Forbearance Authority Should Extend to Video, Pai Says

In a media market where broadcasters and MVPDs are far more regulated than booming streaming competition, Congress should consider expanding FCC forbearance authority to cover the video market including broadcasters and MVPDs, Chairman Ajit Pai told the Media Institute Tuesday. He said government should "fundamentally rethink the very concept of media ownership regulation."

Pai mostly recapped FCC actions under his tenure, such as media modernization, AM revitalization and the fight over media ownership rules. He said after his term, which ends Jan. 20, the FCC needs "a fundamental, intellectually honest reassessment of what the media marketplace looks like now [and] where it’s going," Pai said.

Facebook and Google dominate the growing online advertising market, as broadcast is holding steady in nominal dollars and newspaper advertising is imploding, Pai said. Nexstar has a market capitalization one-fiftieth of Netflix's, but Nexstar is far more regulated due to "regulatory inertia and ... willful blindness about today’s marketplace," he said. He said the FCC used forbearance authority to ax "outdated regulatory burdens from telecommunications carriers," and doing the same for broadcast and MVPD regulation "only makes sense."

Pai urged a Cable Act "top-to-bottom rewrite." Asked about possible political headwinds to that, Pai hoped for bipartisan recognition the assumptions underlying it have eroded. Just expanded forbearance authority would be "a relatively light lift and let the FCC take a careful scalpel" to parts of the law, he said.

He said the media ownership rules regime overall "doesn't make any sense," especially when considering social media platform and streaming service ownership don't have similar rules. He said determination of an outlet's market share shouldn't be limited to broadcasters and cable operators but other media consumption that consumers might consider as substitutes, such as social media and gaming.

"These are issues that I was looking forward to tackling head on" if not for the 3rd U.S. Circuit Court of Appeals blocking 2017 media ownership revisions, which in turn stymied the agency's 2018 quadrennial review, Pai said.

Asked about media reforms the FCC didn't get to beyond 3rd Circuit issues, Pai said, "I can't think of anything we left on the field," before adding, "we would love to pursue" a TV incubator program. He said he's "generally skeptical" of applying MVPD rules to new competitors such as over-the-top services, with a better route being removing those regulatory burdens to allow more equal competition.

Asked about non-policy advice for the next chairman, Pai said predecessors told him of regrets of not getting more done. He said he focused on "figuring out what you want to do and have the courage to do it." He said it wouldn't be "appropriate" for the next FCC administration to revisit net neutrality rules since the dire predictions for their repeal didn't pan out. Asked by us about action on Communications Decency Act Section 230 before his term ends, Pai didn't comment. Many consider agency action under Pai unlikely (see 2012110055).