Charter/Spectrum Wants to Charge Netflix, Others Interconnection Fees

Charter Communications, owner of Spectrum cable, has petitioned the Federal Communications Commission to allow it to charge interconnection fees (or peering) to over-the-video services such as Netflix, Amazon Prime Video, HBO Max, Disney+ and Hulu broadband.

The fees were in part the genesis behind the Obama-era Net Neutrality guidelines, which specifically prohibited Internet Service Providers from up-charging streaming video services for faster access into subscriber homes.

Charter has been prohibited from charging fees as part of an anti-trust agreement with federal regulators when it acquired Time Warner Cable and Bright House Networks in 2016.

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The cable operator now claims that with online video booming and the FCC under new authority, it should be allowed to charge fees to third-party platforms delivering content on its broadband network similar to the interconnection fees charged by Comcast, Verizon and AT&T. Charter also wants the FCC to do away with its ability to impose data caps on subscribers.

“The online video marketplace has become extremely competitive,” Charter said in the June 17 petition. “Online video distributors have seen record-shattering growth and increased strength across all performance indicators, including number of subscribers, amount of content available, number of platforms, streaming hours, and revenue. In fact, the online video distribution marketplace is almost unrecognizable compared to what existed in 2016.”

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Charter contends that to ensure efficient allocation of its resources to accommodate the “explosive growth” in broadband usage, many Internet providers have incorporated data caps. It claims data caps imposed by companies such as Comcast, AT&T, Cox and Altice8 has not stifled the growth of SVOD services.

“In fact, the opposite is true: OVD services are thriving and growing at an unprecedented rate. In other words, the market is working,” Charter wrote.

FCC: Americans Lacking Broadband Access Declines

The number of people lacking access to fixed high-speed Internet access has declined more than 30%, according to new data from the Federal Communications Commission.

This comes as welcome news to Americans living in rural parts of the country looking to stream Netflix, Amazon Prime Video, Disney+ and Redbox TV, among other over-the-top video services.

Section 706 of the Telecommunications Act of 1996 requires that the FCC determine annually whether advanced telecommunications capability, i.e. broadband access for streaming video, music, data, is being deployed to all Americans “in a reasonable and timely fashion.”

The FCC’s “Broadband Deployment Report” found that for the third consecutive year advanced telecommunications capability is being deployed on a reasonable and timely basis.

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The report found the number of Americans lacking access to fixed terrestrial broadband service at 25/3 Mbps continues to decline, going down by more than 14% in 2018 and more than 30% over the course of 2017 and 2018. The number of Americans without access to 4G Long Term Evolution (LTE) mobile broadband with a median speed of 10/3 Mbps based on Ookla data declined approximately 54% between 2017 and 2018.

The vast majority of Americans — more than 85% — now have access to fixed terrestrial broadband service at 250/25 Mbps, a 47% increase since 2017, with the number of rural Americans having access to 250/25 Mbps fixed terrestrial broadband service more than tripling between 2016 and 2018.

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“Under my leadership, the FCC’s top priority is to close the digital divide, and I’m proud of the progress that we have made,” chairman Ajit Pai said in a statement. “In 2018 and 2019, the United States set consecutive records for new fiber deployment, with the number of homes passed by fiber increasing by 5.9 million and 6.5 million, respectively.”

Pai said growing up in rural Kansas drove home the need for access to new technology in communications and technology. Since being appointed by President Trump to chair the FCC, Pai has made deregulation a cornerstone of his tenure — including spearheading the overturn of Obama-era “net neutrality” guidelines mandating equal access to broadband networks for video services.

“I have a deep commitment to expanding broadband to all corners of the country,” he said. “That’s why we’ve taken aggressive steps to remove regulatory barriers to broadband deployment and reform our ‘Universal Service Fund’ programs.”

The gains have been fueled in part by the broadband industry’s $80 billion investment in network infrastructure in 2018, the highest annual amount in at least the last decade. In 2019 alone, fiber broadband networks became available to roughly 6.5 million additional homes, the largest one-year increase ever, with smaller providers accounting for 25% of these new fiber connections.

But despite these gains, Pai said the job isn’t done affording all Americans have access to digital “opportunity.”

“I look forward to commencing Phase I of our ‘Rural Digital Opportunity Fund’ auction in October, which will bring high-speed broadband to millions of currently unserved Americans,” he said.

FCC’s Pai Says Streaming Video Competition Negates Need for Pay-TV Rate Regulation

Ongoing proliferation of over-the-top video services has created an effective argument against continuing basic rate regulation on pay-TV operators,  says FCC Chairman Ajit Pai.

