of MVPD in the 

1992 Cable Act, as will be discussed below, it is clear from the context and purpose 

of the law that a "channel" is intended to be given a service-based, not a technologybased reading. 

Two popular reference works will conclude the demonstration that the word 

"channel" in a television context frequently is used in two different senses. First, the 

Oxford English Dictionary defines channel as "[a] band offrequencies of sufficient 

width for the transmission of a radio or television signal; spec. a television service 

using such a band," providing both senses of the word.19 Second, Wikipedia, with an 

ethos very different from the OED, similarly provides both senses. It writes that "[i]n 

broadcasting, a channel is a range of frequencies (or, equivalently, wavelengths) 

assigned by a government for the operation of a particular radio station, television 

station or television channel," providing the "container" sense of the word. But it 

concludes with the content sense, explaining that "[i]n common usage, the term also 

may be used to refer to the station operating on a particular frequency."20 

While the different ways that the 1984 Cable Act, the Commission, or anyone or 

anything else uses the term does not determine how the 1992 Cable Act uses the 

term, it is instructive to observe these different senses since they illustrate the 

18 See Internet Ventures Petition for Declaratory Ruling that Internet Service 

Providers are Entitled to Leased Access to Cable Facilities, Memorandum Opinion & 

Order, 15 FCC Red. 3247 (2000). 

19 Oxford English Dictionary Online Edition, http://www.oed.com (accessed May 2, 

2012). 

20 Channel (broadcasting), 

http:// en. wikipedia.org/w /index.php ?title=Channet(broadcasting)&0Idid=442911 

630 (last visited May 2, 2012; last edited Aug. 3, 2011). 

7 
196 


87023.152

different meanings the word can have in different contexts. In sections below it will 

be shown how the word "channel" when read in the context of the 1992 Cable Act 

must be given a "content" reading, both to make sense of the statutory context and 

to give effect to Congress's pro-competitive intent. 

C. The 1992 Cable Act Uses "Channel" To Mean "Prescheduled Video 

Programming" 

The 1992 Cable Act gives the following definition of "multichannel video 

programming distributor": 

the term "multichannel video programming distributor" means a person such 

as, but not limited to, a cable operator, a multichannel multipoint distribution 

service, a direct broadcast satellite service, or a television receive-only 

satellite program distributor, who makes available for purchase, by 

subscribers or customers, multiple channels of video programming[.]21 

A plain reading of this definition demonstrates that MVPOs are characterized by 

what they do, not how they do it. All providers who "make[] available for purchase, 

by subscribers or customers, multiple channels of video programming" qualify. As 

the FCC has previously found, the plain language of this definition does not require 

that an MVPO "operate [its] vehicle for distribution."22 Indeed, in the 

Telecommunications Act of 1996 Congress demonstrated that an MVPO need not be 

facilities-based when it mentioned that an MVPO might "use the facilities" of another 

provider.23 This shows that the last time it considered this issue, and consistent with 

the 1992 Cable Act, Congress found that "MVPO" was a service-oriented category 

2147 U.S.C. § 522(13). 

22 Implementation of Section 302 of the Telecommunications Act of 1996, Open 

Video Systems, Third Report & Order & Second Order on Reconsideration, 11 FCC Red. 

20227, 'If 171 (1996). 

23 47 U.S.C. § 543(1)(1)(0) (discussing a "multichannel video programming 

distributor using the facilities of [ a] carrier or its affiliate"). 

8 
197 


87023.153

and not a technological silo. The law does not require that an MVPD build or operate 

last-mile wired facilities, launch a satellite, or use any particular technology or 

method of program delivery. 

To further clarify this, Congress provided in its definition a list of every thenexisting multichannel service ("a cable operator, a multichannel multipoint 

distribution service, a direct broadcast satellite service, or a television receive-only 

satellite program distributor") while expressly reserving that the list was not 

intended to be exhaustive ("a person such as, but not limited to.") This demonstrates 

that Congress intended the definition to encompass technologies that, at the time, 

had not yet been developed. 

In its Sky Angel Standstill Denial the Bureau took note of this but reasoned that, 

because the definition states that an MVPD must be a system "such as" the ones 

expressly listed, to be an MVPD a system must share characteristics with the ones 

given.24 Of course, any MVPD must, like the listed MVPDs and consistent with the 

definition, provide multiple channels of video programming to subscribers. This 

provides the necessary commonality between the listed services. But the Bureau 

further reasoned that each listed MVPD provides a "transmission path" it uses to 

deliver video programming.25 (This reasoning informed its narrow construction of 

"channel," discussed below.) In addition to contradicting FCC precedent, this 

analysis if flawed for at least three reasons. 

First, while it may be that a cable system or a telco MVPD "provides" a 

transmission path in the sense that they physically string copper wires or fiber optic 

24 Sky Angel Standstill Denial at '117 n.41. 

25 [d. at'll 7. 

9 
198 


87023.154

cable, wireless systems like DBS and MMDS do not similarly "provide" a 

transmission paths. They use licensed spectrum to transmit information like any 

other wireless services. They did not build this spectrum and do not "provide" it. 

Second, even if the Bureau decides that wireless systems do "provide" (or "make 

available") a transmission path, it is not clear that online systems do not provide 

transmission paths in the same way. For example, an online video distributor might 

enter into a relationship whereby it leases and resells last-mile broadband 

capacity.26 And even a traditional cable system does not necessarily provide a 

complete transmission path to a viewer's television: the viewer herself or a landlord 

might provide inside wiring, for instance. Given this background, since online 

services generally own or lease some facilities (such as servers) and "transmit" 

programming partly on their own Internet connections, they "provide" transmission 

paths in the same sense as other MVPDs. 

