Comcast Already Crying That FCC Set-Top Box Proposal Violates Federal Law

Image courtesy of Knight725

Within minutes of FCC Chair Tom Wheeler unveiling his final proposal for reforming the multibillion-dollar set-top box market, Comcast was already firing back, accusing the Commission of violating the law and hinting at a legal challenge to come.

Sena Fitzmaurice, Comcast’s VP Government Communications starts off with a backhanded compliment, applauding Wheeler for abandoning his “discredited proposal to break apart cable and satellite services,” apparently referring to the initial plan to require pay-TV companies allow third-party manufacturers to create boxes that would do the same (and more) as the overpriced hardware most of us are forced to “lease” from our cable and satellite companies.

But this barely positive statement from Comcast is quickly left in the dust, as Fitzmaurice goes on to call Wheeler’s proposal — requiring pay-TV providers to create free-to-use apps that work on multiple devices — a “tortured approach” that is “equally flawed.”

The Comcast statement also contends that the FCC-mandated apps would “stop the apps revolution dead in its tracks by imposing an overly complicated government licensing regime and heavy-handed regulation in a fast-moving technological space.”

With all this rhetorical chest-thumping out of the way, Fitzmaurice begins to lay out what will likely be the underlying argument of the inevitable courtroom challenge to the proposal, arguing that it “violates the Communications Act and exceeds the FCC’s authority.”

You don’t often see a corporate response — especially one released so quickly on the heels of an announcement — actually cite a specific law. Similarly, the whole “exceeding authority” thing is a frequent claim whenever a telecom company wants to challenge a new FCC rule. It was the core argument of the many lawsuits (both the successful and unsuccessful ones) against net neutrality, and a key claim in North Carolina and Tennessee’s recent appeals court victory over the FCC’s attempt to expand municipal broadband.

Moving on, Fitzmaurice argues that Wheeler’s proposal, “perpetuates many of the concerns that led hundreds of Members of Congress, content creators, diversity and civil rights organizations, labor unions, and over 300,000 individuals to object to his original flawed approach, including problems with privacy, copyright protection, content security, and innovation.”

What that statement doesn’t mention is Comcast and the industry’s involvement in the astroturfing campaign that spread ridiculous fictions, many of which Fitzmaurice continues to reference in Comcast’s response. It’s easy to get people worked up when industry-backed groups just make things up, like claiming that third parties would be able to reorganize channel listings, or pick and choose which channels were carried.

Fitzmaurice also fails to address the issue of how many of those “concerned” voices were the result of more than $20 million in lobbying by the cable industry.

The fact is, the pay-TV industry makes a huge amount of money from set-top boxes. The lawmakers who first brought this issue to the FCC’s attention estimated — because the companies refused to provide reliable revenue data — that the industry brings in $20 billion a year from box fees.

Industry supporters have claimed that this is a huge overstatement, but even a calculation from an industry-friendly analyst still puts the figure at around $13 billion annually.

Yes, pay-TV providers have increasingly been offering their users apps that allow them to watch content online and on mobile devices, but almost all customers still need at least one cable box that they can usually only get by paying their provider a monthly fee.

The inevitable courtroom battle — whether it comes from Comcast, another telecom, or some industry association — over the FCC app proposal should be appointment viewing. We can’t wait to binge-read the opening briefs.