In an Oct. 3 in blog post, Pai said increased availability of subscription streaming video services has established credible competition to pay-TV; and thereby negates the need to further regulate basic cable rates.

The Commission on Oct. 25 is set to address a request by Charter Communications seeking to recognize that AT&T’s bundled streaming video packages offered in Hawaii and Massachusetts are comparable to its cable TV packages.

FCC Chairman Ajit Pai

The 1992 Cable Act mandated basic rates in areas lacking effective competition in the video marketplace. Due to the evolving video landscape, rate regulation is now limited to certain parts of Hawaii and Massachusetts.

Pai would like to end that.

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“Charter is now subject to effective competition from AT&T’s streaming service,” he wrote. “Adopting this order would be a major step toward the Commission recognizing the realities of the modern video marketplace, and the increasingly important role that streaming services are playing in it.”

The move, which has been applauded by business groups, could redefine the way the government recognizes, taxes and regulates OTT video.

Federal attempts in 2015 to regulate streaming video were challenged by lawmakers eager to promote OTT investment and infrastructure in their districts.I

Indeed, Pai, who pushed the FCC to reverse its net-neutrality safeguards adopted under the Obama Administration, warned against regulating OTT video back in 2015.

“Some have proposed extending to over-the-top providers many of the rules that currently apply to cable operators and satellite providers, regulations that in many cases are over two decades old,” Pai told an industry group at the time.

“I strongly oppose this idea. Given the remarkable success of the over-the-top video industry — success driven in part by regulatory restraint — I don’t believe we should change our regulatory approach,” he said.

 

Federal Appeals Courts Upholds Net Neutrality Deregulation

The U.S. Court of Appeals for the D.C. Circuit Oct. 1 affirmed the basic principles of Republican-led efforts to deregulate net neutrality guidelines established during the Obama Administration.

The three-judge panel did rule against the FCC superseding state efforts to impose local guidelines where the federal government did not.

“We uphold the 2018 order, with two exceptions,” the court wrote. “The order failed to examine the implications of its decisions for public safety; the order does not sufficiently explain what reclassification will mean for regulation of pole attachments; and the agency did not adequately address petitioners’ concerns about the effects of broadband reclassification.”

Dubbed “2017 Restoring Internet Freedom,” the bill reclassified the Internet under less restrictive Title I provisions of the Communications Act of 1934 under President Franklin Roosevelt.

Under Title II provisions of the Communications Act approved by the FCC under Obama, commerce and video distribution on the Internet, including ISP distribution of broadband to consumers, was regulated more rigorously as a utility.

Conservatives argued net neutrality guidelines would negatively impact business investment, among other issues.

 

Studios Reportedly Back Private Sector 5G Spectrum Allocation

Next-generation 5G wireless technology continues to get a lot of attention (and hype) — notably as an enhanced distribution channel for mobile video entertainment.

Mobile data traffic worldwide is expected to increase from 28 exabytes monthly this year to 77 exabytes monthly by 2022, according to Statista. 5G is expected to add $2.7 trillion to the U.S. GDP by 2030.

Consumer awareness of the fifth-generation wireless technology successor has reached mainstream, according to The NPD Group. So too has government concern surrounding the security and allocation of increasingly coveted (and finite) spectrum (or megahertz) required to deliver 5G data.

The FCC reportedly is considering offering 5G wireless services through a government-backed network using existing and Department of Defense spectrum, an idea that would include repurposing current commercial bandwidth.

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This isn’t sitting well with some regulators, notably Federal Communications Commission board member Michael O’Reilly, a longtime champion of market-driven initiatives over government intervention/regulation.

“To call this [government 5G network] effort a trial balloon is insulting to balloons, as all the ideas mentioned have far less consistency than balloons, and more closely resemble a child’s bubbles,” O’Reilly wrote in a blog post last month.

Enter the C-Band Alliance (CBA), a lobbying group representing satellite operators it says represent “100%” of the C-band services currently provided in the United States.

The group sent the FCC a proposal it claims would “quickly clear” C-band spectrum and would pave the way toward the United States maintaining equilibrium with China and other countries in 5G wireless services.

The CBA advocates streamlining the allocation process of 200 MHz of C-band downlink spectrum to 18-to-36 months after the FCC finalizes repurposing satellite’s C-band spectrum for 5G service.

Specifically, the group says satellite operators would cover all costs to clear spectrum and to implement operations in the upper 300 MHz of the band.

“Compared to FCC-run spectrum auctions, which historically have taken as long as a decade, the CBA proposal can deliver valuable spectrum to the U.S. market years ahead of any alternative proposal,” the CBA wrote.