Third, it is the wrong question. Nothing in the text or legislative history of the 

Act suggests that Congress intended to hide an unstated requirement that MVPDs 

must be facilities-based. Thus analyzing whether or not particular video platform is 

or is not facilities-based and whether or not it provides a transmission path is an 

unnecessary diversion. It is clear from context that as part of the definition of MVPD 

"channel" should be given a "contents" reading. Questions about the nature of the 

facilities an MVPD uses are thus inapposite. Consumers do not purchase "a portion 

26 See Implementation of Section 302 of the Telecommunications Act of 1996, Open 

Video Systems, Third Report & Order & Second Order on Reconsideration, 11 FCC Red. 

20227,1 171 (1996). Furthermore, it is well-established that a "facilities-based" 

provider may be a reseller. See, e.g., Flying J Petition for Expedited Declaratory 

Ruling, Memorandum Opinion & Order, 18 FCC Red. 10311 (2003). 

10 
199 


87023.155

of the electromagnetic spectrum" when they subscribe to an MVPD. They buy access 

to content-in particular, to channels like NBC, ESPN, and Comedy Central. An 

MVPD like Comcast even distinguishes its various TV plans as offering different 

levels of "on demand" and access to different numbers of "channels."27 The channels 

in question are given names like "MTV" and "Discovery," not like "549.25 MHz." This 

demonstrates that what matters to everyone concerned is the content, not the 

precise carrier. 

This practice is consistent with the statute, which makes clear that consumers 

buy access to "video programming" in two primary ways: on-demand, and via 

prescheduled channels. The law distinguishes these two services when it provides 

that 

the term 'interactive on-demand services' means a service providing video 

programming to subscribers over switched networks on an on-demand, 

point-to-point basis, but does not include services providing video 

programming prescheduled by the programming provider[.pa 

On-demand and prescheduled programming thus represent different models of 

presenting "video programming." By defining a kind of service ("interactive ondemand service") that is distinct from MVPDs, and by providing that video common 

carriers that offer only interactive on-demand services would not be considered 

"cable systems" (one kind of MVPDF9 Congress drew a line between providers of 

pre scheduled video programming on the one hand, and providers of on-demand 

video programming on the other. Since on-demand video programmers are not 

27 See, for example, Comcast's overview at 

http://comcast.com/Corporate/Learn/DigitaICable/digitaJcable.html (last accessed 

May 10, 2012). 28 47 U.S.C. § 522(12). 

29 47 U.S.C. § 522(7)(C). 

11 
200 


87023.156

cable systems and are therefore not MVPDs, it follows that a provider of 

prescheduled video programming is an MVPD. Thus, for the purposes of the 1992 

Cable Act, a "channel" of video programming must simply mean "prescheduled video 

programming," or a provider of such programming.3o 

"Channels" and "on-demand" are both services, not technological delivery 

methods. The overall statutory scheme would fail if a "channel" were found to be a 

transmission method while "on-demand" remained a service. As will be discussed 

more fully below, under this reading, there is no reason why an on-demand service 

could not be delivered via a channel. Only a reading that understands that both of 

these terms refer to mutually exclusive services prevents such commingling. 

D. The Legislative History o/the 1992 Cable Act Confirms That "MVPD" Is a 

Technology-Neutral Category 

The 1984 Cable Act was "was premised on the expectation that emerging 

competition in the video marketplace would result in reasonable rates for cable 

service and improved customer services practices."31 However, after its passage 

"competition to cable from alternative multichannel video technologies largely ... 

failed to materialize."32 Business and regulatory barriers stood in the way of 

competition, and consumers suffered. 

30 While an MVPD becomes one by virtue of delivering channels of video 

programming, video programming it offers via any means (including on demand) 

may be subject to special requirements. For example, video programming offered 

on-demand by an MVPD is subject to program access rules while on-demand 

programming offered by a non-MVPD would not be. See Applications of Comcast 

Corp., GE Co. & NBC Universal, Inc., Memorandum Opinion & Order, 26 FCC Red. 4238 

(2011) at 'If 54 n.122. 

31 H.R. Rep. No. 102-628 (1992) at 26. 

32 [d. 

12 
201 


87023.157

In response, Congress enacted the 1992 Cable Act. In that Act, rather than 

simply regulating monopolist cable systems, Congress enacted a series of measures 

designed to promote consumer welfare by enabling competition to cable from 

systems that used different transmission methods. Rather than regulating each 

different system differently according to its technology, Congress created a new 

service category, "multichannel video programming distributors" (MVPDs), along 

with a framework that treated all MVPDs alike. Thus, the program access and 

retransmission consent systems that were central components of the 1992 Cable 

Act apply to all MVPDs, not just to cable or just to satellite TV. Of course, where 

there are good reasons to treat different classes of MVPDs differently Congress 

continues to do so. But the future-proof laws that concern MVPDs generally were 

specifically designed to be technology-neutral and can apply to online MVPDs today 

just as, in 1992, they easily encompassed cable, direct broadcast satellite, and 

multichannel multipoint systems. 

A "principal goal" of the 1992 Cable Act was "to encourage competition from 

alternative and new technologies,"33 by extending like treatment (e.g., under the 

program access rules, and for retransmission consent purposes) to like services.34 

This would enable competition rather than regulation to protect consumers. The 

House found that "competition ultimately will provide the best safeguard for 

consumers in the video marketplace and strongly prefers competition and the 

331d. at 27. 34 1992 Cable Act, PL 102-385, 106 Stat. 1460 at 1482 (retransmission consent 

applies to all multichannel video program distributors), 1494 (some MVPDs are 

prohibited from taking anti-competitive actions against any MVPD). 

13 
202 


87023.158

development of a competitive marketplace to regulation."35 (It also found that "until 

true competition develops, some tough yet fair and flexible regulatory measures are 

needed."36) Along these lines, the Senate found that "[ e ]ffective competition is 

achieved when there is competition from both another 'multichannel prOVider' 

(such as a competing cable operator, microwave or satellite system) and a sufficient 

number of over-the-air broadcast signals"37 -thus recognizing the need for broad, 

multi-platform competition between video providers without regard to their 

specific modes of operation. 

