‘Clean’ STELA Reauthorization Sought by House Democrats

Walden acknowledged the shifts in the video marketplace since the 1988 law was enacted. “The video market is changing rapidly. Phone companies are in the video business now, both over wires and wirelessly. Netflix is offering original programming over the Internet. And Aereo, for better or for worse, could turn everything upside down,” Walden said. “Ultimately, the question is can we better ensure viewers have access to the programming they want while respecting the investments of the networks that create it and the broadcasters and pay-TV companies that deliver it?” he said.

House Communications Subcommittee Ranking Member Anna Eshoo, D-Calif., urged Walden to convene majority and minority staff members to “work expeditiously” to draft a “clean” reauthorization of STELA “long before the December 31, 2014 deadline.” “We have both stated publicly that we want a clean bill,” she said to Walden. “I think we need to get going with this.” Last week, in an interview for C-SPAN’s The Communicators (CD June 7 p3), Eshoo said she didn’t want STELA to become a “Christmas tree with many things dangling off of it.” On a previous Communicators interview Walden too said he believes Congress will pass a “clean” reauthorization of the Act (CD May 24 p3). House Commerce Committee Ranking Member Henry Waxman, D-Calif., agreed in his opening remarks that the committee should “pursue a clean reauthorization” of STELA and urged Congress to expedite its work on the bill “so consumers do not inadvertently lose access to programming.”

Rep. Steve Scalise, R-La., said the subcommittee would be “wise to revise” STELA to address what he said were imbalances in the video marketplace. The laws “dramatically need revision and updating” because the marketplace has undergone a “dramatic transformation” since STELA and the Cable Act were first enacted, he said. Scalise told us before the hearing he plans to reintroduce his Next Generation Television Marketplace Act (HR-3675), but would not give a timeline for its introduction. The bill aims to repeal both the compulsory copyright licenses and retrans provisions of the Cable Act.

Scalise said the court cases between broadcasters and online-TV startup Aereo, which streams broadcast-TV signals to consumers via the Web, provide a good example of the “imbalance” in the marketplace. “We should trust the consumer demand ... to ensure that quality programming is carried by pay-TV providers at a rate that both the buyers and sellers can agree on without the government thumbing the scale for one industry over another,” he said. Executives at several networks have publicly threatened to take their programming off the air to thwart Aereo’s business model. The threats came after Aereo won a 2nd U.S. Circuit Court of Appeals ruling denying broadcasters a preliminary injunction against the service (CD April 5 p9). Broadcasters have subsequently asked the full 2nd Circuit panel to re-hear their case for a preliminary injunction (CD April 17 p4). Aereo, which streams New York City broadcast TV programming transmitted by tiny Web-connected antennae, told the U.S. District Court in New York that it plans to expand its service to Boston (CD May 8 p7).

Rep. John Dingell, D-Mich., said he was “somewhat alarmed” that some lawmakers on the panel were advocating for “extraneous” issues unrelated to the reauthorization of STELA. “The committee’s work on satellite television legislation has been predicated on the simple principle of localism and should continue to do so,” he said. If some elements of the 1992 Cable Act need to be amended the Commerce Committee has not established a sufficient record to move forward, Dingell said. “I don’t think most of our colleagues understand full well what the situation is and what we should do about it. In light of that fact we would be well served to confine our efforts to a clean reauthorization” of STELA, he said.

DirecTV Executive Vice President-Services and Operations Mike Palkovic told lawmakers that “congressional action is needed” to resolve consumer complaints about retransmission consent, among other issues in the marketplace. Palkovic said there are three primary problems with the retrans process: it raises prices, limits choice, and creates retrans-related program blackouts. Though he didn’t endorse any particular legislative solution Palkovic said the Next Generation Television Marketplace Act “is better than today’s hodgepodge video regulation.” Another approach would be to seek “smart reforms” of current video regulations that end broadcast blackouts related to retrans fights, he said.

Bend Broadband CEO Amy Tykeson said STELA should be amended to prevent harms to consumers who are facing what she said are increased costs, a lack of choice and programming blackouts. “The outdated video rules are hurting my customers,” Tykeson said. Program bundling limits the ability of providers to offer content that consumers want, she said. The retrans process “is broken ... networks are demanding an increasing share of their networks’ retrans fees ... that drives up cost.” She also urged lawmakers to repeal the technology mandates on set-top boxes.

Marci Burdick, senior vice president-broadcasting for Schurz Communications, urged lawmakers to “at a minimum ... embrace a clean reauthorization.” Burdick bristled at the suggestions that Congress legislate “false fixes” to current video laws that she said “would harm consumers.” As for retrans, “If the system isn’t broken, why fix it? Only in D.C. could something that works 99% of the time ... be called broken,” she said.

Ben Pyne, president of global distribution at Disney Media Networks, said in his testimony Congress should give “serious consideration to letting [STELA] sunset.” “Retrans is working well ... and the necessity for the satellite legislation ... is simply not as great as it once was,” he said. With regard to Aereo, broadcasters “will do everything we can to protect our content,” he said. TechFreedom Senior Fellow Geoffrey Manne agreed that STELA should be allowed to sunset because he said outdated video marketplace regulations are a “house of cards” that is “bound to fall down.” “A clean reauthorization of STELA isn’t clean at all,” he said.