FCC

When a PR tactic masquerades as principle or sound policy a mess inevitably ensues.

Google and Public Knowledge, the two leading corporate and interest group entities respectively that are opposed to copyright in America, plotted that they could disguise their real intent to “unlock copyright licensing” and devalue the valuable “information flows” of the $200b a year U.S. pay TV industry, with a clever #UnlockTheBox consumer “gift”/sneak attack… just like Greeks did in the Trojan War using the purported “gift” of a huge wooden “Trojan Horse” as a trick to secretly enable soldiers hidden inside the horse to gain entry to the securely protected city of Troy.  

We now know that this FCC AllVid/Set-Top-Box (STB) rulemaking was not really about unlocking set-top-boxes for consumer benefit, but predominantly about unlocking copyright licenses for the nation’s most valuable video programming – to de facto, open-force more proprietary information to be free on the Open Internet.

How can the FCC imagine it is pro-competitive to help Google expand its search monopoly by illegally forcing the search neutrality principle that Google opposes as never justified, on competitive pay-TV providers, in order to divert pay-TV viewer traffic to piracy-friendly Google-YouTube’s 1.6 billion viewers?  

Multiple sources indicate the FCC is on path to include in its final proposed AllVid set-top box order a de facto FCC office of copyright licensing to try and politically paper over obvious policy and enforcement gaps in FCC authority.

It is further evidence that the “Unlock the Box” proponents pushing AllVid are really bent on “unlocking the copyrights, licenses, and contracts” that collectively protect $200b worth of annual video programming business, not the purported $20b set-top box business.

That’s because AllVid proponents continue to demand their initial outrageous and unlawful claim that the FCC should force the pay TV and video programmer industries to give Big Internet companies their $200b of video programming flows for free -- because the Internet wants information to be free.

The FCC’s big legitimacy problem here is that the FCC is not operating in a legal area where they can argue they are due broad court deference, because in this instance the law is very clear.

The FCC does not have the authority to force property owners to give away their copyrighted property for free or to forfeit their legal licensing or contract rights.

FCC and FTC meet the law of unintended consequences.

A Ninth Circuit Court decision overturned an FTC enforcement action against AT&T for “throttling” broadband data speeds by definitively ruling that the FTC did not have any legal jurisdiction over AT&T (and other common carriers) because of the explicit common carrier exemption in the FTC’s core Section 5 legal authority.

A fox should not be allowed to guard a henhouse, unless the farmer wants the fox to eat all the hens.

Neither should the world’s fiercest corporate opponent of copyright, Google, be allowed to be the FCC’s technological guard of $200b worth of annual video programming revenues, in the FCC’s AllVid Set-Top Box rulemaking, unless the FCC wants Google-YouTube and others to be able to pirate the nation’s video-programming property without paying for it.

Why is the FCC protecting and facilitating online advertising monopolies?

How can the FCC square its “competition, competition, competition” PR mantra with its regulatory plans for applying new anticompetitive privacy rules only on ISPs and not the “edge” online advertising monopolies -- Google and Facebook?

Simply as it relates to online advertising, the FCC’s new proposed Title II privacy rules would require ISPs with existing advertising businesses, or those planning to enter, compete, and grow in the online advertising market, to be subject to a new and special, privacy opt-in, consumer-consent framework where they alone in the marketplace would have to secure users’ advanced permission to use a majority of their data for advertising purposes.  

The evidence shows that Google & Facebook -- by far the world’s most dominant Internet gatekeepers – are not an Internet advertising “duopoly,” but worse, two separate Internet advertising monopoly platforms, one in search advertising and another in social media advertising.

That’s because search and social media advertising are not competitive substitutes for each other, but are proving to be synergistic advertising complements to each other in company marketing campaigns, because generally search advertising excels at lead generation and local business visibility while social media advertising generally excels at building brand awareness and interactivity with consumers.

Tellingly, after beginning to directly compete in social in 2011 and in search in 2013, Google and Facebook both abruptly, coincidentally, and effectively stopped competing directly with each other in both the search and social media markets in 2014.

Apparently, they either jointly agreed in 2014 to divide up the marketplace and no longer directly compete with each other to maximize their exceptional mobile growth and profitability; or they concluded independently -- from their initial directly competitive forays into the other’s core markets -- that the other commanded unbeatable monopoly network effects, so not directly competing with each other would maximize their exceptional mobile growth and profitability.     

[Note: This was submitted to the FCC for Reply Comments on the Title II Privacy NPRM]

The FCC’s Open Internet order and proposed Title II privacy rules divided what was unified.

For privacy, it broke what was working. Confused what was clear. Complicated what was simple. Unprotected what they sought to protect. Created more costs than benefits.

Since the Internet’s beginning the FTC has had privacy authority over information services.

For the decade since the FCC classified cable, wireless, and DSL broadband as an information service, and for the entire smartphone era where consumers became familiar with online privacy issues and regulation, the FTC was the sole unified regulator for protecting American consumers’ privacy.

In a 2014 filing to the FCC, the FTC explained why the FTC was better positioned to protect consumer privacy and data security than the FCC, because the FTC had national direct statutory authority to protect all consumers under: Section 5 -- that proscribes “deceptive” or “unfair” business practices; the Fair Credit Reporting Act (FCRA); and the Children’s Online Privacy Protection Act, (COPPA).

The likelihood improved this week, that the Supreme Court could have an interest in hearing an appeal of the recent USTelecom v. FCC court decision that granted the FCC complete Chevron deference to uphold the FCC’s Title II reclassification of ISPs as utilities. That’s because a new unanimous 8-0 Supreme Court decision suggests that the USTelecom Court may have granted the FCC too much legal Chevron deference on its Title II reclassification. (A hat tip to Gus Hurwitz’ tweet for flagging the Title II relevance of this SCOTUS case and his great legal analysis is here.)    

Are the FCC’s set-top-box proposed rules really about unlocking the set-top-box to competition or are they really about advancing Google and Public Knowledge’s real agenda – forced unlocking of the licensing and copyright protections of the underlying video programming that generates ~$200b in annual revenues?

In response to the FCC Chairman’s request for an alternative approach to the FCC’s current AllVid proposed rules, the Pay TV coalition has proposed an app-based solution that solves all of the FCC’s publicly-stated problems with cable set-top boxes.