The fact that online MVPDs were not yet possible when Congress passed the 

1992 Cable Act is of no importance. To be sure, Congress enacted the 1992 Cable Act 

in response to conditions that were prevalent in 1992.38 But in defining MVPDs it 

used broad language, and "[t]he use of broad language ... to solve [a] relatively 

specific problem ... militates strongly in favor of giving [a statute] broad 

application."39 In any event the problem that it sought to solve-consumer harms 

caused by a lack of sufficient competition-persists today. And the solution is the 

same: a service-oriented approach to the video market that permits MVPDs using 

any technology to compete with established cable systems. 

35 H.R. Rep. No. 102-628 (1992) at 30. 

361d. 

37 S. Rep. No. 102-92 (1992) at 63. 

38 The legislative history's reference to "facilities-based" competition should be read 

in this light. See H.R. Rep. No. 102-862 at 993 (1992). In 1992 the main competition 

to cable that could be foreseen was facilities-based. However, given the broad 

language of the Act, the pro-competitive policies that Congress enacted should not 

be confined to particular kinds of technology. 

39 Consumer Electronics Ass'n v. FCC, 347 F. 3d 291 (D.C. Cir 2003). 

14 
203 


87023.159

Given the pro-competitive, technology-agnostic approach evinced in the statute 

and the legislative history it is clear that Congress intended "MVPD" to be a service 

category, not a technological silo. Ifit intended to require that MVPDs be facilitiesbased it could have easily said so in the statute. It is unlikely that it would have 

enacted such a requirement through the circuitous means of incorporating in its 

definition one of the possible senses (the "container" sense) of the word "channel."4o 

Thus, the Bureau should revise the construction of "channel" as contained in the 

definition of MVPD that it adopted in the Sky Angel Standstill Denial to reflect 

Congress's technology-neutral intent. 

E. A Narrow Reading of "Channel" Would Have Unintended Consequences 

Unless the Bureau revises the restrictive definition of "channel" it adopted in the 

Sky Angel Standstill Denial, numerous unintended consequences will follow. These 

go beyond the anti-competitive and anti-consumer effects that would be expected to 

follow from artificially restricting market entry. Instead the Bureau may find that 

many "channels" that are currently offered by MVPDs are not channels at all 

anymore-or it may find that other services offered by MVPDs, such as interactive 

apps or on-demand programming are suddenly defined as "channels," based only on 

the behind-the-scenes technical characteristics of the way that the content is 

delivered. 

For example, if the Bureau continues to hold that an MVPD must provide its 

subscribers with a transmission path, then any programming that is delivered 

without a fixed transmission path may become ineligible. IP-based MVPDs such as 

40 See Whitman v. American Trucking Association, 531 U.S. 457, 468 (2001). 

15 
204 


87023.160

U-Verse that may not assign particular programming networks particular 

frequencies may not provide any "channels" at all if "channel" is defined in this way. 

Switched digital networks on cable systems may no longer count as "channels" since 

they are not continually broadcast on a fixed "portion of the electromagnetic 

frequency spectrum." And any MVPD would simply be able to spin off its facilities 

into a separate affiliate and then lease them back in order to avoid MVPD regulation. 

At the same time, if an MVPD provides its video-on-demand or other services on 

particular bands of frequencies, then these services would be considered "channels" 

under the Commission's rules. There is nothing in the definition of "channel" as 

adopted by the Sky Angel Standstill Denial that would exclude on-demand 

services. As was mentioned above, because "on-demand" is a kind of service, if 

"channel" refers to a means of delivery then on-demand video programming could 

very well be delivered via a "channel." By contrast, a service-based reading of 

"channel" precludes this. For the purposes of defining an MVPD, only a servicebased reading of the term "channel" that refers to a prescheduled transmission of 

video programming is sufficient to both 1) ensure that traditional "channels" 

continue to be considered "channels" under the Commission's rules, and 2) ensure 

that only traditional channels are considered "channels" under the Commission's 

rules. 

Needless to say such shifting categories would wreak havoc with the 

Commission's ability to oversee the MVPD market-existing programming may fall 

outside the program access rules while other services come within them, and 

MVPDs would have an incentive to engineer their systems inefficiently just to 

16 
205 


87023.161

qualify for, or fall outside of, particular rules. The Commission has seen ample 

evidence of exactly this kind of behavior-MVPDs have continually tried to skate 

around FCC and Congressional policy by delivering programming via terrestrial 

wires instead of satellite, providing only the standard definition and not the high 

definition versions of feeds to competitors, and so forth. It does not require much 

imagination to see how a cable system might stop providing some programming to a 

DBS competitor by claiming that this programming no longer counted as a "channel" 

under the Commission's rules since it is not offered over an assigned transmission 

path. 

F. Many Policy Benefits Would Follow From the Bureau's Clarification That 

Online Services Can Choose to Compete as MVPDs 

1. Consumers Would Benefit 

By clarifying that an online system can qualify as an MVPD, the Bureau will 

significantly benefit consumers. A typical viewer will go from having a choice of one 

or two MVPDs to any number of them. Just as a reader today is no longer limited to 

the local newspaper and one or two national papers, but can read online news from 

around the country and around the world, by clarifying that online systems can 

qualify as MVPDs, the Bureau will make it so that viewers can choose from between 

a large number of competitive MVPDs instead of being limited to the same few 

options, year after year. 

2. Independent Programmers Would Benefit 

Independent programmers will benefit, as well. Today an independent 

programmer has no choice but to deal with a handful of large programming 

distributors, on terms the distributors set. While the program access rules prevent 

17 
206 


87023.162

an MVPD from keeping a programmer from being carried by other current MVPDs, 

nothing at the moment prevents a company like Comcast demanding, as a condition 

for being carried on Comcast, that the programmer stay off of online platforms. With 

its clarification the Commission will fix that by extending the same protection that 

programmers enjoy with respect to current competitive MVPDs to online MVPDs. 

