Back at the drawing board, Chairman
Wheeler and staff have attempted to find the sweet spot where ISPs can
negotiate paid traffic prioritization so long as it’s “commercially reasonable.”
Libertarians and a lot of other
observers would conclude that all commercial negotiations reach a reasonable
outcome between two willing parties. So
absent coercion or evidence of an unfair—okay call it unreasonable—trade practice,
the negotiation should produce a mutually beneficial outcome.
Such outcomes do not prevent one
side from exercising superior bargaining leverage.
In
broadcaster-cable television retransmission consent negotiations, the former
enjoys a superior bargaining position for two reasons: 1) broadcasters have
exclusive access to “must see” television such as the regular season of
professional football and 2) cable operators face severe restrictions on their
ability to negotiate with a distant broadcaster if the local station imposes unreasonable
demands. So arguably the deck is
stacked in favor of broadcasters.
What does
the Commission do in this situation?
Nothing for two reasons: 1) the Commission lacks specific statutory
authority to impose terms and conditions; and 2) the Commission wisely refrains
from interfering with “marketplace driven” negotiations knowing that eventually
the parties will reach closure, particularly after the regular NFL season begins. The Commission limits its intervention to defining
what constitutes good faith negotiations.
I acknowledge
that the consequences of regulatory reticence to act can more significantly
harm consumers when ISPs cannot come to terms.
The pain threshold arrives almost immediately when access to the
Internet cloud becomes congested, or when specific sites become
inaccessible. Many would assert that reliable
and neutral Internet access has more significance than whether cable television
subscribers can watch a football game.
Similarly
the D.C. Circuit Court of Appeals has instructed the FCC that it lacks
jurisdiction to supersede cable operators’ channel placement and content
tiering decisions. Absent a “voluntary” commitment, as occurred when Comcast agreed
to limits on its channel placement freedom, the FCC cannot mandate neutrality
and fairness. Comcast can place its
owned and operated Golf Channel on the basic tier and relegate the Tennis
Channel to a more expensive tier viewed by fewer subscribers. Was this a commercially prudent decision, or
one designed to disadvantage the Tennis Channel? The court in effect said it does not matter.
The FCC has
a model in retransmission consent and case precedent that it may not consider applicable.
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