Hit the Pause Button

November 18, 2016

On December 18, 2008, Senator Jay Rockefeller and Congressman Henry Waxman, two of the key Democratic leaders in the Senate and House, shortly after the election of Barack Obama, wrote to the Republican Chairman of the FCC calling for the Commission to not push major new initiatives during the then-transition period. They stated that to do otherwise would be “counterproductive” particularly in regard to “especially complex and controversial items that the new Congress and new Administration will have an interest in reviewing.” The recent elections now have created a very similar circumstance.

It seems highly advisable and appropriate for the current Administration and independent agencies to not impose major novel policy initiatives on the incoming new political regime. We, of course, are focused on items that will substantially impact advertising. The Federal Communications Commission (FCC), in particular, has been struggling for months to adopt rules regarding set-top boxes. The FCC seemed ready to require pay-TV providers to develop apps that would be licensed to third parties for use on their own networks. The FCC’s proposed rule envisaged a major ongoing regulatory role for the FCC to determine whether agreements regarding these licenses would be “reasonable.”  

In several filings at the FCC, ANA, along with many other groups, emphasized that any revised FCC proposal – utilizing apps or other means to create competition in the set-top box market – must ensure that advertising is transmitted whole and intact, so that contractual terms can be honored and enforced. ANA pointed out that advertising agreements contain specific and carefully-negotiated elements, and that any licensing provision must make sure that the third party “steps into the shoes” of the original pay-TV provider regarding those contractual obligations, agreements and terms.

Any undermining of these arrangements would threaten the financial underpinnings provided by advertising that has led to the extraordinary rapid growth of cable offerings and would jeopardize both existing and new programming. This is an example of the kind of complex and controversial issues that certainly should be delayed until a new majority at the FCC is installed, and until the new Administration is able to assess the merits of the current proposal. Now important members of Congress with direct responsibility for overseeing the FCC have weighed in. Not surprisingly, the Chair of the full House Energy and Commerce Committee, and its Telecommunications Subcommittee, and the Chair of the Senate Commerce Committee have urged that the FCC limit its activities in these next weeks to items that are required to be done by law, and to advancing the already-commenced broadcast auction proceeding.  

These requests should be carefully heeded. This delay would be the appropriate step to take for the interest of both consumers and businesses right now.

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