This will ensure that programmers can bid distributors against each other, extract 

more favorable terms, and extend the reach of their programs. 

3. All Online Video Distributors Would Benefit, Even Ones That Are Not 

MVPDs 

Non-MVPD online programmers will benefit from the FCC's clarification, as well. 

Many online video platforms like Netflix and Vimeo have chosen business models 

that take them outside the meaning of "MVPD." These new models of video 

distribution have been a boon to both viewers and content creators, but they are not 

full substitutes for traditional MVPD service. They usually lack "must-see" 

programming such as current TV shows, live sports, and popular cable networks. 

While many viewers have "cut the cord" (cancelled their MVPD subscription) and 

replicated much of what they might have watched through free over-the-air 

broadcast TV and mixing and matching online services, this is generally an 

imperfect substitute that does not offer all of the programming available through a 

traditional MVPD-and is technologically complex (and somewhat cumbersome) 

besides. But if more viewers were able to access all of the programming they 

currently access through a traditional MVPD subscription online, more consumers 

might be able to switch completely to competitive offerings. For example, a given 

viewer might not have an Amazon Instant Video subscription today. since she finds 

18 
207 


87023.163

cable programming indispensable and, on-balance, finds that cable on-demand 

video is good enough to not justify subscribing to an online service. But if online 

MVPDs were allowed to thrive consumers might be able to efficiently mix and match, 

obtaining on-demand video from one source and traditional network and cable 

channels from another source. So if a viewer were able to subscribe to an online 

MVPD and access the indispensable programming that currently keeps her tied to 

cable, she might find that Amazon Instant Video serves well as the on-demand 

component of her viewing. Online MVPDs would therefore benefit non-MVPD video 

distributors by allowing viewers to fill in the gaps and obtain the programming that 

the non-MVPDs cannot or do not provide, which makes viewers more likely to 

switch to competitive online offerings. 

Additionally, it is likely that in a world with online MVPDs, non-MVPD online 

video program distributors might be able to access programming they are currently 

shut out from. Currently, facilities-based MVPDs seek out and obtain some measure 

of exclusivity, which can limit online distribution. But if online MVPDs had the same 

access to programming as facilities-based MVPDs then that exclusivity would be 

impossible. There would thus be no reason for an MVPD to keep programming off of 

non-MVPD platforms such as iTunes or Netflix. 

4. Device Makers and Their Customers Would Benefit 

A rise in the number of cord-cutters would also benefit companies that make 

devices and services that facilitate online viewing, such as Boxee, Roku, Hauppage, 

and many others. Today a viewer might not be willing to invest in a device that 

makes online video as easy or easier to watch than traditional MVPD video, since it 

19 
208 


87023.164

would be an additional box, taking up space next to a cable set-top box and being yet 

another gizmo to set up, configure, and maintain. But if a viewer could use such a 

device to watch every kind of content it is more likely that they would be willing to 

cut the cord and invest in such a device. This would have a number of positive 

effects. 

Currently MVPD viewers are, for the most part, stuck using MVPD-provided 

devices to navigate and watch TV. Compared with the competitive markets in 

smartphones, tablets, computers, and other areas of consumer electronics these 

devices have bad user interfaces, few features, and are generally poor. This is simply 

because a lack of competitive pressure eliminates the incentive for the companies 

that provide these devices to innovate. MVPDs buy these devices from 

manufacturers, not consumers, so the devices tend to reflect the MVPD priority to 

keep consumers watching MVPD and not online content, and not the viewer priority 

to have an intuitive, useful device. The consumers who are stuck using these boxes 

have no alternatives; they cannot simply go to the store and buy a better one. The 

competitive marketplace for devices that would arise in the wake of the FCC's 

decision to allow online MVPDs to play by the same rules as other MVPDs would 

improve this situation, allowing devices like the Roku and the Apple TV (which are 

already superior to cable set-top boxes) to begin providing all, not just some, of a 

viewers content. The increase utility of these devices would attract yet more 

companies to the market,41 and would in turn encourage cord-cutting, which would 

41 Sony, Apple, and Intel have all been reported as being interested in entering the 

online MVPD market. See Yukari Iwatani Kane & Ethan Smith, Apple Sees New Money 

in Old Media, WALL STREET JOURNAL, 

20 
209 


87023.165

encourage new online video platforms. These virtuous cycles would benefit viewers 

and significantly improve video competition generally. 

5. Competitive MVPDs Would Benefit 

Finally, online MVPDs would also benefit current, facilities-based MVPDs in a 

number of ways. Currently, many MVPDs pay high rates for retransmission consent. 

But if an MVPD's customers were able to access broadcast content from other 

sources, the MVPD might simply decline to carry expensive broadcast signals, saving 

significantly without inconveniencing its customers (or offsetting that 

inconvenience with lower rates). Additionally, a more fluid MVPD market would 

allow current MVPDs to become online MVPDs as well, competing outside of their 

traditional service areas. 

G. The Majority of Current Online Video Services Are Not, and Could Not 

Become, MVPDs Unless They Chose To 

Although this should be evident from the above, it bears emphasizing that by 

clarifying that a "channel" can be provided online, the Bureau would not somehow 

transform current services like Hulu, Netflix, and iTunes into MVPDs. While they 

provide "video programming" within the meaning of the law, these services do not 

offer channels of programming-their content is typically available on demand. If 

the Bureau acts consistently with these comments their regulatory status would not 

change. 

http://online.wsj.com/ article/SB 1 000 1424052 7 487034057 045750153626536442 

60.html (Jan. 22, 2010) (Apple); Marguerite Reardon, Is Intel Developing an Online 

TV Service?, CNET, http://news.cnet.com/8301-30686_3-57395834-266/is-inteldeveloping-an-online-tv-service/ (Mar. 12, 2012) (Intel); Andrew Wallenstein, Sony 

Virtual MSO Play Could Hinge on Com cast, VARIETY, 

http://www.variety.com/article/VRl118053341 (Apr. 30, 2012) (Sony). 

