These comments are submitted in response to the Commission's Notice proposing new regulations on how video devices and related delivery technologies are designed and operate.

 

Today's markets for video distribution and video devices are competitive and innovative. In fact, 99% of consumers have choices from three or more multi-channel video programming distributors (MVPDs). These competing MVPDs offer consumers their own video devices for leasing. Meanwhile, consumers have the option of purchasing their own CableCARD-compatible devices from third-party device makers. Consumers today have ample choice among online video distributor (OVD) services as well, viewable on mobile devices, gaming consoles, PCs, or media streaming devices. All told, more than half of all households with Internet access can stream video from the Internet to their TV using their smart TV, gaming console, Internet-connected Blu-Ray device, or a digital streaming media device. These choices for video devices - available now - favor a policy of market freedom, not the Commission's proposal to adopt complicated new "open standards" tech mandates.

 

No demonstrable market problem exists to justify the kind of intrusive tech mandates proposed by the Commission. And it highly doubtful that any conceivable benefit could outweigh the heavy costs that the Commission now ignores - costs which will initially be paid by MVPDs or program content owners, but will ultimately be paid by consumers. The Commission performed no cost-benefit analysis of its proposal prior to its Notice. Nor did it even seek input to conduct such an analysis.

 

It is highly doubtful the Commission has any idea how costly it will be to implement its proposed tech mandates, which includes its proposed requirement that MVPDs make available to third-party device makers presently bundled video content and related information in so-called disaggregated "information flows." MVPDs also would be required to develop an open standard for delivering these information flows. At the same time, the Commission would ban certain technological approaches that MVPDs might use, such as HTML 5.

 

These tech mandates substitute bureaucratic preferences for freedom to innovate. Requiring video service providers to re-design physical devices and standards to satisfy the Commission's proposed regulations means sinking financial resources and research efforts into new boxes. Video service providers will have increased incentive to focus efforts on recouping their forced investments in the new devices and standards, instead of forging ahead toward an app-based future for video viewing. The proposed regulations thereby threaten to hinder the future transition to apps-based delivery of video services.

 

Consumer privacy also is jeopardized as a result of the forced access requirements coupled with disparate regulatory treatment between MVPDs and third-party device manufacturers. The Commission would require MVPDs to hand over their "information flows" to third party device makers that are not subject to Sections 551 and 338 privacy requirements with which MVPDs must comply. And the Commission has no authority to enforce third-party device makers to be in compliance with MVPD privacy requirements. The Commission's proposal would confer advantages on third-party device makers providing access to MVPD content because they would not have to comply with the privacy requirements that apply to MVPDs. Receiving only partial protections when it comes to third-party device makers, consumers would not know with any certainty what privacy protections they have in their subscriber and viewing data.

 

The information flows targeted by the Notice's proposed regulation certainly include copyrighted video content. Negotiated licensing agreements are a critical mechanism for owners of video programming to exercise their right of control over use of their content. But the Commission's proposal effectively would undo those agreements and harmfully disrupt existing business dealings. Under the proposed regulations, third-party video device makers would gain a special right to use video programming commercially without having to negotiate with the copyright owners. Third-party device makers could take these programming information flows and repackage them with add-ons or perhaps advertisements for viewing on their retail devices. At best, video service providers would become a kind of forced middleman, negotiating licenses for the benefit of third-party device makers while perhaps policing their compliance also. In any event, the Commission's approach would warp contractual relations, impair the exclusive rights of video programming owners, and diminish the value of video programmers' intellectual property rights.

 

Proposed regulations in the Notice also clash withthe First Amendment. Although the Commission may not wish to recognize this, MVPD editorial choices concerning video programming content, channel placement, and display menus are protected forms of free speech. Under First Amendment jurisprudence, the government is prohibited from interfering with MVPDs' ability to select, control, and identify their own speech messaging and branding. Requiring video service providers to develop a method to bundle content and menu products into "information flow" outputs for third party device makers to rearrange and rebrand infringes upon the free speech rights of video service providers. Free speech infringement results from the government compelling MVPDs to provide market competitors with access to their editorial and expressive content while depriving MVPDs of the ability to preserve the integrity of the speech to be delivered to consumers.

 

All told, the Commission's proposal: (1) subjects a dynamic, well-functioning market to a swath of tech mandates; (2) imposes unknown costs on industry and consumers; (3) imposes privacy regulations that gives preferential treatment to third-party device makers but leaves consumers potentially vulnerable; (4) impairs contract rights and the intellectual property rights of video programmers; (5) and infringes the free speech rights of MVPDs. The Commission should lay its proposal aside.

 

The video competition that now exists and the choices for video devices that today's consumers have call for reaffirmation of market freedom, not unnecessary, counterproductive, costly new tech mandates. In a dynamic environment such as today's video marketplace, a policy favoring market freedom offers the best means for facilitating future video device and video app breakthroughs that will benefit consumers.

 

Finally, the early high-profile involvement of the Obama Administration in this proceeding - making it clear that the President's views are completely aligned with the FCC's proposal - is an early warning sign that, like the net neutrality rulemaking proceeding, this rulemaking could become highly politicized in a way that cast doubt on the FCC's independence. When it appears that political considerations may trump considerations rooted in supposed Commission expertise, the agency's institutional integrity may be jeopardized.