USF Revamp Issues to Factor in House Video Marketplace Hearing, Likely Sept. 21 Broadband Panel

USF revamp matters are expected to come up in both a Wednesday House Communications Subcommittee hearing on the state of the U.S. video marketplace (see 2309070060) and a likely Sept. 21 subpanel discussion on rural broadband funding, communications sector lobbyists told us. NAB CEO Curtis LeGeyt and other officials set to testify at the Wednesday hearing focused their written statements largely on more video-centric issues, including staking a range of positions on a recent push for the FCC to refresh its long-dormant docket (14-261) on reclassifying streaming services as MVPDs to fix a perceived disparity in retransmission consent rules. The hearing will begin at 2 p.m. in 2322 Rayburn.

There’s not much clarity yet on the potential Sept. 21 USF-focused rural broadband hearing, but it’s likely to include discussion on both how to fit an extension of the affordable connectivity program into broader universal service legislation and how to change the USF contribution factor to include non-wireline entities, lobbyists said. The House Commerce Committee’s memo on the Wednesday video hearing in part highlights “calls for contribution reform” amid the “significant increase” in the contribution factor the FCC assesses to wireline carriers. “One proposal is to expand the base and assess contributions on a broad range of revenues, such as digital advertising and edge providers” like “Amazon, Facebook, Google, and Netflix,” the memo said.

LeGeyt says he backs resurrecting the FCC’s streaming services reclassification docket, while Consumer Reports Senior Policy Counsel Jonathan Schwantes and FuboTV CEO David Gandler strongly oppose it. House Commerce’s memo notes Chair Cathy McMorris Rodgers, R-Wash., and Communications Chairman Bob Latta, R-Ohio, urged FCC Chairwoman Jessica Rosenworcel in August against refreshing the record (see 2308090065). Senate Commerce Committee Chair Maria Cantwell, D-Wash., backs reopening the docket.

It's been “nearly a decade” since comments came into the MVPD redefinition docket, so the FCC’s “languishing record does not” reflect “drastic” changes in the video market “and its impact on consumer access to local broadcast stations,” LeGeyt says. “There is simply no reason the FCC should not at least refresh its record in this proceeding to better reflect current marketplace realities.”

Congress and the FCC “should resist efforts to apply retransmission consent requirements, which have clearly failed consumers, to [virtual] MVPDs as some have suggested,” Schwantes says. “Applying a law drafted and passed at the time the internet was barely known and its effects not even dreamed of would be hugely damaging to consumers in the form of more station blackouts and higher prices. What in the past decade would suggest any different?”

“Large station groups” are pushing to “revive a long-dormant FCC proceeding that provoked an overwhelmingly negative response during a comprehensive public consultation where commenters pointed to the potential harm to viewers, content creators, and local news providers,” Gandler says. “Their proposed rule changes would turn back the clock and force online video providers and streaming platforms to be regulated like the cable industry of decades past.”

ACA Connects President Grant Spellmeyer and other parties took equally divergent positions on the existing retransmission network. The “antiquated” existing framework “continues to leave customers suffering under a regime of inflated pricing, blackouts, and without an ability to choose content packages that best suit their needs,” Spellmeyer says. “We should not ‘double down’ on this broken system by expanding it to the online world.” Policymakers should “mitigate” retrans “harms by strictly enforcing rules on the books that limit broadcast industry consolidation and market power,” he says: “We must close” media ownership anti-consolidation loopholes and “robust antitrust enforcement is critical to protect consumers from anti-competitive practices.”

Congress “has the authority to cure the ills of the retransmission consent regime by doing away with it altogether,” Schwantes says: “Such solutions have been considered during Congressional hearings, and legislative proposals have been floated in the past,” including the 2021 Modern Television Act (see 2103110064). That measure, first filed in 2019, would repeal parts of the 1992 Cable Act, including retrans rules (see 1907290053).

“Important local broadcast content is available on our platform and that of our competitors today commensurate with the desires of our viewers,” Gansler says. “Applying decades old regulations to streaming platforms in the name of 'modernization' is the epitome of a solution in search of a problem.” Fubo and other Preserve Viewer Choice Coalition members “are united behind the premise that the streaming environment as it exists today is one that viewers uniformly enjoy,” he says.

LeGeyt urged Congress to pass the AM Radio for Every Vehicle Act (HR-3413/S-1669), which would require the Transportation Department to mandate automakers include AM radio technology in future vehicles. Senate Commerce advanced an amended version of S-1669 in July, but House Commerce leaders have expressed mixed opinions about the measure (see 2307270063). NAB continues to seek passage of legislation to reinstate the minority tax certificate program (see 2301270068), LeGeyt says.

Spellmeyer cautions “policymakers interested in adopting net neutrality or rate regulation for broadband services,” saying “the data points to a competitive and dynamic market where broadband providers are giving their subscribers the ability to reach any upstream content of their choosing.” Lawmakers instead “need to look out for smaller broadband providers, who have no leverage to demand payments or other concessions from the big online providers to carry their traffic,” he says.