21 
210 


87023.166

However, the Bureau's action would allow any service that chooses to operate as 

an MVPD to do so. Any service that begins to offer video programming via multiple 

channels online would be able to benefit from the retransmission consent and 

program access regimes, and would, like any other MVPD, be subject to public 

interest obligations.42 By adopting a proper reading of "MVPD" that includes online 

services the Commission will both promote new entry and competition without 

extending regulations to any services that do not wish to operate as MVPDs. 

II. The Commission Has Discretion to Interpret the Law to Enhance Competition 

A. The Commission Should Resolve Any Statutory Ambiguity in Favor of 

Competition 

The terms "channel" and "multichannel video programming distributor" are not 

ambiguous. As discussed above, in the context of the 1992 Cable Act "channel" 

unambiguously refers to a stream of pre scheduled video programming, and a 

multichannel video programming distributor is any provider who provides this 

service, such as a cable system, DBS, or an online provider such as Sky Angel. 

However, if the Commission finds the statute and the legislative history 

insufficient to demonstrate whether an online video service can be defined as an 

MVPD, the Commission has the authority to make that clarification. Under the 

Commission's Chevron deference it has the authority to interpret the relevant terms 

42 To be sure a proper reading of "MVPD" or "channel" is not the end ofthe legal 

work that the CommisSion will have to do to accommodate online MVPDs-the 

Commission may have to update some of its MVPD-wide rules, such as CableCARD 

support, 47 C.F.R. §§ 76.1200-76.1210, and certain technical requirements, e.g. 47 

C.F.R. § 76.610, to better ensure that Congressional intent is carried out with respect 

to this new technology. But such ministerial fixes are well within the Commission's 

authority and are a necessary part of carrying out the pro-competitive goals of the 

1992 Cable Act 

22 
211 


87023.167

and find that online services can be treated as MVPDs. Congress delegated power to 

the Commission to adopt the interpretation of ambiguous language that best 

furthers the public interest goals of the Communications Act. As the Supreme Court 

explained, "[i]f Congress has explicitly left a gap for the agency to fill, there is an 

express delegation of authority to the agency to elucidate a specific provision of the 

statute by regulation. Such legislative regulations are given controlling weight 

unless they are arbitrary, capricious, or manifestly contrary to the statute. 

Sometimes the legislative delegation to an agency on a particular question is implicit 

rather than explicit."43 Here, if the Commission finds that the operative definitions 

do not definitively answer whether online systems that offer channels of 

programming are MVPDs, it should use its implicit delegation of authority to clarify 

the terms in a way that gives effect to Congress's pro-competitive intent. 

B. The Commission Can Use Its Ancillary Authority to Promote Video 

Distribution Competition 

Furthermore, even if the Commission adopts a reading of statutory language that 

puts online services outside of the definition of "MVPD," it still has ancillary 

authority to determine that online services will be treated as if they were MVPDs. 

Congress expressly gave the Commission power "to perform any and all acts, make 

such rules and regulations, and issue such orders, not inconsistent with this Act, as 

may be necessary in the execution of its functions."44 There are two conditions for 

ancillary jurisdiction and both are satisfied here.45 First, the Commission's general 

43 Chevron U.S.A., Inc. v. Natural Res. Def Council, 467 U.S. 837, 843-44 (1984). 

4447 U.S.C. § 154(i). See United States v. Southwestern Cable Co., 392 U.S. 157 (1968). 

45 See Com cast Corp. v. FCC, 600 F.3d 642, 646 (D.C. Cir 2010); American Library 

Ass'n v. FCC, 406 F.3d 889, 691-92 (D.C. Cir. 2005). 

23 
212 


87023.168

jurisdictional grant under Title I covers all "communication by wire or radio,"46 

which includes online delivery of video programming, and (2) the regulations are 

reasonably ancillary to the Commission's effective performance of its statutorily 

mandated responsibilities because of the close relationship between online services, 

broadcasting, and facilities-based MVPDs. In Southwestern Cable, the Supreme Court 

explained that the Commission did not have express authority over cable television 

under the then-existing Communications Act, but the Commission could regulate 

cable television to the extent "reasonably ancillary to the effective performance of 

the Commission's various responsibilities for the regulation of television 

broadcasting."47 Just as cable television was reasonably ancillary to regulating 

television broadcasting, online video services are reasonably ancillary to regulating 

MVPDs. Therefore, the Commission has the discretion to treat online services that 

offer MVPD services as though they were MVPDs even in the event it chooses to read 

the relevant statutes in a way that excludes online services. 

III. The Commission Should Update Its POlicy Framework for Online and On 

Demand Video 

A. Section 628 Prohibits Anti-Competitive Actions By an MVPD Against Any 

Video Distributor 

The Commission should use its authority over the video programming 

distribution market to protect online video distribution generally, by prohibiting 

MVPDs from behaving anticompetitively in ways that harm any video distributor, 

whether or not it is an MVPD. Section 628 of the Communications Act provides 

authority for this. This Section bans any actions "the purpose or effect of which is to 

46 47 U.S.c. §§ 151, 152. 

47 Comcast, 600 F.3d at 646 citing Southwestern Cable Co., 392 U.S. at 178. 

24 
213 


87023.169

hinder significantly or to prevent any multichannel video programming distributor 

from providing ... programming to subscribers or consumers."48 The close 

connection between the markets for MVPD and non-MVPD video distribution mean 

that anticompetitive actions taken against an non-MVPD would likely have a 

deleterious effect on the ability of a competitive MVPD to offer programming-for 

example, by increasing its costs, or inhibiting the ability of an MVPD to offer 

programming on demand or online. The Commission and the courts have 

traditionally given Section 628 a "broad and sweeping"49 reading that gives the 

Commission the authority to protect video competition as necessary. The 

Commission should follow this precedent and find that Section 628 prohibits anticompetitive actions by MVPDs against video distributors generally. 

