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MEDIA ADVISORY               October 8, 2015

Contact: Randolph May at 202-285-9926

FSF Tells FCC to Abandon Video Device Mandates  
 
 
Free State Foundation President Randolph May and Senior Fellow Seth Cooper submitted comments today to the Federal Communications Commission in response to the Commission's request for comments regarding the final report of the Downloadable Security Technical Advisory Committee (DSTAC).

The focus of the comments is on the policy imperative that the Commission refrain from imposing any technical mandates or other new regulations on the design of video navigation (set top box) devices.
 
The complete set of Free State Foundation comments, with the footnotes, is here.
 
Immediately below is the "Introduction and Summary" to the comments, without the footnotes.
 
These comments are submitted in response to the Commission's request for comments regarding the final report that the Downloadable Security Technical Advisory Committee (DSTAC) submitted to the Commission on August 28, 2015. The STELA Reauthorization Act of 2014 (STELAR) required the Chairman to establish a working group to recommend standards for software-based downloadable security to video navigation devices. The standards are supposed to be "not unduly burdensome, uniform, and technology- and platform-neutral." The DSTAC report was submitted pursuant to STELAR.
 
Importantly, the working group's report did not recommend that any technical mandates be imposed concerning downloadable security software or any other design or functionality aspects of video device design. The focus of these comments is on the policy imperative that the Commission refrain from imposing any technical mandates or other new regulations on the design of video devices.
 
Market innovation - not FCC regulation - is responsible for consumers' enjoyment of multi-channel video programming distributor (MVPD) and other video viewing options, such as Wi-Fi or wireless, mobile devices, tablets, and video game consoles. New restrictions on the designs of video device hardware and software would threaten the investment and innovation that has taken place outside the scope of regulation. New regulation would harm MVPDs' ability to compete for consumers in a market that now includes online video distributors (OVDs) and streaming media devices.
 
Providers in different segments of the video market should be left free to pursue the design of video device functions and interfaces. Design decisions and arrangements should not be decided through a command-and-control process in which regulators place their thumbs on the scales.
 
A fair reading of the report suggests that any attempt by the Commission to impose new downloadable security or other technical mandates on MVPD-supplied devices would overtax the agency's administrative capabilities and cause harm to the development of technologies and business models. Tremendous technological diversity exists among MVPD, direct broadcast satellite (DBS), and telco IPTV platforms. Not surprisingly, the report deemed it unreasonable to expect MVPDs to re-architect their networks in order to converge on a single, common security solution.
 
New technical mandates regarding downloadable security would displace or even destroy the intricate and interdependent technological systems and business arrangements that shape the video navigation device market. Video content owners, video device manufacturers, and video service providers have direct institutional knowledge and expertise concerning the technical functions and business models involved. These market participants balance security and other rights and interests through detailed voluntary agreements. The Commission does not possess the kind of institutional knowledge or the incentives necessary to balance those rights and interests. Market participants are best positioned to propel and adapt to change in the video device market.
 
Nor should the Commission impose new video device controls over video menu content and display functions. The report declined to endorse new controls on menu and content display, and rightfully so. MVPD editorial choices regarding video programming content, arrangement, and menu displays are protected forms of free speech. Requiring MVPDs to disaggregate bundled content and menu products into outputs for third parties to reassemble and rebrand would infringe upon their First Amendment rights, and perhaps their intellectual property rights as well.
 
The Commission should adopt an alternative course to imposing new regulations. It should finally eliminate its analog, VCR-era video device regulations. Section 629(e) contains a unique mechanism for sunsetting the video device regulations when the Commission determines that the MVPD and devices markets are fully competitive and that elimination of regulations would promote further competition and the public interest.
 
Section 629 passed Congress at a time when cable operators still had more than 90% market share for video subscription services. But nationwide DBS and telco IPTV entrants have reduced that market share significantly. The Effective Competition Order (2015) acknowledged the effective competitive state of national and local MVPD markets. That acknowledgment effectively undermines the analytical basis for video device regulations.
 
Also to be considered is the rapid rise of online video distributor (OVD) services and the emergence of the streaming media device market. These new services and devices also offer independent alternatives for video viewing that is increasingly popular with consumers, especially cost-conscious consumers. The disruptive presence of OVDs and the streaming media devices undermines the old rationale for intrusively regulating MVPD-provided video devices. The Commission should therefore sunset those regulations under Section 629(e).

 
* * *
 
Randolph J. May, President of the Free State Foundation, is a former FCC Associate General Counsel and a former Chairman of the American Bar Association's Section of Administrative Law and Regulatory Practice. Mr. May is a current public member of the Administrative Conference of the United States, and a Fellow at the National Academy of Public Administration.
 
Mr. May is a nationally recognized expert in communications law, Internet law and policy, and administrative law and regulatory practice. He is the author of more than 180 scholarly articles and essays on communications law and policy, administrative law, and constitutional law. Most recently, Mr. May is the co-author, with FSF Senior Fellow Seth Cooper, of the recently released The Constitutional Foundations of Intellectual Property and is the editor of the book, Communications Law and Policy in the Digital Age: The Next Five Years. He is the author of A Call for a Radical New Communications Policy: Proposals for Free Market Reform. And he is the editor of the book, New Directions in Communications Policy and co-editor of other two books on communications law and policy: Net Neutrality or Net Neutering: Should Broadband Internet Services Be Regulated And Communications Deregulation and FCC Reform.
 
    
The Free State Foundation is a non-profit, independent free market-oriented think tank.

  
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