With a Notice of Proposed Rulemaking (“NPRM”) released May 15, 2014, the FCC is focusing again on the highly controversial subject of net neutrality. The proposed regulations include enhanced transparency rules, modification of the no-blocking rule, and prohibitions on commercially unreasonable practices.

Initial comments are due by July 15, 2014 with reply comments to follow by September 10, 2014.

Background. In December 2010, the FCC adopted its Open Internet Order imposing regulations, for the first time, on providers of broadband Internet access service.  Verizon challenged the 2010 rules, resulting in a January 14, 2014 decision by the U.S. Court of Appeals for the D.C. Circuit, striking down the no-blocking and the no unreasonable discrimination rules.

The NPRM

            Transparency.  The 2010 transparency rule remains in effect, but the FCC seeks comment on an enhanced regulation requiring providers to tailor disclosures based on specific needs of affected parties, including end users and providers of Internet content, applications and services (so-called “edge” providers).  The FCC also seeks comment on the form and content of disclosures, including whether to require a standardized form.

No-Blocking.  The FCC proposes reinstating the 2010 rule, but with some clarification.  The FCC proposes adoption of the same text as the 2010 rule, under which wireline broadband providers cannot block legal Internet content, applications, services, and non-harmful devices subject to reasonable network management, with the clarification that the rule requires a minimum level of access to be provided while permitting individualized bargaining for enhanced services.  This suggests transactions like the one reported between Comcast and Netflix would be permitted under the no-blocking rule.  

Commercially Unreasonable Practices.  The FCC proposes a new regulation to replace the invalidated 2010 rule banning discriminatory practices.  The NPRM now proposes instead a prohibition on “commercially unreasonable” practices (as opposed to “unreasonable discrimination”) and seeks comments on the factors used to evaluate commercial reasonableness.  This rule also may allow broadband Internet providers greater flexibility to negotiate arrangements with Internet edge providers for paid prioritization.  The new rule would still permit providers to serve customers and carry traffic on an individually negotiated basis.  Agreements would be subject to case-by-case evaluation, relying on a “totality of the circumstances” test by the Commission for commercial reasonableness.

            The American Cable Association will be very active in the proceedings, assisted by Cinnamon Mueller partner Barbara Esbin.  This is a very important issue for broadband Internet providers, and all interested parties are encouraged to participate.  

If you have questions about this NPRM, filing comments, or the proposed transparency regulations, please contact Barbara Esbin at (202) 872-6811 or besbin@cinnamonmueller.com, or Chris Cinnamon at (312) 372-3930 or cccinnamon@cinnamonmueller.com.

New FCC Retransmission Consent Negotiation Restrictions Become Effective June 18, 2014

            Beginning June 18, 2014, non-commonly owned top four-ranked broadcast television stations (“Top Four”) in the same DMA will be prohibited from jointly negotiating retransmission consent agreements. 

This prohibition springs from an FCC Order, released on March 31, 2014, which declared that a Top Four t station owner commits a per se violation of its statutory duty to negotiate retransmission consent in good faith if (i) the station jointly conducts retransmission consent negotiations with another Top Four station, and (ii) the stations are not commonly owned, operated or controlled, and serve the same DMA.  A Top Four station is one that is ranked among the top four in a DMA, based on the most recent all-day Nielsen audience share measurement.

Specifically, the prohibition prohibits the following actions:

• A Top Four station delegating negotiating authority to another Top Four station;
• Two or more Top Four stations delegating authority to a common third party (e.g., a consultant); and
• Top Four stations entering into any informal, formal, tacit or other agreement and/or conduct that signals or is designed to facilitate collusion regarding retransmission terms or agreements between them.

Importantly, while the Order does not invalidate existing agreements that have been jointly negotiated, it prohibits joint negotiations going forward even if an existing agreement call for such negotiations.

If you have questions about the FCC’s good faith rules, or retransmission consent negotiations in general, please contact Barbara Esbin at (202) 872-6811 or besbin@cinnamonmueller.com; Bruce Beard at (314) 394-1535 or bbeard@cinnamonmueller.com or Scott Friedman at (312) 580-8557 or sfriedman@cinnamonmueller.com.

FCC Acts on Must-Carry Complaints Filed by Low-Power Stations

            Last Friday, the FCC released two Orders covering must carry complaints filed by low-power television stations.  One station emerged victorious after providing evidence that it qualified for carriage; the other station’s complaint was denied after the cable operator provided evidence that the station did not provide a good quality signal.

Under the Cable Act and FCC’s rules, low-power stations have limited must carry rights.  To qualify for must carry, an LPTV must meet all of the following six requirements:

• Operational standards.  The station must meet minimum operational standards applicable to full-power stations and a range of public interest programming obligations.
• Geographic proximity.  The station can be no more than 35 miles from the cable system's principal headend.
• No full-power station.  There can be no full-power broadcast station licensed to any community in the county served by the cable system.
• Population threshold.  Both the community of license and the franchise area must be located outside the largest 160 metropolitan statistical areas.
• Local programming required.  The station must provide local news or information not provided by full-power stations carried on the system.
• Good quality signal.  The station must meet the same signal strength requirements as a full power commercial station.  Unlike a full-power station, a low-power station cannot cure a signal strength deficiency solely through a commitment to provide specialized equipment.

If you have any questions about low-power stations’ must carry rights, or must carry rights in general, please contact Scott Friedman at (312) 580-8557 or sfriedman@cinnamonmueller.com.