B. The Commission Should Consider the Policy Implications of the Increasing 

Popularity of On Demand Video 

Finally, as more video moves online and as on-demand services have become an 

ever-greater part of even traditional MVPDs' offerings, it seems apparent that 

"channel"-oriented video consumption may, in the near future, no longer be the 

dominant way that viewers access some forms of programming. Some kinds of 

"must-see" programming may move solely to on-demand video and thus fall outside 

the Commission's competition rules. While the program access proceeding provides 

a vehicle to address some of these issues that docket is far more complex and deals 

with many other issues. Thus, in a further Notice of Inquiry in this docket, the 

Commission should begin to consider the ways in which its competitive framework 

48 47 U.S.C. § 548. 

49 Cablevision v. FCC, 649 F.3d 695, 704 (D.C. Cir. 2011) (citing Nat Cable & 

Telecommunications Assoc. v. FCC, 567 F. 3d 659, 664 (D.C. Cir. 2009)}. 

25 
214 


87023.170

is challenged by the rise of on-demand video, and what steps it can take to ensure 

that the video market becomes more competitive. 

CONCLUSION 

For the reasons above, the Commission should find that online services that offer 

multiple channels of video programming fall within the statutory definition of 

"multichannel video programming distributor." 

May 14, 2012 

26 

Respectfully submitted, 

John Bergmayer 

Senior Staff Attorney 

PUBLIC KNOWLEDGE 
215 


87023.171

Before the 

FEDERAL COMMUNICATIONS COMMISSION 

Washington, DC 20554 

In the matter of 

Interpretation ofthe terms "Multichannel 

Video Programming Distributor" and 

"Channel" as Raised in Pending Program 

Access Complaint Proceeding 

) 

) 

) 

) 

) 

) 

) 

) 

MB Docket No. 12-83 

REPLY COMMENTS OF PUBLIC KNOWLEDGE 

John Bergmayer 

Senior Staff Attorney 

Harold Feld 

Legal Director 

KaraNovak 

Staff Attorney 

Public Knowledge 

1818 N St. NW, Suite 410 

Washington, DC 20036 

June 13, 2012 
216 


87023.172

TABLE OF CONTENTS 

I. There is No Requirement That an MVPD Must Provide a Complete Physical 

Transmission Path to a Viewer-Especially Since Such a Requirement Might 

Exclude Traditional MVPDs ...................................................................................................... 5 

II. The Proper Reading of "MVPD" Does Not Affect Cable-Specific Regulation ............. 7 

III. Although A Decision For Sky Angel Will Lower Barriers To Entry and Spur 

Competition, The Cost of Programming and Other Obligations Associated With 

MVPD Status Will Still Limit Entry ......................................................................................... 8 

IV. The Bureau Should Refer the Matter En Bane to the Commission ifthe Bureau 

Finds That "MVPD" and "Channel" are Ambiguous Because the Bureau Lacks 

Delegated Authority to Decide Novel Issues of Law ....................................................... 10 

ii 
217 


87023.173

INTRODUCTION AND SUMMARY 

The commenters in this proceeding have put forth a variety of legal and policy 

arguments both for and against the Commission recognizing that certain online 

providers can be multichannel video programming distributors (MVPDs). Certain 

misconceptions seem common among many commenters opposed to this procompetitive action. These reply comments will briefly address these concerns as 

well as addressing related matters. 

First, even supporter's of the Media Bureau's initial interpretation that provision 

of multiple, physical conduits to the home similar to 1984-style analog cable 

channels is the sine qua non of MVPD status concede that there is nothing in the 

plain language of the statute that compels such an interpretation.1 Not only-as 

Public Knowledge, DirecTV, and AT&T observed in their initial comments-would 

such an interpretation would exclude many existing MVPDs, it would require the 

FCC to make constant arbitrary distinctions as to what does or doesn't constitute a 

"transmission path" and how much of the transmission path must an entity provide 

to win MVPD status. How would the FCC distinguish, for example, Sky Angel's 

physical facilities at the beginning of its transmission path where it receives the 

programming and the box it provides users to decode the programming from, for 

example, a DBS provider leasing a transponder on a satellite and using the "public 

airwaves" to transmit programming to a satellite receiver dish? Why is transmission 

1 Comments of Comcast in MB Docket No. 12-83 (May 14, 2012), at 8 (asking the 

Bureau to disregard the "untidiness" of the statutory language because "the 

intention was plain and universally understood"). Comcast's argument is somewhat 

undercut, however, by its insistence that this "plainly understood" meaning applied 

only to DBS, when the statute explicitly states otherwise. Id. 

3 
218 


87023.174

of programming to cable head ends via satellite permissible, but transmission 

through the Internet "cloud" is not? Will Verizon Wireless become an MVPD if it 

offers subscribers an option to stream Time Warner Cable's video service, because it 

is now Verizon Wireless offering the "channel"? 

It is far more sensible, and more in keeping with both the statutory language and 

the Legislative intent, to use the functional definition of MVPD urged by PK and 

others. The interpretation urged by the cable incumbents invites arbitrary 

distinctions that will only increase confusion and chill innovation and investment as 

the market increasingly embraces digital technologies. 

Second, nothing in this proceeding would impact cable-specific regulation nor 

would Sky Angel or similar MVPDs acquire cable-specific obligations. Comcast's 

inexplicable but undoubtedly sincere concern that its would-be rivals will be 

crushed by the unbearable burdens that only a facilities based provider can endure 

is touching, but unwarranted.2 Likewise, the somewhat more understandable 

concern from content providers with regard to preserving retransmission consent 

revenues, or from existing online tech companies that they will be transformed into 

MVPDs, is equally unwarranted. 