Satellite operators would also coordinate with domestic C-band users such as Hollywood studios, content holders and distributors to “repack hundreds of audio and video services” into the remaining 300 MHz.

Representatives from Disney, Viacom, Fox, CBS, Discovery and Univision, among others, reportedly met with the FCC advocating for speedier spectrum allocation.

Indeed, Disney said its ESPN unit last month used 143 C-band feeds in one day to produce its 24/7 sports content.

“No other distribution method matches C-band in ubiquity and reliability,” the studios wrote in a letter to the FCC. “Content companies and other programmers thus rely on the C-band as the principal means of delivering video to the many thousands of earth stations in the United States.”

Trump Administration Pledges to Veto Net Neutrality Bill

As expected, White House officials April 8 said they would recommend President Donald Trump veto House Democrats’ efforts to revive net neutrality guidelines enacted in 2015 by the Federal Communications Commission under President Obama.

The current FCC, under Trump-appointed chairman Ajit Pai, reversed the guidelines, favoring so-called “light touch” regulation.

Following the 2018 midterm elections, Rep. Mike Doyle (D-Pa.) introduced H.R. #1644 (Save the Internet) that would reinstate net neutrality classifying the Internet as a utility under Title II of the Telecommunications Act of 1934.

The bill, which has 197 co-sponsors, seeks to stop Internet service providers from enacting speed lanes for higher-paying Web traffic and throttling third-party competitive services.

The legislation is up for possible vote in the Democrat-control House as early as April 9. If passed, it would be reconciled in the Senate and then sent to Trump for his signature or veto.

The White House (and many Republicans) argue that the current FCC last year sought to “restore Internet freedom” by adopting so-called “light-touch” regulation that it said enabled the Internet and entrepreneurs to “thrive” for nearly two decades.

In a tweet, the Office of Management and Budget said that since the FCC reversed its position on net neutrality, the United States has risen to sixth from 13th in global fixed broadband download speeds.

It said ongoing rollout of fiber technology benefited from a change in the law, underscored by an increase in capital investment by $2.3 billion.

“H.R. 1644 would undermine this success by repealing the FCC’s current rule,” the OMB tweeted. “If H.R. 1644 were presented to the President, his advisors would recommend that he veto it.”

 

 

Lawmakers Introduce ‘Save the Internet’ Bill

As expected, Democratic lawmakers in the House and Senate March 6 introduced legislation aimed at overturning the FCC’s 2017 repeal of the 2015 Open Internet Order, or net neutrality.

Dubbed “Save the Internet Act,” the bill seeks to re-classify the Internet as a utility under Title II of the Telecommunications Act of 1934 prohibiting Internet service providers from blocking, throttling or creating fast lanes and slow lanes by charging extra fees to prioritize content.

“Since the FCC foolishly repealed net neutrality, we’ve seen a wild west where monopoly telephone and cable companies have been free to do what they want at the expense of consumers,” Michael Copps, a former FCC commissioner, said in a statement in support of the legislation.

Copp contends there exists evidence of broadband providers throttling speeds, degrading video quality, and creating service plans that favor their own content over competitors.

“The harms will only get worse the longer net neutrality remains repealed,” he said.

Jason Pye, VP of legislative affairs with FreedomWorks, a lobby group supporting small government, lower taxes and free markets, said repeal of net neutrality guidelines was an attempt to correct government overreach.

“This Democratic proposal is yet another solution in search of a problem,” said Pye. “Our Internet grew, innovated, and thrived under a light touch regulatory framework. The Democrats’ bill would inhibit future innovation and would only serve to increase big government control over the lives of everyday Americans.”

Regardless, the bill must pass Congress and then be signed by President Trump – a long shot considering Trump’s appointee to run the FCC – Ajit Pai – personally pushed for the net neutrality repeal.

 

 

FCC: Nearly Half of 22 Million Public Comments on Net Neutrality Fake

During the 2017 run-up to the Federal Communication Commission’s repeal of net neutrality guidelines enacted in 2015 during the Obama Administration, the agency solicited public comments on the proposed decision not to treat the Internet as a public utility.

The FCC on Dec. 14, 2017 voted 3-2 along party lines to nullify the Open Internet Order affirmed under previous chairman Tom Wheeler. In doing so, Internet service providers such as Comcast, AT&T, Verizon and Charter were no longer prohibited from charging online streaming services such as Netflix market rates for broadband access, among other issues.