On the other extreme, certain existing incumbents argue that a finding for Sky 

Angel will lower the barriers to competition and unleash competition "disruptive" to 

existing industry arrangements is somewhat more substantive. Accordingly, they 

argue for a definition that will suitably shackle new entrants and preserve the status 

quo. While PK wishes it could share the optimistic view of some commenters that 

2 Comcast Comments at 10-13. 

4 
219 


87023.175

the barriers to entry will drop so low that anyone could start a competing MVPD,3 

the cost of programming and other factors seem likely to keep out many would-be 

competitors. 

Section 628 and the 1992 Act generally were intended to facilitate precisely the 

kind of "disruptive" competition these incumbents fear. It does not, as the 

incumbents suggest, provide free programming. It does not even provide the kind of 

price-control subsidy cable operators enjoy under the pole attachment rules. It 

simply gives those online distributors that want to provide MVPD services a level 

playing field on which to compete. The FCC should honor the Congressional intent to 

promote such "disruptive" competition by adopting a non-facilities based definition 

of "MVPD." 

Finally, if the Bureau determines that "MVPD" and "channel" are ambiguous, it 

should refer the matter en bane to the Commission because the Bureau does not 

have the authority to decide novel questions of law. 

I. There is No Requirement That an MVPD Must Provide a Complete 

Physical Transmission Path to a Viewer-Especially Since Such a 

Requirement Might Exclude Traditional MVPDs. 

The law does not require that an MVPD must provide the entire "transmission 

path" that takes service to the customer, and arguing otherwise leads to absurd 

results. Syncbak is correct to observe that most ISPs do not provide a complete 

transmission path to a consumer's home: the last step of an Internet connection is 

typically provided over user-provided WiFi or ethernet.4 Similarly, the last step of a 

cable "transmission path" may be home wiring provided by the subscriber or 

3 Comments of Cablevision in MB Docket No. 12-83, at 4 (May 14, 2012). 

4 Comments ofSyncbak in MB Docket No. 12-83, at 8-9 (May 14, 2012). 

5 
220 


87023.176

building owner and not over wires provided by a cable operator. Homes and 

apartment buildings, for example, may be built with coaxial wiring pre installed. 

Furthermore, cable systems have historically not provided "end to end" 

transmission of programming-leased satellite transmission capacity and other 

means are often part of the transmission path. And as MVPDs increasingly provide 

services to subscribers "over the top" -through video streaming apps, initiatives 

like TV Everywhere, and so forth-it becomes even more difficult to hold on to a 

requirement that MVPDs provide "transmission" as well as content.s 

These issues illustrates the problems that arise from an overly physicalistic view 

of a "channel"-e.g., suddenly a cable provider is not an MVPD-and argues against 

the Bureau creating a non-statutory requirement that MVPDs must provide a 

"transmission path," however conceived. Under this supposed "plain meaning" of 

the statute, the Commission will increasingly be required to make and justify 

arbitrary distinctions over what physical facilities an MVPD must provide. Is it 

sufficient that Sky Angel has physical facilities where it receives satellite distributed 

programming and transmits this to subscribers, who must have a physical box to 

decode the channels? It is hard to distinguish this from providers using wireless 

transmission, such as Wireless Cable providers and DBS providers, except that Sky 

Angle uses the Cloud and DBS provider use the public airwaves. 

Such an interpretation would also raise questions where a wireless provider 

such as Verizon Wireless offers a video service. If what matters is the physicality, 

S Also, as PK argued in its initial comments, there is no reason to conclude that 

wireless services such as DBS provide a transmission path to consumers. Radio 

broadcasting does not involve any sort of physical "path." 

6 
221 


87023.177

not the nature of the programming, then Verizon Wireless' Viewdini service would 

appear to be an MVPD service because it aggregates multiple "video programming" 

which it provides through wireless channels. But Sky Angel, which actually pays to 

acquire programming and which maintains its own facilities, would not be an MVPD. 

This obviously absurd result-and resulting confusion-is best avoided by adopting 

a definition of MVPD that relies on what consumers commonly understand as a 

programming channel rather than on artificial distinctions not found in the statute. 

Nevertheless, to the extent that the Bureau does decide to impose such a 

requirement, there is still no reason that online services cannot qualify as MVPDs. 

Syncbak is further correct that online services, as much as traditional cable systems, 

can be viewed as providing "transmission paths" to viewers' homes. In the case of 

online MVPDs, the transmission paths are composed of multiple physical and logical 

links. As PK argued in its comments,6 there is no requirement that an MVPD provide 

a complete physical transmission path to a viewer-especially since such a 

requirement might exclude many traditional MVPDs. Thus the recognition that 

logical links would satisfy any transmission path requirement settles the issue that 

online services can qualify as MVPDs. 

II. The Proper Reading of"MVPD" Does Not Affect Cable-Specific 

Regulation. 

As Public Knowledge (PK) discussed in its comments/ the statute and 

Commission regulations use the word "channel" differently in different contexts. 

Thus, if the Bureau does hold that an online service can be an MVPD and finds that 

6 Comments of Public Knowledge in MB Docket No. 12-83, at 10 (May 14, 2012). 

7 Comments of Public Knowledge at 2-15 (May 14, 2012). 

7 
222 


87023.178

the word "channel" in the definition of MVPD does not refer to a specific physical 

transmission path, there would be no effect on any provisions that plainly do use the 

word channel to refer to a communications path and not to programming. In 

particular, when the statute speaks of "channel capacity," it is apparent that 

Congress intended the phrase to refer to capacity and not programming.s 

Thus, what the Bureau does in this context will have no effect on rules about 

public, educational, or governmental (PEG) use of cable systems (nor on the 

question of who may qualify as a cable system as opposed to the broader category of 

MVPD). Nor will it impact franchise fees, pole attachment rates, or any other 

obligations or privileges uniquely assigned to the cable industry. The argument that 

adoption of a definition of MVPD that would somehow alter the regulatory status of 

existing cable systems, or that Sky Angel or other MVPDs using broadband to bring 

programming to the home of the viewer would find themselves subject to cablespecific regulations, is utterly unfounded. 

III. Although A Decision For Sky Angel Will Lower Barriers To Entry and 

Spur Competition, The Cost of Programming and Other Obligations 

Associated With MVPD Status Will Still Limit Entry. 

Cablevision is representative of commenters that urge the Commission to avoid 

the disruption that would stem from clarifying what services are MVPDs. It writes: 

De-coupling MVPD status from facilities ownership or control would 

effectively enable anyone to leverage the offering of a handful of amateur 

video clips into a right to demand access to high quality programming 

networks, a change of such far-reaching consequences for the video 

distribution and programming industries that it cannot be the correct 

interpretation of the term.9 

8 See 47 U.S.C. § 531. 

9 Comments of Cablevision in MB Docket No. 12-83, at 4 (May 14, 2012). 

8 
223 


87023.179

Because the notice primarily raised issues of statutory interpretation, it is not 

initially clear what weight the Bureau should give such concerns. Here, Congress has 

created a broad category (multichannel video programming distributors) that 

unambiguously includes online providers that offer content via "channels," and the 

Bureau has no choice but to give effect to Congressional intent. Standard tools of 

statutory interpretation, including consulting the legislative history to the extent 

that it is necessary to clarify Congressional intent, suffice. 

Thus, in some respects, Cablevision's concern is simply irrelevant. But when 

considering that Congressional intent to improve competition is clearly concordant 

with good policy, the issues Cablevision raises become relevant because the "harm" 

that Cablevision foresees is actually in the public interest. The "far-reaching 

consequences" it complains of are nothing more than the salutary effects of 

competition. Anyone should be able to start an MVPD. Nothing the Bureau does 

would somehow give online providers content for free or on terms that are 

somehow more favorable than those Cablevision itself enjoys-online MVPDs will 

have capital and content costs like any others. 

The regulatory implications of clarifying who may be an MVPD may be profound. 

While none of the MVPD-related statutes raise any problems, the Commission will 

have to update many of its implementing rules to account for the full technological 

variety of different kinds of MVPDs. 10 But contrary to some commenters, the results 

10 One issue the Commission will have to grapple with relates to geography. An 

online MVPD, of course, has nationwide footprint like satellite, rather than a local 

footprint like cable. If such an MVPD carries a broadcast signal, should it only be 

allowed to make that signal available to its original market? Why should the 

Commission extend legacy requirements that stem from the physically local nature 

9 
224 


87023.180

of this clarification will not simply be a boon for online operators (and consumers), 

since there are regulatory obligations as well as benefits that attend MVPD status. 

As the Bureau summarized: 

The regulatory benefits of MVPD status include the right to seek relief under 

the program access rules and the retransmission consent rules. Among the 

regulatory obligations of MVPDs are statutory and regulatory requirements 

relating to program carriage, the competitive availability of navigation 

devices (including the integration ban), the requirement to negotiate in good 

faith with broadcasters for retransmission consent, Equal Employment 

Opportunity ("EEO") requirements, closed captioning and emergency 

information requirements, various technical requirements (such as signal 

leakage restrictions), and cable inside wiring requirements. I I 

Given this array of regulatory obligations, the choice to become an online MVPD is 

not an easy one. In addition to capital and funding the entity must be willing to 

operate in a regulated environment. But since entities like Sky Angel have shown 

they are willing to do this, the Commission's rules should not prevent them from 

providing a dose of healthy disruption to the video market. 

IV. The Bureau Should Refer the Matter En Bane to the Commission if the 

Bureau Finds That "MVPD" and "Channel" are Ambiguous Because the 

Bureau Lacks Delegated Authority to Decide Novel Issues of Law. 

PK does not concede that the definition of MVPD or channel is ambiguous 

because the evidence so strongly suggests a technology-neutral reading. 

Nevertheless the very existence of this proceeding shows that these definitions are, 

at least, controversial. If the Bureau does decide that the relevant terms are 

of broadcast and cable to the online world? See Comments of M3X Media in MB 

Docket No. 12-83, at 7-9 (May 14, 2012) (initiating this discussion). 

11 Media Bureau Seeks Comment on Interpretation ofthe Terms "Multichannel 

Video Programming Distributor" and "Channel" as Raised in Pending Program 

Access Complaint Proceeding, Public Notice, DA 12-507, ~2 (Mar. 30, 2012). 

10 
225 

Æ 


87023.181

ambiguous, PK urges the Bureau to refer the matter en bane to the Commission, 

since the Bureau lacks the delegated authority to decide novel issues of law. 12 

Ambiguous terms in the Communications Acts represent implicit delegations of 

authority from Congress to the Commission to "fill in the gaps" with its policy 

expertise.13 As PK discussed at length in its comments the sound policy in this case 

favors competition and not unnecessary technology-drawn barriers to entry. Thus if 

the Commission finds it necessary to clarify an ambiguous term where 

Congressional intent is not clear, it should do so in the only way that benefits the 

public by finding that online providers can be classified as MVPDs. 

CONCLUSION 

For the reasons above and in PK's initial comments, the Commission should find 

that online services that offer multiple channels of video programming fall within the 

statutory definition of "multichannel video programming distributor." 

Respectfully submitted, 

/s John Bergmayer 

Senior Staff Attorney 

Harold Feld 

Legal Director 

KaraNovak 

Staff Attorney 

PUBLIC KNOWLEDGE 

1818 N S1. NW, Suite 410 

Washington, DC 20036 

June 13,2012 

12 See 47 CFR § O.283(c) (matters that present novel questions oflaw, fact or policy 

that cannot be resolved under existing precedents and guidelines must be referred 

to the Commission en bane, rather than the Chief of the Media Bureau, for 

disposition). 

13 See Comments of Public Knowledge at 23, citing Chevron U.s.A., Inc. v. Natural Res. 

De! Council, 467 U.S. 837, 843-44 (1984). 

11