In new FCC disclosures following Freedom of Information Act requests by The New York Timesand other media groups, it was revealed that nearly 11 million of the 22 million comments received online regarding net neutrality were fraudulent, including 500,000 comments received from Russian sources.

The revelation underscores the widespread influx and influence social media can have on more than national elections. Indeed, about 8 million fake comments originated from domain sites associated with FakeMailGenerator.com. Another 2 million comments used stolen identities.

FCC Chairman Ajit Pai, in a statement to Congress, claimed that much of the “overheated rhetoric” against his proposed net neutrality rollback originated from fraudulent sources. In fact, most of the authentic comments reportedly consisted of form-letter responses.

Regardless, the New York State Attorney General’s Office in October opened an investigation to the fake comments, including subpoenaing public action groups on both sides of the issue.

 

Nexstar Media Group Acquires Tribune Media Company for $6.4 Billion

Nexstar Media Group Dec. 3 announced it has entered into a definitive merger agreement with Tribune Media Company to acquire all outstanding shares of Tribune Media in a cash deal valued at $6.4 billion, including the assumption of Tribune Media’s outstanding ($2.3 billion) debt.

The transaction makes Irving, Texas-based Nexstar the largest local TV station owner in the country, including 216 stations in 118 markets – reaching approximately 39% of U.S. television households. Tribune also owns 31% stake in Food Network.

The combined entity will be one of the nation’s leading providers of local news, entertainment, sports, lifestyle and network programming through its broadcast and digital media platforms with annual revenue of approximately $4.6 billion.

Notable Tribune stations include WGN America in Chicago and KTLA in Los Angeles. WGN became one of the first local broadcasters to ink production deals for original (now cancelled) series, including “Salem” from 20thCentury Fox, “Manhattan” (Lionsgate), and “Underground” (Sony Pictures), among others.

The deal is expected to close by the third-quarter next year following regulatory approvals.

“Nexstar has long viewed the acquisition of Tribune Media as a strategically, financially and operationally compelling opportunity that brings immediate value to shareholders of both companies,” Perry Sook, CEO of Nexstar, said in a statement.

Sook said the transaction offers synergies ($160 million in the first year) related to the enhanced scale of the combined broadcast and digital media operations and increases the company’s audience reach by about 50%.

The deal follows the scuttled $3.9 billion merger attempt between Tribune and Sinclair Broadcasting Group, which imploded following allegations the politically conservative Sinclair would have positioned Tribune stations as far-right partisan mouthpieces.

The new transaction reflects a 15.5% premium for Tribune Media shareholders and a 45% premium to Tribune’s closing price on July 16, the day FCC Ajit Pai issued a statement regarding his intention to hold a hearing on the Sinclair offer.

The Nexstar/Tribune deal faces its own regulatory hurdles under the current FCC and Department of Justice, which together under the direction of the Trump Administration, have taken stronger approaches toward media mergers as seen in the DOJ’s ongoing appeal of the AT&T/Time Warner pact.

Indeed, Nexstar said it intends to divest certain TV stations necessary to comply with regulatory ownership limits and may also divest other assets it deems to be non-core.

 

 

U.S. Supreme Court Refuses to Hear Net Neutrality Appeals Court Ruling

The U.S. Supreme Court Nov. 5 declined to hear a case brought by the telecommunications industry and the Department of Justice seeking to reverse a lower appeals court ruling upholding Obama-era regulations that treated the Internet as a utility.

The Federal Communications Commission under President Trump reversed the regulations in 2017. Through the Obama-era guidelines were no longer in place, the Trump Administration and telecoms were hoping the Supreme Court would remove the precedent set by the 2016 U.S. Court of Appeals for the District of Columbia Circuit’s ruling that upheld them.

The Supreme Court’s lack of action on the case does not reverse the 2017 repeal of the net neutrality guidelines enacted in 2015, and leaves the door open to future litigation for any net neutrality policy.

The FCC reversal had been seen as a win for major ISPs such as Comcast, AT&T and Verizon having greater control of content distribution on the Internet. Indeed, Dish Network this month alleged AT&T-owned HBO and Cinemax wouldn’t renegotiate pay-TV carriage agreements, in part due to AT&T’s competing over-the-top video distribution platforms.

California state lawmakers this year voted to adopt the guidelines affording content providers such as Google, Apple, Facebook, Netflix, Hulu and Amazon Prime Video equal access to high-speed Internet distribution without being subjected to throttling, blocking or paid prioritization by Internet service providers.

Enforcement of the new legislation – set to take effect in January – has been put on hold pending a separate lawsuit by the federal government that argues states seeking their own net neutrality guidelines are violating the supremacy clause.